As the cryptocurrency industry smashes through an all-time high market cap of $3 trillion, Bitcoin (BTC) continues to lead the pack as the highest-valued crypto available. Just this month, amid fears of inflation, BTC’s worth spiked at almost $40,000. Many financial analysts see this as further evidence that cryptocurrency is an effective inflation hedge—and this, in turn, has encouraged more people to invest in Bitcoin. As of 2022, about 46 million Americans now own a share of Bitcoin, with realized gains reaching over $4 billion. If you want to get in on this bustling and rapidly rising digital asset, too, here’s how to start investing:
1. Choose a crypto exchange
Bitcoin is an open-source technology and is decentralized, so there is no one sole trading platform. Hence, familiarizing yourself with crypto exchanges is the primary step in learning how to buy Bitcoin. Most investors find that the best place to start investing in Bitcoin is through an exchange. These crypto exchanges act as safe platforms on which you’ll be buying, selling, and even holding (holding a cryptocurrency for future profits). Although there aren’t any “official” crypto or Bitcoin exchanges, some of the most reputable ones include Coinbase, Robinhood, Gemini, and BlockFi. These exchanges will safeguard your transactions and privacy, though there are service fees that vary on each platform.
2. Create a Bitcoin wallet
Purchased coins are stored in your crypto wallet—which is either “hot” or “cold”. For most investors, hot wallets are preferable, which is why exchanges like Robinhood offer built-in wallets. This is because hot wallets are consistently connected online, making them easier to access. The downside, though, is that this leaves them vulnerable to hackers. Cold wallets, meanwhile, are physical devices that store your Bitcoin’s private key. They may be a bit pricier and are a little trickier to access, however, they’re considered the most secure wallet. This is better for holders or those trading in large quantities.
3. Connect your payment method
Depending on the exchange you’ve signed with, you’ll have to link your account to your preferred payment method. Major exchanges support bank transfers, as well as credit and debit card payments. In some cases, you can even connect your PayPal or Apple Pay. To verify these, you’ll need a variety of IDs—which is why it’s easier to just have them all ready beforehand. Take note that regardless of whether you’re buying or selling crypto, your exchange will deduct a service fee. Such fees can range from 1% to almost 4% of the total transaction fee.
4. Purchase your Bitcoin
Now that you’ve got all the necessary components in order you can buy Bitcoin. However, if you don’t want to heavily invest in Bitcoin you can also buy a fraction of it. Although the cost of a single BTC token is several thousand dollars, some exchanges let you buy Satoshis — which are the equivalent of cents for Bitcoin. Depending on the current Bitcoin value, this means you can start investing for as little as $50. To make your purchase, you can either press the buy button or complete a purchase order. The latter can be customized so you can set it to buy Bitcoin immediately or when it hits a specific price.
Now is the best time to dive into cryptocurrency given its international recognition. Aside from major companies like Microsoft, Starbucks, and Home Depot, even governments are embracing Bitcoin. In a landmark move for Bitcoin and other altcoins, Cuba’s central bank and Russian president Vladimir Putin have formally recognized cryptocurrency. Aside from this, Bitcoin has become legal tender in El Salvador and a form of payroll in New Zealand. In the United States, the Securities and Exchange Commission (SEC) recently approved the world’s first BTC exchange-traded fund (ETF). All this has spurred crypto growth and proven naysayers wrong.
That said, remember that Bitcoin and other digital tokens are speculative and volatile assets. While it’s time to add them to your investment portfolio, those wondering where to invest during the US recession may want to diversify with more tangible assets. These include real estate and precious metals.
Renotoo has been a part of the journey ever since Xtrapoint started. As a strong learner and passionate writer, she contributes her editing skills for the news agency. She also jots down intellectual pieces from health category.