Crypto

The 5 steps to buying Bitcoin 2019

August 24, 2019

After the bitcoin hype and ICO craze in 2017, most people have probably heard of bitcoin and cryptocurrency by now. While some people understand how bitcoin works, not everyone knows how to buy bitcoin properly.

Here are the five steps you should know to buy bitcoin:

  • Determine where to buy bitcoin
  • Make your plan
  • Select storage method for your bitcoin
  • Buy bitcoin
  • Key moments to focus on

1. Determine where to buy bitcoin

First, you have to decide where you will be buying bitcoin. There are several different types of places where you can buy bitcoin: 

Centralised exchange

Most people that buy bitcoin for the first time, go through a centralised exchange, with Binance being one of the most popular crypto exchanges. This platform supports a wide variety of cryptocurrencies including Bitcoin, Ethereum, and its own Binance Coin (BNB).

Decentralised exchange

Decentralised exchanges (DEXs) are more secure than centralised exchanges, but are also less easy to use for beginners. Popular DEXs include BitShares, Sparkdex and IDEX.

Peer-to-peer network

In a peer-to-peer network (P2P), buyers and sellers communicate directly with each other to make bitcoin deals and transactions. One of the oldest and most trusted bitcoin P2P networks is Localbitcoins. Up until recently, people could use cash to buy bitcoin but that has changed and members of the network now mostly buy and sell bitcoin using bank transfers.

Cash

Buying bitcoin with cash is still possible. Two ways are through Bitcoin ATMs which can be found in most major cities, and through the Cash Point network available through the Bitspark mobile app.

2. Make your plan

After you decide on the way to buy bitcoin, you must create your bitcoin plan to be confident in what you will be doing. The plan depends on your goal, but if you want to hold bitcoin to sell it for a higher price later, you need a strategy.

Bitcoin's price changes all the time. It mostly grows exponentially and then starts decreasing slowly until it stabilizes. You can use different tools such as Bitcoin Wisdom or Cryptowatch to analyse bitcoin price trends, and keep up with crypto news to understand market sentiments. If you buy together with partners internationally, try online translation service such as The Word Point to communicate effectively.

3. Select storage for your bitcoin

There are several safe ways that you can store bitcoin:

Desktop Wallet: Unlike online wallets, desktop wallets are less vulnerable to potential hacking but can't be accessed from anywhere in the world. Desktop wallets can only be accessed from your personal computer by using special security keys that are stored only on that machine. Unfortunately, if your computer gets infected with malware that specifically targets security keys, your desktop wallet may be hacked.

Mobile wallet: A crypto wallet on your phone is essentially the same as the desktop wallet, but with the added benefit of always having it on you. While this may be less ideal for keeping all your bitcoin, it can be useful to store some of your crypto in a mobile wallet for easy reach, while keeping the rest in a separate wallet.

Hardware Wallet: A hardware wallet is even more secure than a desktop or mobile wallet. Hardware wallets can be carried around as they look like actual hardware devices such as USB sticks. Moreover, you have complete anonymity with which you can transact. No personal information is linked to the hardware meaning nothing can be leaked.

Paper Wallet: Even though it requires more advanced knowledge of how cryptocurrencies work, a paper wallet can be a relatively safe way to store bitcoin. You can either generate a paper wallet online by using one of the dedicated sites such as Wallet Generator or generate it offline. Paper wallets don't take up much space too.

Physical Coins: Last but not least, you can now buy physical bitcoins that have a tamper-proof sticker that covers a predetermined amount of bitcoin. However, you will have to pay a fee for the manufacturing and shipment of your physical bitcoins.

4. Buy your bitcoin

You can use a debit card, credit card, bank transfer or cash to buy bitcoin. Remember that a bitcoin wallet on a centralised exchange must not be used for long-term storage of bitcoin as they do not have the optimal level of security.

5. Key things to focus on

Lastly, here are the five best practices when it comes to improving your bitcoin game every day:

  • Do your homework: Always understand what you are doing and how bitcoin works. And keep on learning!
  • Proceed with caution: Buying bitcoin is always risky, just like any other type of trading or investing.
  • Diversify effectively: By diversifying your portfolio, you will lower the chances of losing your money when one component decreases in value. Stablecoins pegged to local currencies are good option.
  • Keep coins in wallets: Don't keep your purchased bitcoin in exchanges as they are not the best or safest place to store cryptocurrency.
  • Prepare for volatility: Always be prepared for any kind of changes. Stick to your plan and HODL. 
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