Notes

How to Buy Bitcoin


Affording investments in Bitcoin (BTCUSD) could seem complicated, however it's easy to divide it up into smaller steps. When you invest or trade, Bitcoin does not require an account at a third party or an exchange, although other safe storage practices are advised.





There are many things hopeful Bitcoin investors require to have: a cryptocurrency exchange account along with personal identification documentation for those who use a Know Your Customer (KYC) platform, a secure connection to the Internet, and a method of payment. It is also suggested to have a personal wallet outside of the exchange account. The most reliable methods to pay using this approach include bank accounts, debit cards, and credit cards. There is also the option to receive bitcoin from ATMs with specialization or through P2P-based exchanges.





KEY TAKEAWAYS


* The value of Bitcoin is due to its adoption as a source of value and payment method, as well as its limited supply and declining inflation.


l h trading While it's virtually impossible for Bitcoin to be compromised however, it is still possible that your bank or exchange account to be compromised. This is why taking care of proper safeguards and storage is imperative.


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


One way to get bitcoin in indirect ways is to invest in companies with bitcoin in their balance reports.


Before You Buy Bitcoin


Security and privacy are vital aspects to Bitcoin investors. Anyone who gets the private key to a public account to the Bitcoin blockchain can be authorized to make transactions.1 Private keys should be kept private as criminals could attempt to take them away should they learn of massive amounts. Remember that anyone is able see the balance of a public address you use. The other side of this information being public is that you can create multiple public addresses for themselves. Therefore, they could distribute their wealth of Bitcoin among several addresses. A great strategy is to hold large investments at public addresses that aren't directly associated with those which are used for transactions.





Anyone can look up a history of transactions recorded on the blockchain--even you. Although transactions can be publicly recorded by the blockchain, the identification of individual information about the user isn't. While on the Bitcoin blockchain users only have their public key is visible next to each transaction. Thus, transactions are private however not completely in any way anonymous. In this way, Bitcoin operations are more transparent and traceable than cash due to the fact that all of them are available for public viewing, in contrast with private cash transactions. However, Bitcoin transactions also come with the element of anonymity built as part of their design. It is extremely difficult to identify the transacting parties--i.e., the recipient and the sender of bitcoin--through the blockchain used by the cryptocurrency.





Researchers from around the world and the FBI have claimed they can trace transactions that are made on the Bitcoin blockchain to users' other accounts online, which include their digital wallets.2 For example, when somebody creates a Coinbase account Coinbase they will need to supply their identification.3 If that person makes a purchase on Coinbase, it is linked to their identity. If they transfer the money to another wallet, it can nevertheless be traced back the Coinbase transaction that is tied to the account owner's identity. It shouldn't concern the majority of investors as Bitcoin can be legally used in the U.S. and most other advanced countries.





Be sure to look up whether there are any legal or regulatory, and tax laws for purchasing and selling bitcoins where you reside before you make any transactions.


Buying Bitcoin








We've laid out the steps to purchasing bitcoin in the following steps. Remember to research the options and make the best choice depending on your needs.





Step 1: Select a crypto trading service or venue


The first step for buying bitcoin is to select the right crypto trading service or a location. The most popular options for trading and venues for buying cryptocurrency include exchanges, payment services and brokerages. From these, cryptocurrency exchanges are the most efficient alternative because they have a array of features as well as more cryptocurrency options for trading.





Making an account with a cryptocurrency exchange will enable you to purchase, sell and hold crypto. It is usually best to use an exchange that lets its customers withdraw crypto to their own personal online account for safekeeping. In the case of those wanting to trade Bitcoin and other cryptocurrencies this feature might not be relevant.





There are various kinds of exchanges for cryptocurrency. Because the Bitcoin philosophy is based on individual sovereignty and decentralization certain exchanges let users remain anonymous and don't require users to fill in their personal details. These exchanges operate on their own and are generally decentralized so they don't have a central point of control.





Although such systems are often used to fulfill harmful purposes, they also provide services to the majority of the world's population that is not banking. Certain categories of people -- refugees and those living in countries that have no infrastructure for credit from the government or banking--anonymous exchanges may help integrate them into the mainstream economy.





However, at present, most of the popular exchanges do not decentralized , and they follow regulations that require users to submit identifying documentation. The United States, these exchanges comprise Coinbase, Kraken, Gemini, FTX, and Binance.US There are many others to mention. They have also grown in terms of features they offer.





The cryptocurrency universe has grown rapidly in the last 10 years with numerous new tokens seeking investor dollars. With the exception of Bitcoin and certain prominent coins such as Ethereum there are a few exceptions to the fact that not all the tokens listed are on all exchanges. Each exchange has different criteria in order to decide whether it should include or deny trading specific tokens.





Coinbase, Kraken, and Gemini offer Bitcoin and a steady stream of altcoins. These three are the easiest on-ramps to crypto across the industry. It caters to an sophisticated marketer, and provides higher-quality trading features as well as more diverse altcoin choices. FTX is a rapidly growing crypto exchange that has an estimated value of more than a billion dollars, provides an exclusive number of altcoins for U.S. investors.4 However, traders outside within the U.S. have a greater variety of coins available on its platform.





One of the most important things to remember when setting up your cryptocurrency exchange account is to follow safe Internet methods. It is recommended to use two-factor authentication. having a unique and long password that comprises a variety lowercase lettersand capitalized ones as well as special characters and numbers.





El Salvador made Bitcoin legal tender on September 7, 2021. It was the first country to do so.5 Bitcoin is able to serve as currency for any transaction in which a company is willing to accept it. The U.S. dollar continues to be El Salvador's principal currency.


Step 2. connect your account to your payment option


If you've chosen the exchange option, you'll require your personal documents. Dependent on the exchange, you may need to include images from a driver's license and/or Social Security card, as along with information regarding your employer and the source of funds. The information you need will vary depending on the area your home is located in and regulations within it. The process is similar to creating a typical brokerage account.





Once the exchange has confirmed your identity, you will be required to connect with a payment option. Most exchanges can connect your bank account with a single click or you can connect a debit or credit card. Although you can utilize a credit card to buy cryptocurrency, it is unwise because the volatility of cryptocurrency prices could increase the price of buying coins.





Bitcoin has been legalized in the United States, but some banks might be suspicious or prevent deposits to crypto related sites or exchanges.6 It's recommended to verify whether your bank allows deposits at the exchange you choose.





There are different charges for transactions made with a banking account or debit card. You should research the costs that come with each payment option in order to choose an exchange or to select the payment method that works best for you.





Exchanges may also charge fees for each transaction. These charges can be in the form of a flat charge (if the trading value is too low) or some percentage of the trading amount. Credit cards incur the processing fee as well as transaction costs.





Step 3. Make an order


It is possible to purchase bitcoin (or other cryptocurrencies) after selecting an exchange as well as connecting to a payment method. In the past few years bitcoin exchanges have steadily became more accepted. They have grown significantly in terms of liquidity and their breadth of features. The operational changes of cryptocurrency exchanges are in line with the shift in how people view cryptocurrencies. A business that was seen as a fraud or with unreliable practice is gradually evolving into an authentic one, which has attracted the attention of the top players in the financial services industry.





Nowadays, cryptocurrency exchanges' have reached a stage where they have nearly the same feature set as their stock brokerage counterparts. The cryptocurrency exchanges of today provide various types of orders as well as ways to invest. The majority of crypto exchanges offer limits and market orders. Some even have stop-loss or stop-loss orders. Of the exchanges listed above, Kraken offers the most order types. Kraken can accommodate market, limit, stoploss or stop-limit takes-profit, take-profit and limit orders.7





Apart from offering a variety of kinds of orders, exchanges offer options to establish ongoing investments, allowing investors the option of incorporating a dollar-cost median into their preferred investment. Coinbase, for example, allows users to set up recurring purchases for each week, day or month.8





Step 4: Safe storage


In addition, bitcoin and cryptocurrency wallets provide an excellent way to store your digital assets in a more secure way. The fact that your cryptocurrency is not in the exchange , and instead in your personal wallet guarantees that only you hold the secret key to your cash. Also, it gives you option to save your funds in a safe place away from exchanges, and avoid the risk of your exchange getting hacked and losing your funds.





While most exchanges provide wallets for their users, security isn't their main business. We generally don't recommend using an exchange-based wallet for huge or long-term crypto holdings.





Some wallets have more features than others. Some are Bitcoin only, while others offer the ability to store multiple altcoins. Some wallets are also equipped with the possibility of swapping one token for another.





When it comes time to choose the right Bitcoin wallet, there are a number of options. The first thing you will have to be aware of about crypto wallets is the concept of hot wallets (online wallets) and cold wallets (paper or physical wallets).





Hot wallets


The online wallets can also be referred to under the term hot wallets. Hot wallets are wallets that run on devices that are connected to the Internet, such as phones, computers or tablets. They can be vulnerable because these wallets store the secret keys to your currency using these devices that are connected to the Internet. While a wallet that is hot can prove extremely beneficial in the way you are able 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 hack.





It might sound like a lot of work and a bit naive, but wallets who do not have adequate security have the possibility of the loss of funds due to theft. This is not an infrequent occasion, and could be triggered in many ways. For example, you could boast on a forum like Reddit about how much bitcoin you've got while there is little or no security and keeping it in a wallet that is hot would not be sensible. It is true that these wallets can be made secure so you take the proper precautions. Secure credentials, two-factor authentication, and secure Internet browsing should be considered the minimum standards.





These wallets are perfect when you have a small amount of cryptocurrency as well as cryptocurrency that you are actively trading on an exchange. A hot wallet to a checking account. According to conventional wisdom, you should that you should keep your money only for spending in a checking or savings account while the majority of your savings is in savings accounts or other investment accounts. This is also true in the case of wallets that are hot. Hot wallets include mobile, desktop, web, and exchange accounts custody wallets.





As was mentioned earlier, exchange wallets are custodial accounts offered by exchange. The user of this wallet of this type does not hold the owner of the key private for the cryptocurrency which is stored within the wallet. In the event that an incident would happen where the exchange gets hacker-proof or your account is compromised, you'd end up losing your funds. The phrase "not your key, not your coin" is frequently repeated within cryptocurrency forums and communities.





Cold wallets


The simplest description for cold wallets is that it isn't tied to Internet and thus has greater risk of being vulnerable. They can also be described as offline wallets or even hardware wallets. They keep a user's private key on something but isn't connected the internet. These wallets can be fitted with software that works in parallel so that users can see their entire portfolio without putting private key at risk.





Perhaps the most secure method for storing cryptocurrency offline is via a paper wallet. A paper wallet is a wallet that can be created using certain websites. Then, it generates private and public keys which you print on paper. Access to cryptocurrency from these addresses is only possible when you possess the piece of paper that has the private key. A lot of people laminate their papers wallets and place them in safe storage boxes at the bank or even in a safe at home. They are intended for higher security and longer-term investments since you cannot quickly sell or trade bitcoin stored such a way.





The most common kind of cold wallet is one that is a physical wallet. Hardware wallets are typically a USB drive that holds key information of the user offline. They offer a significant advantage over hot wallets in that they are unaffected by viruses that can infect one's computer. With hardware wallets, your private keys don't come in contact with your network-connected computer or other software that is potentially vulnerable. The devices are usually open source, allowing users to assess their security via inspections of their code rather than the firm stating that they're suitable for use.





Cold-wallets are among the most secure method to store your bitcoin or other cryptos. But they require more technical understanding to set up.





An ideal way to set up your wallets is by having three things one of which is an exchange bank account for trading and buying with a hot or hot wallet that will store small or moderate amounts of cryptocurrency that you intend to trade or sell, and a cold hardware wallet to store larger holdings to last for a long time.





How to Buy Bitcoin With PayPal


Bitcoin can also be purchased through the payment processor PayPal Holdings, Inc. (PYPL). There are two ways to purchase bitcoin using PayPal. The first and most convenient option is to purchase cryptocurrency with your PayPal account, which is linked to a payment mechanism, such as a checking account with a debit or credit card. Another option is to utilize the balance in account balances in your PayPal account to purchase cryptocurrencies via a third-party supplier. This isn't nearly as effective as the first since a small percentage of third-party websites allow users to purchase bitcoin via by clicking the 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. It is also possible to use the cryptocurrency you own to purchase products or services by using PayPal's "Checkout With Crypto" feature.10





To set up a bitcoin account through PayPal it is necessary to provide the following details is needed for registration: name, physical address as well as date of birth the tax identification number.11





It is not possible to use a credit card to buy Bitcoin using PayPal. While you are buying the Bitcoin, PayPal will display a price for the cryptocurrency. However, that price is susceptible changing rapidly due the fluctuation of markets for cryptocurrency. It's a good idea to make sure you have greater than the price you budgeted for the purchase in your savings account.





If you buy bitcoin directly from PayPal it earns you money out of the spread in crypto, or the differences between Bitcoin's value along with its currency exchange with USD. PayPal also charges a transaction cost for each transaction. These fees are contingent on the value of the purchase. For instance, a flat fee of $0.50 is charged for purchases between $100 to $200. Following that, the cost is part of the overall dollar amount. As an example, a percentage of 2% of the entire amount is payable for purchases of crypto between $100 and $200.12





A disadvantage to buying cryptocurrency via PayPal is that it is not possible to transfer the currency outside the transaction processor's network. So, it's not possible in order to transfer your Bitcoin purchase from PayPal's account to an outside crypto wallet or your personal wallet.11





The other disadvantage of using PayPal is the fact that very few trader and exchanges accept using the processor for payments. eToro is one of the very only a few online sellers that allow users to use PayPal to buy bitcoin on its platform.13





How to Buy Bitcoin With a Credit Card


The process of buying bitcoin using credit cards follows the same procedure to buy it using debit cards as well as through automatic clearing houses (ACH) wire transfers. You'll need your credit/debit card details to the online trading or exchange firm and authorize the transaction. However, generally speaking, it's not a great option to buy bitcoin using credit cards. There are a couple of causes for this.





First, most exchanges will not allow Bitcoin purchase using credit cards due to the associated processing fees and the risk of committing fraud. This option could be in the best interests of customers. This is because credit card processing will charge additional fees to transactions. Thus, in addition to paying transaction fees and transaction fees, you'll also be charged with processing charges that the exchange might pass on to you.





The other reason is that purchase with credit cards can be costly. The credit card issuers regard bitcoin transactions as cash advances, and are able to charge large fees as well as interest rates for these advances. For example, American Express and Chase both view purchases of cryptocurrency like cash transactions. In other words, if one purchases $100 worth in bitcoin using the American Express card, you are required to pay an amount equal to $10 (current cash advance cost for the transactions) and an annual percentage cost of 25%. What's more, the credit card firm also limits you to making $1,000 worth of bitcoin purchases per month.14





Another method to purchase bitcoin with a credit or debit card is to use an Bitcoin reward credit card. These cards function as a typical rewards credit credit card except they grant rewards in way of bitcoin. In other words, they convert the cash back that is earned from purchases into Bitcoin. One illustration of a Bitcoin points card for rewards is the BlockFi Bitcoin Rewards Credit Card.15 Beware, however that the annual fees for these cards might be high and there could be additional costs associated with the transformation from fiat currency to crypto.





Although exchanges such Coinbase and Binance remain among the top methods to buy Bitcoin however they are not the only way.


Alternative Ways to Buy Bitcoin


Bitcoin ATMs


Bitcoin ATMs act like in-person bitcoin exchanges. Customers can simply insert money into a machine and then use it to purchase bitcoin. This bitcoin is then moved to online accounts for users. Bitcoin ATMs have become more popular in recent years--even retail massive Walmart Inc. (WMT) is conducting a test program that will provide customers with the option of buying bitcoin. Coin ATM Radar can help to locate the closest machines.






However ATMs can be expensive alternative. There are two expenses associated with ATM bitcoin transactions they charge a cost for the purchase as well as the cost to convert Bitcoin into fiat currency. Both charges are quite high in comparison to other options. For instance, worldwide, the average price of purchases that Bitcoin ATMs charge is 8.4% (of the amount of purchase) and 5.4% for sales at ATMs.16





Be aware, however, that Bitcoin ATMs have increasingly required IDs issued by the government as of 2020.


Exchanges P2P


Unlike decentralized exchanges, which are able to match sellers and buyers anonymously and allow for all aspects of the transaction, there's peer-to-peer (P2P) exchange services which provide a direct communication between users. LocalBitcoins is one such exchange. Once they have created an account, users can make requests to buy and sell bitcoin, as well as details on payment methods and prices. They can then peruse listings of both buy and sell deals before selecting the traders with whom they want to trade.





LocalBitcoins helps with certain aspects of trading. Although P2P exchanges may not provide the same level of anonymity as decentralized exchanges do, they offer users an opportunity to shop around to find the best price. Most of these exchanges offer rating mechanisms so that their users have a way to evaluate potential trade partners before transacting.





Mainstream brokerages


Very few mainstream brokerages offer bitcoin trading and purchase capabilities due to the uncertainty over regulations for cryptocurrencies. Robinhood Markets, Inc. (HOOD), an app popular with retail investors, is an exchange that has crypto trading capabilities. It charges no commission for cryptocurrency transactions and purchase and makes profit from the payment of order flow, passing its trading volume onto other trading platforms or brokerages.17





The absence of commission fees may be an enticing prospect for novices, but there are a few downsides to the offer. For one, Robinhood lacks the broad range of features and coins that are offered by the most prominent crypto exchanges like Coinbase. Robinhood allowed trading on its platform for seven currencies: Bitcoin, Bitcoin Cash, Ethereum, Bitcoin SV, Dogecoin, and Ethereum Classic.18 But, in contrast, you can trade more than 100 cryptocurrencies through Coinbase.19 The exchange also provides several types of orders to limit risks and compensate for losses during trading.





The Robinhood platform also does not offer a hosted wallet. So, if you wish to purchase cryptocurrencies using Robinhood then you'll have to factor in additional costs to an online wallet service.





Bitcoin and other cryptocurrency investments are not covered by insurance under The Securities Investor Protection Corporation (SIPC). For regular brokerages, the corporation protects against loss of cash and securities account with brokerages that are up to $5000, with a $2500-dollar cash limit.20 This facility isn't available to customers of cryptocurrency exchanges. Coinbase is one of the cryptocurrency exchanges. Coinbase offer insurance against crime to safeguard their infrastructure from hacks. But that insurance does not guarantee the security of individual users against password theft.21


How to Sell Bitcoin


Bitcoin is sold on the same place where you purchased the cryptocurrency for instance, cryptocurrency exchanges and P2P platforms. Usually, the process for selling bitcoin through these platforms is similar to the process for purchasing it.





For example, you may only have to press one button and indicate an order type (i.e., whether the cryptocurrency must be sold immediately with the highest price available or if it is sold to minimize losses) to make the sale. Based on the composition of the market and demand at the venue and location, the sale price for Bitcoin will vary. For instance, exchanges in South Korea traded bitcoin at an amount that was referred to as kimchi during the time of the increase in prices back in 2018.





Coinbase and other cryptocurrency exchanges charge a certain percentage percent of the price for crypto as fees. For instance, Coinbase charges 2.49% of the total transaction amount as fees.22





Exchanges typically have daily and monthly withdrawal limitations. This means that the money earned from an extensive sale may not be immediately available to the seller. There aren't limits on the amount of crypto you may sell, however.





What Are the Steps for Purchasing Bitcoin?


The process for purchasing bitcoin is comprised consisting of four steps: selecting an exchange or venue to place your order then selecting a method of payment, and ensuring safe storage for your purchase. Depending on trading 5 talents selected in the initial step, there could be additional steps needed in the process. For example, if choose to purchase the cryptocurrency through Robinhood you may need to include additional expenses for an online account as well as custody for your bitcoin because Robinhood does not provide these services.





What Are the Most Popular Venues for Buying Bitcoin?


The most popular venues to buy bitcoins are exchanges and brokerages (crypto in addition to mainstream) as well as payment services such as PayPal. There is also the option of buying Bitcoin via P2P online exchanges. For indirect ownership of bitcoin you may invest in companies that hold bitcoin on their balance sheets. For instance, Tesla, Inc. (TSLA) or MicroStrategy Incorporated (MSTR).2324





How Much Should I Expect to Pay to Purchase Bitcoin?


Typically, the cost for purchasing bitcoin is fees per trade, plus the cost of converting a traditional currency (generally dollars) to bitcoin. (Cryptocurrency exchanges and payment service providers make money through this conversion spread.) The fee per trade will be a function of the dollar amount of the trade. A greater amount of trades will be charged more. The total cost of purchase is contingent on the features provided by the company. For instance, Robinhood does not currently provide an online wallet that allows storage of bitcoin. This means that you'll have be prepared for online wallet costs for your purchase.





Besides Cryptocurrency Exchanges, Where Else Can I Buy Bitcoin?


You can also purchase bitcoin at these places:


* Through Bitcoin ATMs


• Online payment services such as 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 private accounts can be insured under FDIC at $250,000 per account.21





The Bottom Line


The process for purchasing bitcoin is slightly more complicated when compared to purchasing regular equity or stock. This is due to the fact that the blockchain and cryptocurrency infrastructure are not as well developed that those of traditional trading.





A bitcoin purchase process consists from four steps: choosing the service or the location of purchasing, connecting with the payment method of your choice, placing an order and ensuring secure storage for the purchased cryptocurrency. Each of these steps needs research and an in-depth review of the pros and benefits of each choice. You can also purchase bitcoin at Bitcoin ATMs, as well as from payment services such as PayPal and traditional brokerages like Robinhood.












Read More: http://taizhouzhicheng.cn/home.php?mod=space&uid=10809