It is easy to invest in Bitcoin (BTCUSD) can seem complicated, however it's much simpler when you break it down into smaller steps. Trading or investing in Bitcoin is easy if you have an account at a third party or exchange. more secure storage practices are recommended.





There are a few things future Bitcoin investors need such as a cryptocurrency exchange account for personal identification should you be using the Know Your Customer (KYC) platform that has a secure connection the Internet, and a method of payment. It is also suggested that you have your own private wallet separate from your exchange account. Methods of payment that work with this path include bank accounts credit cards, debit cards, and credit cards. It is also possible to obtain bitcoin through ATMs that are specifically designed and through P2P exchanges.





KEY TAKEAWAYS



"The value and value that comes from Bitcoin comes from its adoption as a store of value, as well as a payment method, as well as its limited supply, and the decrease in inflation.


While it's nearly impossible to allow Bitcoin itself to be hacked but it's still possible for your exchange or wallet Account to fall victim to a hack. That's why using secure protection and storage measures are imperative.


You can also purchase bitcoin using mainstream services such as PayPal and Robinhood.


* One method to hold bitcoin indirectly is to invest in companies that have bitcoin on their balance and balance sheets.


Before You Buy Bitcoin


Security and privacy are the most important aspects for Bitcoin investors. Anyone who gets the private keys to a private address through the Bitcoin blockchain can sign off on transactions.1 Private keys must be kept in secret. Criminals may attempt to steal them once they know of your large amounts. You should be aware that anyone is able to observe the balance of the public address that you have. The downside to the public data is that an individual can create multiple public addresses themselves. Thus, they can distribute their wealth of Bitcoin among several addresses. An effective strategy is keeping large investments in public addresses that aren't directly linked to addresses which are used for transactions.





Anyone can look up a history of transactions performed on blockchain--even you. Even though transactions are recorded publically in the blockchain, individuals' personal details isn't. While on the Bitcoin blockchain the only public key appears alongside an transaction. This makes transactions secure but not secure. In that sense, Bitcoin payments are more transparent, and trackable in comparison to cash, as all of them are open for public examination, unlike private transactions. However, Bitcoin transactions also include the element of anonymity built inside their code. It is extremely difficult to track the transaction parties--i.e., the party who sent and received bitcoin--through the blockchain used by the cryptocurrency.





International researchers as well as the FBI have claimed they can trace transactions that are made on the Bitcoin blockchain to the users' other online accounts, which includes their digital wallets.2 In the case of somebody creates a Coinbase account Coinbase users must present their identification.3 In the future, when that buyer buys bitcoin, that is linked to their identity. If they decide to transfer it to another wallet, it will remain traced back to the Coinbase transaction which is linked to the identity of the account holder. This should not be a concern for the majority of investors because Bitcoin remains legal throughout the U.S. and most other developed nations.





Be sure to look up whether there are any legal or regulatory and tax implications of buying and selling bitcoins where you live before transacting.


Buying Bitcoin








We have simplified the steps of buying bitcoin below. Remember that you still need to do your homework and make the best choice for yourself based on the specifics of your situation.





Step 1: Choose a crypto-trading service or a venue


The first step for buying bitcoin is choosing a cryptocurrency trading service or a venue. A variety of popular services and venues to buy cryptocurrencies include exchanges, payment solutions, and brokerages. Out of all these, crypto exchanges are a good option because they offer a breadth of features and more exchanges using cryptocurrencies.





Joining a cryptocurrency exchange can allow you to buy, sell, and hold crypto. It is generally recommended to select an exchange that allows its users to withdraw crypto to their own personal online wallets for safekeeping. If you're looking to trade Bitcoin or other cryptocurrencies, the feature might not matter.





There are a variety of exchanges for cryptocurrency. Because the Bitcoin ethos is about autonomy and decentralization, certain exchanges let users remain anonymous and don't require users to enter personal information. They operate independently and are often decentralized that is, they don't have a central source of control.





Though these systems can be used for nefarious purposes, they can serve as a service to the vast majority of people without banking. For certain kinds of people--refugees and those living in countries where there isn't much infrastructure for government credit or banking--anonymous exchanges can help bring them into mainstream economy.





As of now, all of the top exchanges in the world are controlled by a central authority and demand users submit identifying documentation. To be specific, within the United States, these exchanges include Coinbase, Kraken, Gemini, FTX, and Binance.US, to name a few. These exchanges have seen significant growth in terms of features they provide.





The crypto universe has grown rapidly over the last decade, with many new tokens which are competing with dollars from investors. Except for passive income crypto 2021 and a handful of other well-known coins such as Ethereum, not all of these tokens can be found on all exchanges. Each exchange has its own set of standards to decide if it's appropriate to include or not allow trading of specific tokens.





Coinbase, Kraken, and Gemini offer Bitcoin along with a growing selection of altcoins. These three are possibly ones of the easiest ways to get into crypto within the entire crypto industry. Binance is designed for the more advanced trader, and offers more sophisticated trading options and more alternative cryptocurrency options. FTX is a fast-growing digital trading platform that has earned itself an investment of multibillion dollars, offers limited number of altcoins to U.S. investors.4 However, investors from outside that U.S. have a greater choice of cryptocurrency options on the platform.





The most important thing to remember when creating a cryptocurrency exchange account is it is to utilize secure Internet procedures. This means two-factor authentication, as well as one long, unique password with a mix of lowercase letters, capitalized or lowercase letters or special characters as well as numbers.





El Salvador made Bitcoin legal tender on September 7, 2021. It was the very first country to do so.5 The cryptocurrency is used as currency for any transaction that the company can accept it. A U.S. dollar continues to be the currency of El Salvador.


Step 2: Connnect your exchange with any payment option


After you have chosen an exchange, you'll have to collect your personal documents. It is contingent on the exchange. they could include photos of a driver's permit or Social Security card, as along with information regarding your employer and source of money. The details you'll need may depend on where you reside and the laws within it. The process is almost the same as setting up a typical brokerage account.





After the exchange has verified your identity, you will be asked to connect to a payment method. In the majority of exchanges, you can connect your bank account to the exchange directly, or connect a debit or credit card. Even though you can use a credit card to purchase cryptocurrency, it is not advisable because fluctuation in the price of cryptocurrency can raise the price of buying the coin.





Bitcoin is legal in the United States, but some banks may deny or restrict deposits to crypto-related sites or exchanges.6 It's a good idea to check to confirm that your bank allows deposits at your preferred exchange.





There are varying fees for deposits through bank accounts in the form of debit, credit, or card. It is crucial to investigate the costs that come with the various payment options to assist you to decide on a payment option or choose which payment option works best for you.





Exchanges may also charge fees for each transaction. These charges could be an unrestricted fee (if the amount traded is relatively small) or an % of the trading amount. Credit cards incur a processing fee in addition to transaction fees.





Step 3. Place an order


It is possible to purchase bitcoin (or other cryptocurrencies) after choosing an exchange , and then connecting a payment option. In recent years cryptocurrency exchanges have slowly became more accepted. They have seen a significant increase in terms of their liquidity and their number of features. The operations of bitcoin exchanges are similar to the change in the perception about cryptocurrencies. A sector that was previously thought of as a scam or with unreliable methods is slowly evolving into an actual one that is attracting the attention of the top players that are in the business of financial transactions.





In the last few years, cryptocurrency exchanges have become so popular that they offer the same feature set as their counterparts in stock brokerage. Crypto exchanges now offer many different kinds of orders and options to invest. Nearly all exchanges allow limits and market orders. Some also offer stop-loss-orders. Of the exchanges listed above, Kraken offers the most different types of orders. Kraken supports market, limit, stoploss stop-limit as well as take-profit and limit orders.7





Alongside a wide range of order types, exchanges provide the option of setting up regular investments, which allows clients access to a daily cost average of their investments of choice. Coinbase is one example. It lets users create recurring purchases for each week, day or month.8





Step 4: Secure storage


The cryptocurrency and bitcoin wallets can be storage options for digital assets more safely. Being able to store your cryptocurrency away from the exchange and within the private wallet of your wallet ensures only you control the private key to your account. It also gives you the ability to protect your funds out of an exchange. This will help you avoid the risk of your account being hacked and the loss of your funds.





While the majority of exchanges have wallets for their users, security is not their primary business. We do not generally recommend the use of an exchange wallet for significant or long-term investments in cryptocurrency.





Certain wallets come with more options than other wallets. Some are Bitcoin only, and some can be used to store many altcoins. Some wallets even offer the ability to exchange one token with another.





When it comes to choosing a Bitcoin wallet, you have several choices. First, you'll be required to know about crypto wallets is the idea of hot wallets (online wallets) and cold wallets (paper or physical wallets).





Hot wallets


They are known as hot wallets. Hot accounts run on devices connected to the internet, such as phones, computers or tablets. This can create vulnerability because these wallets store the private keys to your coins on these devices with Internet connectivity. While a wallet that is hot can prove extremely beneficial in the way that it allows you to access and conduct transactions on your funds quickly, the storage of your private key via an Internet-connected device could make it more susceptible to a attack.





It might sound like a lot of work, but hot wallet holders who haven't set up enough protection run the risk losing money due to theft. This is a frequent instance, and it can happen in a number of ways. One example is boasting in a public forum such as Reddit about the amount of bitcoins you've got, even though the wallet has little to no security , and storing it in a hot vault would certainly not be safe. The fact is, these wallets may be secured as when precautions are made. Strong security measures, such as two-factor authentication and secure Internet browsing should be considered as minimum standards.





These wallets can be used for small amounts of cryptocurrency or cryptocurrency that you're engaged in trading on an exchange. You could think of a hot wallet to a checking account. According to conventional wisdom, you should to store only money used for spending in a checking or savings account while the majority of your savings is in savings account or other investments accounts. The same could be said with hot accounts. Hot wallets comprise mobile, desktop, web and exchange account custody wallets.





As we have mentioned before, exchange wallets are custodial accounts offered by exchange. The owner of this of this type does not hold the holder on the personal key for the cryptocurrency held within the wallet. If an incident should occur that the exchange breached or your account is compromised, you'd have to forfeit the funds you have invested. The phrase "not your key, not your coin" is frequently repeated on cryptocurrency forums and communities.





Cold wallets


The most basic description of a cold or cold-weather wallet is that it isn't linked to the Internet and thus has greater risk of being vulnerable. These wallets are also described as offline wallets or even hardware wallets. They are wallets that store a person's private key on something that isn't connected the internet and can come with software that operates in parallel so that the user is able to see their entire portfolio without putting private key in danger.





Perhaps the best way to keep your money offline is with a paper wallet. Paper wallets are wallet that can be created off of certain websites. It generates both private and public keys that you print on a piece of paper. The ability to access bitcoin and other digital currencies is only possible if you own the piece of paper with the private key. Many people laminate these cash wallets with paper and store them in safe deposit boxes at their banks or even in a safe in their home. These wallets are meant for security and long-term investment because you can't quickly sell or trade bitcoin stored on this type of wallet.





A more popular kind of cold type of wallet is the hardware. Hardware wallets are typically a USB drive that can store a user's private keys securely offline. The benefits of such wallets are substantial against hot wallets due to the fact that they are unaffected by viruses that can infect a computer. With hardware wallets, private keys do not come into contact with your network-connected computer or software that could be vulnerable. They are also generally open source, allowing the community to judge their security using codes audits rather than a firm declaring that they're acceptable to make use of.





The cold wallet is the best and most secure method of storing your bitcoin or other cryptos. However, they require more technical expertise to setup.





An ideal way to set up your wallets is having three items An exchange account for buying and selling, a hot wallet to hold small to medium amounts of crypto that you plan to trade or sell and a cold hard-copy wallet that can store more substantial holdings to last for a long time.





How to Buy Bitcoin With PayPal


You can also purchase bitcoin via the payment processor PayPal Holdings, Inc. (PYPL). There are two ways to buy bitcoin through PayPal. The most efficient and convenient option is to purchase cryptocurrency by using your PayPal account, which is linked to a financial institution such as a deposit card or a bank account. The second option is to use the balance in an existing PayPal account to buy cryptocurrencies from a third-party company. This option is not much as user-friendly because few third-party websites allow users to buy bitcoin through their PayPal button.





Four cryptocurrencies--Bitcoin, Ethereum, Litecoin, and Bitcoin Cash--can be purchased directly through PayPal.9 With the exception of those who live in Hawaii, residents of all states can either use their existing PayPal accounts or set up new ones. You can also use the cryptocurrency you own to purchase products as well as services via"Checkout with Crypto" feature "Checkout With Crypto" feature.10





To set up a bitcoin account through PayPal The following information is required in order to set up a PayPal account: name; physical address and date of birth along with a tax identification number.11





It isn't possible to use a credit or debit card to buy Bitcoin through PayPal. In the course of purchasing, PayPal will display a price for the cryptocurrency. But , the price can be subject changing rapidly due the volatility of cryptocurrency markets. It is a good idea for you to check if you have more than the amount that you planned for the purchase in your account at the bank.





When you buy bitcoin direct from PayPal it earns you money off the crypto spread or the difference between Bitcoin's market price along with its currency exchange with USD. The company has a transaction cost for each transaction. These fees are contingent on the amount in dollars of the purchase. For instance there is a flat rate of $0.50 is per purchase between $100 and $200. After that, fees are proportional to the overall dollar amount. In this case, for instance, a cost of 2% of the entire amount is applied to purchases made with cryptos between $100 to $200.12





The disadvantage of buying cryptocurrency through PayPal is that you are not able to transfer the crypto out of the Payment processor's own platform. It is therefore not possible to transfer your purchased bitcoin through PayPal's bank account to any other crypto account, or your personal wallet.11





Another drawback of using PayPal is that very few marketplaces and online retailers allow using the processor in order to buy payment. eToro is among the few online brokers that allow for the usage of PayPal to buy bitcoin on its platform.13





How to Buy Bitcoin With a Credit Card


The procedure of purchasing bitcoin with credit cards is the same as to buy it using debit card or through the automated clearing house (ACH) transfer. You will need to enter your credit card details with the exchange or online trading company, and then you can authorize the purchase. However, generally speaking, it's not the best option to buy bitcoin using credit cards. There are several reasons.





First, certain exchanges are not able to allow bitcoin purchase using credit cards due to the associated processing fees as well as the risk of fraud. This can be for the benefit of consumers. This is because credit cards can charge additional fees to transactions. Therefore, in addition to paying transaction fees it will also leave you being charged processing fees which the exchange could pass on to you.





The second reason is that the purchases made using credit cards are expensive. Some credit card companies treat bitcoin purchases as cash advances and apply hefty fees as well as high interest rates on such advances. For instance, American Express and Chase both treat purchases of cryptocurrency to be cash advance payments. So, if you buy the equivalent of $100 in bitcoin using an American Express card, you will be charged 10% (current cash advance cost for the transactions) and an annual rate of 25%. In addition, the credit card provider also restricts you to $1,000 worth of bitcoin purchases per month.14





A more indirect way of purchasing bitcoin using a credit/debit card is to apply for the Bitcoin rewards credit card. These cards function similar to your typical rewards credit credit card except they can offer rewards in type of bitcoin. They invest the cash back that is earned from purchases into Bitcoin. One illustration of an Bitcoin cards that reward you is called BlockFi Bitcoin Rewards Credit Card.15 Beware, however, that the annual charges for these cards might be high and may also be added charges for the conversion from fiat currency to crypto.





Even though exchanges such as Coinbase as well as Binance remain one of the most well-known ways to purchase Bitcoin However, they're not the sole option.


Alternative Ways to Buy Bitcoin


Bitcoin ATMs


Bitcoin ATMs act like in-person bitcoin exchanges. You can use cash inside a machine and then use it to purchase bitcoin. This bitcoin is then moved to online accounts of users. Bitcoin ATMs have been increasingly well-known in recent years. Retail huge Walmart Inc. (WMT) is trying out a pilot program that offers customers the option to purchase bitcoin. Coin ATM Radar can help locate the closest ATMs.





However ATMs can be expensive option. There are two expenses associated with ATM bitcoin purchases they charge a cost for the purchase as well as the conversion fee when converting Bitcoin into fiat currency. The fees for both are quite steep relative to the other options. For instance, the world standard purchase price at Bitcoin ATMs is 8.4% (of the purchase amount) and 5.4% for sales at ATMs.16





Be aware that Bitcoin ATMs are increasingly required to have government-issued IDs by the start of 2020.


P2P exchanges


Instead of decentralized exchanges, that offer buyers and sellers a secure way to communicate and facilitate all aspects of the transaction, there exist peer-to-peer (P2P) exchange services with a greater direct connection between users. LocalBitcoins is one example of such an exchange. After signing up, users can post requests to purchase or sell bitcoin. This includes details regarding payment methods as well as prices. Customers can then browse through lists of sell and buy offers before selecting the traders with whom they wish to do business.





LocalBitcoins aids in some aspects of the trade. While P2P exchanges cannot provide the same anonymity as decentralized exchanges, they give users the ability to shop around to find the best price. Most of these exchanges offer rating systems to ensure that users can assess potential partners for trade prior to doing business with them.





Mainstream brokerages


Few major brokerages provide the capability to trade and buy bitcoin because of the uncertainty regarding the regulation status of crypto currencies. Robinhood Markets, Inc. (HOOD) is an app loved by retail investors, is an exchange which offers the ability to trade in crypto. It charges no commission for cryptocurrency transactions and purchases . It also earns money from cash flow for orders, passing its trading volume onto different trading platforms, or brokerages.17





The absence of a commission charge can be a enticing option for beginners, but there are some disadvantages to this offer. Primarily, Robinhood does not have the number of features or the coins offered by some of the top crypto exchanges such as Coinbase. Robinhood has allowed trading on its platform with seven cryptocurrencies: Bitcoin, Bitcoin Cash, Ethereum, Bitcoin SV, Dogecoin, and Ethereum Classic.18 As a contrast, you can trade over 100 cryptocurrencies with Coinbase.19 The exchange also offers different types of orders to reduce risk and offset losses during trading.





The Robinhood platform does not offer an online wallet. If you're looking to buy crypto through Robinhood you'll need be prepared to pay additional fees to an online wallet service.





Bitcoin and other cryptocurrency investments are NOT protected by insurance from Insurance companies such as the Securities Investor Protection Corporation (SIPC). In the case of regular brokerages and brokerages, the agency protects against the loss of cash or securities brokerage accounts that contain up to $500,000and a $250,000 cash limit.20 This isn't accessible to clients of cryptocurrency exchanges. The cryptocurrency exchanges such as Coinbase have insurance for crime to protect their infrastructure against attacks. But this insurance will not guarantee protection for individual customers against password theft.21


How to Sell Bitcoin


You can sell bitcoin in the same locations where you bought the cryptocurrency for instance, cryptocurrency exchanges and P2P platforms. Usually, the process for selling bitcoin on these platforms is similar to the process of purchasing it.





For instance, you might only have to click on a button, and then specify the type of order (i.e. that you must specify whether the cryptocurrency is to be sold immediately at the best price or it should be sold in order to keep losses to a minimum) to complete the sale. Depending on the market composition and the level of demand at the site and on the market composition, the prices for Bitcoin can vary. The example is that exchanges in South Korea traded bitcoin at the so-called kimchi rate during the upswing in Bitcoin's prices back in 2018.





Exchanges for cryptocurrency charge a percentage of the total amount sold as fees. For example, Coinbase charges 2.49% percent of total transaction amounts as fees.22





Exchanges typically have daily and monthly withdrawal limitations. Therefore, the proceeds from an extensive sale may not be accessible immediately to the buyer. There are no limitations on the amount of cryptocurrency that you can sell, however.





What Are the Steps for Purchasing Bitcoin?


The process of purchasing bitcoin is comprised of 4 steps: deciding on a venue or exchange to place your order and selecting a payment method as well as ensuring safe storage for the cryptocurrency you purchased. In the case of the venue selected in the initial step, there are additional steps needed in the procedure. For instance, if you choose to purchase the cryptocurrency through Robinhood you could need to be aware of additional costs associated with an online wallet and custody of your bitcoin since it doesn't offer these services.





What Are the Most Popular Venues for Buying Bitcoin?


The most popular venues for buying bitcoins include cryptocurrency exchanges brokering companies (crypto and standard) and payment providers like PayPal. There is also the option of buying Bitcoin from P2P exchanges. To acquire indirect ownership of bitcoin you may purchase shares of companies that hold the cryptocurrency in their bilan sheets, including Tesla, Inc. (TSLA) or MicroStrategy Incorporated (MSTR).2324





How Much Should I Expect to Pay to Purchase Bitcoin?


Typically, the cost for buying bitcoin usually includes a transaction fee plus the cost for converting a traditional currency (generally dollars) to bitcoin. (Cryptocurrency exchanges and payment service providers make money from this spread.) The price per trade is a function of the amount in dollars of the trade. A greater amount of trades will cost more. The total cost for purchase depends on the features available by the vendor. For example, Robinhood does not currently offer an online wallet for storing bitcoin. So, you'll need to budget for online wallet costs for your purchase.





Besides Cryptocurrency Exchanges, Where Else Can I Buy Bitcoin?


You can also buy bitcoin at the following locations:


* Through Bitcoin ATMs


By using online payment services like PayPal


* At mainstream brokerages like Robinhood





Is My Bitcoin Purchase Protected by SIPC?


No, your bitcoin transaction is not protected by SIPC.20 In certain exchanges, like Coinbase Bitcoin, the balances of the fiat currency in individual accounts are insured by the FDIC in the amount of $250,000 per account.21





The Bottom Line


The process of purchasing bitcoin is somewhat more complicated in comparison to the purchase of traditional equity or stocks. This is mainly because the ecosystem and infrastructure for bitcoin isn't as well developed as those used for trading in the mainstream.





The bitcoin purchase process is made up in four steps: choosing a venue or service to complete making the transaction, connecting with a payment option, placing an order, then ensuring that your purchase is safe in cryptocurrency. Each step involves a lot of research and careful study of the pros & disadvantages of each method. You can also purchase bitcoin through Bitcoin ATMs or by using payment companies like PayPal and mainstream brokerages like Robinhood.