If you want to start trading BTC but don’t know how, this post is for you. By the time you finish reading this article, you will be able to learn all the basics and start trading effectively. We will talk about how Bitcoin mining works and what it means for Bitcoin traders, ways to trade it and tips to avoid losing money in the market. 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 by a group of anonymous developers back in 2009 during the economic crisis. The idea behind Bitcoin was to build a global monetary system outside the control of governments and banks.
How to 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 with another cryptocurrency. In most cases, there are different fees for each of these options. Bitstamp and Coinbase have low fees and a good reputation, so we’ll use them as examples for the sections below. We will also use BTC as the 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 them at Bitstamp.com, Coinbase, Kraken and ShapeShift. The best idea is to read their terms and conditions so you know the ins and outs of each service. Most of them also have a verification process, usually with proof of identity, address and phone number; some even require proof of residence or other documents.
Connect your Exchange to Payment Option
To facilitate buying BTC, you need to connect your exchange account to the payment option. This is usually done through an API or other form of integration. If you do not know how to do this, contact the support of your exchange service. This is usually simple and only takes a few minutes. This method allows you to deposit money into your exchange account and trade crypto to cryptocurrency, which we will discuss immediately below.
Many exchanges offer both fiat deposits and bank transfers. You can make a deposit through your bank’s website and start trading immediately. Depending on the payment method, you usually have to wait until the money is credited to your account. It may take a few days to associate your exchange with your payment method.
Place an order
After completing the transaction, you are ready to order.
Place a buy order specifying the amount of BTC you want to buy and the price you think the price will increase in the future. Remember that when placing an order, Bitcoin is usually volatile and prices change rapidly. Orders are usually submitted for funding on Bitstamp, so there are no fees for placing them. However, there are fees for placing a limit order, which is what you pay when your order is filled. Usually, this fee is 0.3%, but sometimes it can be higher. For example, if the price of Bitcoin falls, it is better to sell BTC quickly to avoid losing money on high-paying orders.
Once you buy Bitcoin, it’s important to keep it safe. Bitcoin transactions are irreversible: if you lose your private key, you cannot get your money back. On the other hand, you can’t do anything about losing your BTC once your private key is stolen/hacked. It’s important to keep your cryptocurrency securely in a cold wallet, a wallet that allows you to keep it cold. A cold wallet is not connected to the internet, so it is more difficult for hackers to access it.
Many cryptocurrency services allow you to store BTC on their servers.
Hot wallets: If you hold your funds in an exchange, your funds are at risk if an exchange goes bust. In this case, you will lose all your cryptocurrency. If you keep funds in a hot wallet and it gets hacked, you only lose the amount of BTC on top of the current market price. It’s usually relatively small, and it’s not bad news if you lose a few thousand USD worth of cryptocurrency.
You can access hot wallets from any device. This is a good option if you want to use the same wallet on your computer and smartphone. If you have a lot of cryptocurrency in your hot wallet, it’s a great idea to set up 2-factor authentication to access your wallet.
Cold wallets: As mentioned earlier, a cold wallet is a wallet that is not connected to the internet. Your crypto is stored offline and on a hardware device that is not easy to access. Still, these are very difficult to steal because hackers need to access your wallet to steal your cryptocurrency. The best hardware wallets are Trezor and Ledger Nano S. You can store up to six cryptocurrencies on both devices, including BTC. Yes, it is possible.
If you want to know 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 because it will let you know how to trade cryptocurrency 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 described above is simple, safe and secure. It is easy to understand and can help you start your adventure in the world of BTC.