The idea of buying a cryptocurrency like Bitcoin can seem a little daunting at first. If you want to get over the uncertainty of buying your first coins (or fractions thereof), this post will take you through the entire process, step-by-step.
It’s not as hard as you might think and this newfound knowledge will allow you to finally get involved with the cryptocurrency market. Even if you aren’t interested in buying Bitcoin, it is still important to know how to do it because it is sometimes the easiest way to buy smaller altcoins.
But First, You Need to Understand This
Before we get started, there are two things that you need to understand. They can save you a ton of money.
Don’t Give in to FOMO
When you see Bitcoin doing this, it can be easy to give in to the temptation and buy right away.
But this is the absolute worst time to buy. You will probably be buying near a top.
Have the patience to wait for price to drop and shake out some of the suckers who bought out of excitement. Even though Bitcoin has been very bullish in the past, does not mean that it will always be so.
It might drop and stay down for a long time.
Then you will be in a lot of pain and probably close your position at a loss, before it takes off again.
It Will Probably be a Wild Ride So…
…hang on to your knickers.
Seriously, I know someone who put $500 into Ethereum, then could not do any work because he kept checking the price every 5 minutes. Needless to say, he closed out his position a day later.
This is how you know you are violating your Risk Tolerance Personality.
This is a new and very volatile market. Prices can swing wildly, even in the most liquid currencies.
So take whatever number you think you are comfortable risking in crypto, and cut it in half.
…then cut it in half again.
You don’t have to enter your entire position at once. You can scale into the position like Rafael does. Once things start moving in your direction, then you can enter another partial position, on the next pullback.
Alright, now that we have that out of the way, let’s get into how to buy Bitcoin.
Step 1 – Find an Exchange or Service That is Verified in Your Location
Not all companies can sell you Bitcoin.
For example, Coinbase is one of the top websites to get Bitcoin, Litecoin and Ethereum in the US. However, Coinbase cannot sell to people in certain states like Hawaii, Minnesota and Wyoming, because of local laws.
So if you want to get Bitcoin, you have to get a little creative. But if you are lucky enough to live in an area that can get Bitcoin easily, then in my opinion, Coinbase is one of the best places to get your first Bitcoins.
…or more like fractions of a Bitcoin.
If you are in another country, check to see which websites are available to you. Before you open an account do your due diligence and find out which services are reputable.
The process is usually easier than opening other online financial accounts.
Step 2 – Get Verified
Any reputable website will have to verify you, in order to keep accurate records of your transactions. This is to comply with Anti Money Laundering (AML) laws.
In order to get verified, you will usually have to send in a copy of your driver’s license or passport. Other information may be required, but that is generally the minimum.
To withdraw money, you will probably have to give up a social security number. That’s just the way it goes for any type of financial account.
The Coinbase verification instructions can be found here.
Step 3 – Connect Your Credit Card or Bank Account
This almost goes without saying, but to cover all bases, it needs to be spelled out.
Do not buy more cryptocurrency than you can afford on your credit card.
Regardless of what anyone tells you, this investment is not a guaranteed. Not by a long shot. If you are already struggling with credit card debt, this is not the answer.
I once talked to a guy who thought that the revaluation of his 2 million Iraqi Dinars was going to save his house that was in foreclosure proceedings.
No, no, no.
Cryptocurrencies are a very high risk investment.
Alright, now with that PSA out of the way, connect your credit card or bank account to your Coinbase account. If you have a credit card that give you miles or points, this can be a great way to do some travel hacking.
Just don’t overuse your mileage credit card because your credit card company could close your account.
Adding your credit card to your account is the same process like with any other ecommerce website.
Step 4 – Buy Bitcoin
You are now ready to buy some Bitcoin.
If you are using Coinbase, simply enter the dollar amount that you want to purchase. Then click the buy button.
That’s all there is to it!
Congratulations, your account will now show that you own some Bitcoin.
Cashing Out Your Bitcoin
If you want to turn your Bitcoin into cash, then the easiest way is to simply use Coinbase to convert your Bitcoin to your local currency.
You just have to connect your bank account to your Coinbase account.
When you are ready to cash out your Bitcoin, simply convert your Bitcoin back to cash.
How to Store Your Bitcoin Safely
After you celebrate your first Bitcoin purchase, it’s time to think about securing your investment.
Never keep your Bitcoin at an exchange or in an online wallet. Your account could be hacked.
When you put your cryptocurrency into cold storage, you control the wallets and the private keys or passwords. If you use a hardware wallet like the Ledger Nano, it will greatly reduce your risk of having your Bitcoin stolen.
To get more information on how to store Bitcoin safely, read this post.
Not into the fancy hardware wallet?
Then a paper wallet might be more your thing. There are different benefits and risks associated with paper wallets, but some people like them better.
How to Buy Altcoins With Bitcoin
Now that you have some Bitcoin, you might want to buy some other cryptocurrencies too. Having some Bitcoin makes it super easy to buy altcoins.
First, do your research and identify the altcoins that have the most potential. If you want to learn about what to look for in potential altcoin investments, read this article.
Once you find a coin that you want to invest in, sign up with an exchange that has the coin you want.
Then send some Bitcoin from your Coinbase account by following these steps.
The Recipient Address will come from the exchange that you signed up with. In your exchange account, find your Bitcoin wallet address.
Then copy that address into the screen above. Click on the Continue button and verify the transaction.
Be patient, the transfer can take up to an hour.
Once you have transferred your Bitcoin to your exchange, you can buy any altcoin that is available on that exchange.
That wasn’t so bad, now was it? Once you make your first purchase, I think you will find that it is easier than you thought it would be.
Remember that getting Bitcoin is the easy part. Keeping it safe can be a little more difficult.
But if you take the right precautions, your Bitcoin should stay safe until you are ready to cash it in.
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