Bitcoin is a decentralized form of digital currency that eliminates the need for traditional intermediaries like banks and governments to make financial transactions. Bitcoin offers the promise of lower transaction fees than traditional online payment mechanisms and, unlike government-issued currencies, it is operated by a decentralized authority. Bitcoin is commonly abbreviated as “BTC.”
Bitcoin is a type of cryptocurrency, there are no physical bitcoins, only balances kept on a public ledger that everyone has transparent access to. All bitcoin transactions are verified by a massive amount of computing power. Bitcoins are not issued or backed by any banks or governments, nor are individual bitcoins valuable as a commodity. Despite it not being legal tender, Bitcoin is very popular and has triggered the launch of hundreds of other cryptocurrencies, collectively referred to as altcoins.
This article explains the details about how to buy bitcoin and also trade bitcoin. Please know that Investing in Bitcoin can seem complicated, but it is much easier when you break it down into steps. Buying Bitcoin is getting easier by the day and the legitimacy of the exchanges and wallets is growing as well.
Simple Things To Know Before You Buy Bitcoin
There are several things that as a Bitcoin investor you need to know about – A cryptocurrency exchange account, personal identification documents if you are using a Know Your Customer (KYC) platform, a secure connection to the Internet, and a method of payment. It is also recommended that you have your own personal wallet outside of the exchange account. Valid methods of payment using this path include bank accounts, debit cards, and credit cards. It is also possible to get Bitcoin at specialized ATMs and via P2P exchanges. However, be aware that Bitcoin ATMs were increasingly requiring government-issued IDs as of early 2020.
Privacy and security are important issues for Bitcoin investors. Even though there is no physical Bitcoin, it is usually a bad idea to brag about large holdings. Anyone who gains the private key to a public address on the Bitcoin blockchain can authorize transactions. Private keys should be kept secret; criminals may attempt to steal them if they learn of large holdings. Be aware that anyone can see the balance of a public address that you use. That makes it a good idea to keep significant investments at public addresses that are not directly connected to ones that are used for transactions.
Anyone can view a history of transactions made on the blockchain, even you. But while transactions are publicly recorded on the blockchain, identifying user information is not. On the Bitcoin blockchain, only a user’s public key appears next to a transaction making transactions confidential but not anonymous. In a sense, Bitcoin transactions are more transparent and traceable than cash, but cryptocurrency can also be used anonymously.
For example, if someone creates an account on Bitmama, they must provide their identification. Now, when that person purchases Bitcoin it is tied to their name. If they send it to another wallet it can still be traced back to the Bitmama purchase which was connected to the account holder’s identity.
Four (4) Steps You Need To Buy Bitcoin
Step 1: Get A Bitcoin Wallet
Before you buy bitcoin, you’ll need to set up a Bitcoin “wallet”. A Bitcoin “wallet” is just a virtual storage center, just like your physical wallet is what holds your cash and debit and credit cards.
There are a few options when it comes to these wallets:
A “wallet” made from software that’s stored on your computer’s hard drive.
An online wallet offered by a crypto company like Bitmama.
An offline option that acts like a vault. These use special “keys” that only you have access to, which adds an extra layer of protection for your crypto (this is also called “cold storage,” which I’ll discuss more below).
If you’re an everyday user, online services are your best option, as long as you don’t need complete anonymity and don’t mind the long setup procedures. If you’re a crypto investor, any of these platforms will work since you likely won’t be regularly spending from your wallet.
Now that you understand what a Bitcoin wallet is, you’re probably wondering how you actually find the wallet that’s best for you. Here is when you need to use Bitmama, It has one of the most secure wallets in the crypto space.
Step 2: Choose A Bitcoin Exchange
After the wallet, you’ll need to register with a ‘fiat-to-crypto’ exchange. This means a company that accepts regular money in exchange for cryptocurrency such as Bitcoin. In crypto parlance, ‘fiat’ currency is any government-issued money like U.S. Dollars, Euros, or Pounds Sterling, Ghanaian Cedis, Naira and many more.
When you buy bitcoin from a fiat-to-crypto exchange, the company sells you cryptocurrency from their own reserves. This means that they can set the price and charge a fee for their service. For this reason, fiat-to-crypto exchanges are sometimes referred to as ‘broker exchanges.’
Signing up for a cryptocurrency exchange will allow you to buy, sell, and hold cryptocurrency. It is generally best practice to use an exchange that allows its users to also withdraw their crypto to their own personal online wallet for safer keeping. For those looking to trade Bitcoin or other cryptocurrencies, this feature may not matter.
There are many types of cryptocurrency exchanges. Because the Bitcoin ethos is about decentralization and individual sovereignty, some exchanges allow users to remain anonymous and do not require users to enter personal information. Such exchanges operate autonomously and, typically, are decentralized which means they do not have a central point of control.
Bitmama Exchange is user-friendly and was built to have the best features and functionality for Bitcoin Investors and traders. An important thing to note when creating a cryptocurrency exchange account is to use safe internet practices. This includes using two-factor authentication and using a password that is unique and long, including a variety of lowercase letters, capitalized letters, special characters, and numbers. , there are two primary considerations when you are choosing Bitcoin Exchange – Location of the Exchange and Exchange Fees.
Step 3: Connect Your Exchange To Payment Method
Once you have chosen an exchange, you now need to gather your personal documents. After the exchange has ensured your identity and legitimacy were verified on their platform, you may now connect a payment option. At most exchanges, you can connect your bank account directly or you can connect a debit or credit card. Exchanges also charge fees per transaction. This fee can either be a flat fee (if the trading amount is low) or a percentage of the trading amount. Credit cards incur a processing fee in addition to the transaction fees.
Step 4: Deposit Funds To Your Exchange Account
Choose the amount of cash and transfer it to the exchange. The fees and time will depend on the payment you chose. Once you’ve completed this step, you’ll have money in the ‘fiat’ wallet of your exchange account. You can use the cash to buy Bitcoin.
Click on the ‘Buy/Sell’ button and select the value of altcoins you wish to purchase.
Once you’ve agreed to the transaction costs, like transaction fees, click on “Buy” and wait for the transaction to be completed.
Alternate Ways of Buying Bitcoin
While exchanges such as Bitmama remain some of the most popular ways of purchasing Bitcoin, it is not the only method. Below are some additional processes Bitcoin owners utilize.
Bitcoin ATMs act like in-person Bitcoin exchanges. Individuals can insert cash into the machine and use it to purchase Bitcoin which is then transferred to a secure digital wallet. Bitcoin ATMs have become increasingly popular in recent years; Coin ATM Radar can help to track down the closest machines.
Unlike decentralized exchanges, which match up buyers and sellers anonymously and facilitate all aspects of the transaction, there are some peer-to-peer (P2P) exchange services that provide a more direct connection between users. After creating an account, users can post requests to buy or sell Bitcoin, including information about payment methods and prices. Users then browse through listings of buy and sell offers, choosing those trade partners with whom they wish to transact.
Bitmama facilitates some of the aspects of the trade. While P2P exchanges do not offer the same anonymity as decentralized exchanges, they allow users the opportunity to shop around for the best deal. Many of these exchanges also provide rating systems so that users have a way to evaluate potential trade partners before transacting.