One of the easiest ways of investing in Bitcoin is buying the digital currency, using it in making payments here and there, and possibly selling the BTC coins at a profit later. And though the entire process of buying Bitcoin may seem complicated, it is much easier when you get down to doing it.
To makes things even easier, we have prepared this simple guide on how to buy Bitcoins.
Some of the things that you should keep in mind as you begin your journey of investing in Bitcoin are:
- Bitcoins are stored in Bitcoin (BTC) compatible wallets.
- Bitcoin has remained the most valued cryptocurrency since it was launched.
- Bitcoin’s value is derived from its adoptions as a payment system and a store value and it is determined by its limited supply and increasing demand.
- It is extremely hard for the Bitcoin blockchain to be hacked. However, you should keep the private keys of your Bitcoin (BTC) wallets secure to avoid being hacked.
- Bitcoin can be acquired through buying it on crypto exchanges, Bitcoin ATMs, or receiving it as a payment for a service or product.
What you need to invest in Bitcoin
For you to invest in Bitcoin, you require a secure internet connection, to open an account with a cryptocurrency exchange, have personal identification documents that you can use for the Know Your Customer (KYC) verification process when registering with the crypto exchange, and a mode of payment.
Also, although some crypto exchanges offer built-in crypto wallets, it is important to have your own BTC wallet and if possible the wallet should be a cold or hardware wallet for security reasons. Online crypto wallets are somehow prone to hack attacks.
When starting, you will require a mode of payment through which you can purchase Bitcoins from other holders through the BTC ATMs or crypto exchanges. Some of the most commonly allowed payment options by exchanges include bank accounts, debit cards, credit cards, Paypal, and Mpesa (for Kenyans).
You should also be warned that privacy and security go hand in hand for crypto investors especially Bitcoin investors since its value has soared very high over the last years. Therefore, you should avoid bragging about the amount of your BTC holdings since doing so would attract hackers.
Also, it is wise to have different public addresses for different investments. You should maintain a very small amount of BTC in the public address that you directly using for trading or transactions since one can see the balance in the wallet whose public address is shared and that could result in hackers trying to stalk you to see if they can get hold of your private keys.
However, the beauty of it is that Bitcoin transactions are normally kept anonymous and while anyone can track the history of transactions done on the Bitcoin blockchain network, they cannot get the identity of the holders.
Steps to Buying Bitcoin on a crypto exchange
- Choose a reputable exchange
The best crypto websites for buying Bitcoin using fiat currencies are the Peer-to-Peer crypto exchanges. These exchanges allow you to identify Bitcoin holders willing to sell some of their BTC coins and you can send them a request to buy a certain amount of the digital currency.
If possible, it would be good if you choose an exchange that allowed you to withdraw your Bitcoins to your personal BTC wallet. With such an exchange you can withdraw the bulk of the BTC coins to your wallet and leave a small amount in the wallet of the exchange for use in trading.
An example of a Peer-to-Peer crypto exchange is LocalBitcoin.
There are however other exchanges that offer Peer-to-peer trading services although they also offer other cryptocurrency trading features like futures and crypto CFDs. Some of the most commonly used exchanges for the on-ramp to crypto are Coinbase, Binance, Kraken, and Gemini.
When dealing with cryptocurrencies, it is always important to remember to use safe internet practices like using a secure internet connection. You could choose to use a VPN connection to ensure your internet connection is secure. Also, ensure you have a two-step account verification for your crypto exchange account and a unique strong password.
Most exchanges will require you to provide documents that can identify you as part of the KYC guidelines. Therefore, you should ensure you have your documents. Most exchanges will require a clear picture of you, a copy of your national ID or driver’s license among other things depending on the exchange you choose to use.
- Choose the payment option you would like to use
Once the exchange identifies you through the personal documents that you provide. The next step is linking a payment option so that you can use fiat currency to purchase Bitcoins.
Most exchanges will allow credit and debit cards, and direct bank wire transfers. However. Some also accept online payment options like PayPal, Payoneer, and Skrill among others including Mpesa for Kenyans.
It is important to note that different payment options have different transaction fees which could vary depending on your location. Therefore, it is wise to choose not only the fastest but also the least expensive option.
- Identify a seller and place an order
The next step is to identify a BTC seller and placing an order.
Remember BTC prices are very volatile and they change in seconds. However, when you identify a seller and place an order, the price at which the seller is selling his/her BTC coins is locked and if he/she accepts the request, you will buy the BTC coins at that price. However, if they refuse the request, you could find the market prices have changed when going back to make another order.
When buying BTC from sellers, ensure to only provide the public addresses to your wallets and not your private keys.
- Hurrah! You now have BTC coins that you can use
When the seller sends you the BTC coins in your wallet, you can use the BTC as you like. You can use it to make purchases, pay for services and even sell it to other buyers if its value appreciates.
Steps to buying Bitcoin through BTC ATMs
Bitcoin ATMs have become more and more popular in recent years. Just like you deposit money through the normal bank ATMs, you can purchase Bitcoin from ATMs by inserting fiat money into a Bitcoin ATM to purchase a certain amount of Bitcoins which are transferred to your digital BTC wallet.
To track Bitcoin machines closest to you, you could use Coin ATM Radar.