How to Invest in Bitcoin: A Simple 5-Step Guide 2022

Bitcoin

Understanding Bitcoin

Bitcoin and cryptocurrencies have become popular in recent years. Bitcoin is by far the most popular crypto among investors. There is a lot of debate around BTC and all other cryptos – some people argue that it’s worth investing in, while others argue that it’s a risky investment and doesn’t generate significant profits.

Before investing in Bitcoin, it’s good you get some background information about the crypto and how it works. You must understand the crypto’s place and movements in the market.

Just recently, BTC’s value increased by more than 763% in one year. With this margin, Bitcoin outpaced traditional currencies in the stock market. More people seem to be investing in Bitcoin. It’s a decentralized global currency, and it’s accepted in many countries.

Elon Musk has been a significant contributor to the BTC market. He recently announced that his automotive brand would purchase $1.5 billion in BTC and also start accepting cryptocurrencies for payments in the future.

Other Financial technology (FinTech) companies such as PayPal and Square announced their intentions to support cryptocurrencies in future. With such announcements and more people investing in Bitcoin, this crypto seems to be picking momentum.

Recent developments have majorly contributed to Bitcoin’s rise in value. So, what is Bitcoin, and how can you invest in it? In this blog post, I will answer all these questions, advising whether investing in Bitcoin is worth your time.

What is Bitcoin?

Bitcoin is a cryptocurrency created by programmers by the name “Satoshi Nakamoto”. It’s one of the most popular and widely used cryptos worldwide. Its virtual coins are BTC, and you can use them in the cryptocurrency system online instead of using physical cash.

The coins don’t have intrinsic value. The crypto was created to solve several flaws. First, it was created to prevent crypto coin duplication.

Making your data is very easy, and people can easily duplicate what’s online. Cryptocurrency trading would be impossible if people could replicate coins because they could create unlimited coins.

How does Bitcoin Work?

All Bitcoin transactions are usually recorded on a public ledger known as the blockchain. However, the details of customers using it aren’t shared, so users remain anonymous. Initially, providing services anonymously boosted the crypto’s appeal for use on the dark web.

Now more cryptocurrencies have been created, and they offer more privacy. Despite this, Bitcoin remains the number 1 cryptocurrency.

What Do I Need to Invest in Bitcoin?

You don’t need a lot to start your investment journey with Bitcoin. You need the following:

  • Personal identification documents
  • Bank account information
  • A secure and robust internet connection

Always remember that when you’re dealing with a stockbroker, you don’t need to give up your personal or financial information.

How to Invest in Bitcoin 5-Step Guide

Have you given it a thought and decided you want to start investing in Bitcoin? Here I will give you a step-by-step guide on how to start your Bitcoin investment:

  • Join a trustworthy Bitcoin Exchange
  • Get your Bitcoin Wallet
  • Connect the wallet to your bank account
  • Start Placing Bitcoin orders
  • Manage the Bitcoin investments

Now that you have an overview of the steps involved let’s dig deep into the details of each step.

1. Join a Trustworthy Bitcoin Exchange

The starting point will be determining whether you would like to buy Bitcoins. Investors use cryptocurrency exchanges, and several exchanges facilitate BTC transactions. Think of these exchanges as middlemen of crypto investing.

Once you’ve decided you want to buy Bitcoins for an exchange, it’s time you pick the one you want to buy from. There are several options, including Coinbase, Binance, Bitfinex, Kraken and Gemini.

2. Get your Bitcoin Wallet

Whenever you purchase crypto coins, they are stored in a wallet; therefore, you’ll need your own wallet after purchasing Bitcoins. There are two types of BTC wallets: a “hot wallet” and a “cold wallet”.

A hot wallet simply means that the wallet is operated by your crypto exchange or by the provider. Most exchange platforms provide customers with a hot wallet after opening an account. Some hot wallets worth mentioning include Electrum and Mycelium.

A cold wallet is actual hardware that is used to store coins. It’s a portable device that looks like a flash drive. The popular cold wallets are Trezor and Ledger Nano.

3. Connecting the Wallet to your Bank Account

Now that you already have a wallet, the next step is linking it to a bank account. This is an essential step because it’s the only way you’ll be able to buy and sell crypto coins.

Alternatively, you can link your bank account to your cryptocurrency exchange account.

4. Start Placing Bitcoin Orders

Once you’ve completed the steps explained above, it’s time to purchase Bitcoins. If you pick a good cryptocurrency exchange, it will have everything you need to purchase. Some of the coins cost thousands of dollars however; exchange platforms allow you to buy fractions of a coin.

Making a Bitcoin investment is very risky, and you should carefully determine how much you’re willing to lose. You should also review your investment strategy before making any purchases.

5. Manage the Bitcoin Investment

After purchasing your Bitcoin, you can use it to do the following:

  • Make online transactions on sites that accept crypto payments
  • Hold your BITcoins for a long period, and wait to see them appreciate in value
  • Carry out day trading – this is buying and selling your coins with other investors on cryptocurrency exchanges. 
  • You can play online casinos by using bitcoins. Visit here the best and trustworthy Bitcoin casino sites. 

How Much Should You Start With?

Well, as you start investing in any crypto, it’s good to shop around for a crypto platform that has better offers. I advise you to avoid allocating more than 10% of your investment to buying crypto coins.

It’s also good to note that cryptos are very volatile and can take a toll on someone’s pocket. Therefore, as you invest in Bitcoin, ensure you risk what you can afford to lose.

The views expressed in this article are those of the authors and do not necessarily reflect the views or policies of The World Financial Review.