The cryptocurrency market is here to stay and anybody who still doubts the value of Bitcoin is obviously not paying attention. A single Bitcoin is worth thousands of dollars and we’ve seen those prices skyrocket in the past few years. For the average person who wants to get in on the action, the whole crypto market can seem a bit complex – but that shouldn’t keep you from investing in the payment system of the future.
If you’re looking to buy Bitcoin online, here’s a quick guide to get you started:
A Quick Background On Bitcoin
Bitcoin is basically a digital currency that can be bought and traded like a commodity, but is fully decentralized. Bitcoins can also be used to purchase goods and services, and there’s no limit to what you can buy with Bitcoin. Bitcoin differs from hard cash because it functions on a peer-to-peer system; meaning there is no single authority like the Federal Reserve or the U.S. Treasury to track transactions or issue new money. Those functions are not necessary because of the way Bitcoin works. The so-called blockchain technology that is the foundation of cryptocurrency is the very reason it’s such an attractive concept.
What is Blockchain?
It’s like a public ledger, but digital; and transactions are recorded for everyone to see. This is what eliminates the need for trust in this financial system. When each transaction is entered, multiple servers register the transaction as complete, and it cannot be reversed. Bitcoins are generated through a process called “mining” and involves a lot of mathematical and computational effort.
This is the complicated part of cryptocurrency but all you need to know is that each time a mathematical problem on the blockchain is solved, a new “block” is created. Once created, the block is added to the chain and it can’t be altered or removed once the network has accepted it. The Bitcoin system allows for about 21 million coins to be mined in total, so supply is limited and the coins are running out.
How To Invest In Bitcoin
You can buy Bitcoin online by interacting with Bitcoin miners or investors on any major online marketplace. It’s no different than buying any other product online. You can also get Bitcoins from brokers such as Coinbase or Kraken or from peer-to-peer networks like xCoins that connect people looking for bitcoins to other people that want to sell them. I have found this way is a little bit faster and more convenient.
When buying Bitcoin, you’ll need a “wallet” or a place to store the digital currency; and these wallets come in the form of a tiny app that uses a secret number to access your Bitcoins from any online marketplace.
There are online-based wallets and hardware wallets. Online wallets are small applications that you can use to access Bitcoin; but there are hardware wallets as well. These are small devices that look like a memory stick and are used to store your private key for accessing Bitcoin. Some people consider them more secure because they are kept offline (there have been instances where hackers stole Bitcoin from internet-connected devices).
You’ll need to provide a name, email account, and password to create a wallet. Download the app through a secure portal like Google Play or the Apple App Store – remember, you’ll need this app to buy or trade. Some wallets are made for PCs, others are designed for mobile devices. Once you get a wallet and log into an online marketplace, you now have what you need to buy Bitcoin.
The next step is to visit a reputable broker or exchange firm like Coinbase, Poloniex, or Kraken. You may need to provide access to your bank account to pay for the Bitcoin, and once you’ve made a payment, you can use the wallet to store your Bitcoins.
To purchase the Bitcoins, click on the “buy” section on the broker’s website and select the number of Bitcoins you want. Depending on your preferred broker, you may be able to buy less than a single Bitcoin (you can get half a Bitcoin, 1/4, or 1/8). You can use any recognized method of payment to purchase Bitcoin – this includes credit card, wire transfer, PayPal, or even cash.
As with any investment, there are genuine risks for buying Bitcoin. However if you fancy yourself an investor then you should understand the concept of risk, and try to minimize the risks you take with each trade.
