If you want to start trading BTC but don’t know how to do it, this post is for you. When you finish reading this article, you will be able to learn all the basics and start trading efficiently. We will talk about how bitcoin mining works and what it means for bitcoin traders, how it can be traded and tips on how not to lose money in the market. It is essential reading for anyone starting out.
What is Bitcoin?
Bitcoin is a cryptocurrency, also known as digital currency or crypto. It is money that only exists electronically in the form of cryptographic codes. Bitcoin was invented back in 2009 by an anonymous group of developers during the economic meltdown. The idea behind Bitcoin was to build a global monetary system outside the control of governments and banks.
How do I start buying BTC?
Choose a crypto trading service or venue
There are many different cryptocurrency trading platforms, also called exchanges, where you can start trading. There are usually two ways to buy bitcoin: with fiat money or another cryptocurrency. In most cases, there are different fees for each of these options. Bitstamp and Coinbase have meager fees and good reputations, so we’ll use them as examples for the following sections. We will also use BTC as a currency to buy bitcoin as it is the most common cryptocurrency.
The easiest way to buy BTC with fiat money is to go to a bitcoin exchange. You can find many of these on Bitstamp.com, Coinbase, Kraken, and ShapeShift. It is best to read the terms and conditions so that you know the specifics of each service. Most of them also have a verification process that usually includes proof of identity, address and phone number; some even require proof of residency or other documentation.
Connect your exchange to a payment option
To make buying BTC easier, you need to connect your exchange account to a payment option. This is usually done through an API or some other form of integration. If you don’t know how to do it, ask the support of your exchange service. It’s usually uncomplicated and only takes a few minutes. Using this method, you can deposit funds into your exchange account and instantly exchange crypto for crypto, which we will discuss below.
Many exchanges offer both fiat deposits and bank transfers. You can deposit through your bank’s website and start trading right away. Depending on the payment method, you usually have to wait for the money to appear in your account. Linking your exchange to a payment method may take a few days.
To order something
Once you are done with the transaction, you can place an order.
Enter a buy order by specifying the amount of BTC you want to buy and the price at which you think the price will rise in the future. Keep in mind that Bitcoin is usually volatile when you order, and prices change quickly. Orders are typically submitted to Bitstamp for funding, so there is no fee for placement. However, there are fees for placing a limited order, which is the fee you pay when your order fulfills you. Usually this fee is 0.3% but can sometimes be higher. For example, if the price of Bitcoin goes down, it is better to sell BTC quickly to avoid losing money on orders with a high fee.
Once you’ve bought bitcoin, it’s important to keep it safe. Bitcoin transactions are irreversible: you cannot take your funds back if you lose your private key. On the other hand, once your private key is stolen/hacked, there is nothing you can do about losing BTC. It is important that you keep your crypto safe in a wallet that allows for cold storage, a “cold wallet”. A cold wallet isn’t connected to the internet, so it’s harder for hackers to access.
Many cryptocurrency services allow you to store your BTC on their servers.
Hot Wallets: If you store your funds on an exchange, your funds are at risk if the exchange goes bankrupt. In this case you will lose all your cryptos. If you are storing funds in a hot wallet and it gets hacked, you will only lose the amount of BTC in addition to the current market price. It’s usually relatively small, and losing a few thousand USD worth of crypto isn’t bad news.
You can access hot wallets from any device. It’s a good option if you want to use the same wallet on your computer and smartphone. If you have a lot of crypto on your hot wallet, it’s a good idea to set up 2-factor authentication to access the wallet.
Cold wallets: As mentioned earlier, cold wallet is a wallet that is not connected to the internet. Your crypto is stored offline and on a hardware device that cannot be easily accessed. Again, these are very difficult to steal as hackers need to break into your hardware wallet to steal your crypto. The best hardware wallets are Trezor and Ledger Nano S. You can store up to six cryptocurrencies, including BTC, on both devices. Yes, it’s possible.
If you want to learn more about this topic, I recommend reading online wallet reviews and hardware wallet reviews before making your choice.
Buying Bitcoin is not complicated, but it does require some research and experience. Learning how to buy BTC is important as it will give you an understanding of how to trade crypto for crypto so you can start trading. The best option is to buy a small amount first. It is always better to start slow and get used to the trading process. The process outlined above is simple, safe and secure. It is easy to understand and can help you start your adventure in the BTC world.