Bitcoins and similar crypto-currencies behave like the stock market.
The more people buy Bitcoin shares, the higher the price of the currency. The fewer people who buy Bitcoin, the lower the price.
However, the source of Bitcoin’s value – and the way you buy it – is very different from investing in the shares of a public company.
What is Bitcoin?
Bitcoin is a digital currency that allows you to manage your business and exchange resources securely, but without going through a bank or central payment entity to complete the transaction. Bitcoin can be sold, traded for a product, or purchased as a stock
Think of Bitcoin as a barter token, but there is a limited number of digital tokens in the world. Banks and national economies do not generate Bitcoin – the software exploits it with a technology called blockchain.
Bitcoin being a limited resource, one might think that its value would always be off the charts, but this cryptocurrency is extremely volatile. People can adopt Bitcoin as a medium of exchange for many reasons. As Bitcoin is used, the reasons why people choose to buy it also change.
How to buy Bitcoin
Whether you’re looking to invest in Bitcoin later for a big sale, or spend it on various items and assets, there’s a universal process you’ll need to follow to buy stock. Let’s dive into this process.
1. Download a Wallet
By “wallet” we do not mean leather in your pocket, or even credit card reader applications such as Google Wallet. A Bitcoin wallet is an online storage place for all your digital currency. This does not only hold your Bitcoin, however. Bitcoin wallets also store your personal “key” – a unique identifier assigned to every Bitcoin owner, consisting of a long chain of letters and numbers to keep your Bitcoin safe. This is essentially your Bitcoin password.
Your first step in buying Bitcoin is to download a Bitcoin wallet and connect your credit or debit card. There are more than a dozen Bitcoin wallets that you can download, both on your desktop and as an app on your mobile device. Here are the wallets that work with most devices and operating systems:
Coinbase, the first wallet app from the list above, also offers a “Bitcoin Exchange” where you register to buy your first Bitcoin share. We will talk more about trading in the second step below.
2. Register with a Bitcoin exchange
If there are national stock exchanges like NASDAQ, does that also mean a Bitcoin Exchange? Yes. Bitcoin trades on a variety of online exchanges around the world. To start buying and selling Bitcoins, you must register with one of them. Prepare your email address and credit / debit card details.
Do not worry, all your exchange options recognize the same Bitcoin trading price. Each exchange is only for a different country or continent and therefore offers an exchange rate corresponding to the currency used to buy Bitcoin. For example, while Korean stock markets sell Bitcoin to the won (the main currency of Korea), UK-based stock markets sell Bitcoin to the Pounds.
Here are some international Bitcoin exchanges that you can sign up for
(these exchanges trade Bitcoins for most of the world’s currencies):
Although some Bitcoin exchanges are only specialized in one country, you may find it easier to sign up for a stock exchange that also provides you with a Bitcoin wallet. So, you do not submit your banking information to two separate departments. Coin base is one of those options. After downloading the Coin base Wallet, you can go directly to its exchange to buy your Bitcoin stock and fill your wallet.
Now let’s see how to make your first encrypted purchase.
3. Select a redemption amount
Once you have selected the exchange where you want to buy your Bitcoin, go to the “Buy” section of the exchange and select the amount of your purchase. You will attach your Bitcoin wallet to this purchase a “bit” differently (pun intended) depending on the exchange you use to buy your Bitcoin.
You can buy less than 1 if you wish. Bitcoin purses sell crypto-currencies up to several decimal places, so if Bitcoin is trading at $ 7,450 per 1, you can invest $ 1 and receive 0,00013 Bitcoin. Then, as the trading price of Bitcoin increases, the value of the Bitcoin you buy also increases.
4. Browse a Crypto Market
With your Bitcoin in your hand (or rather in a wallet), you can do one of two things with your purchase:
Spending Bitcoin in a market
Bitcoin has its online markets where you can trade Bitcoins for products. Products include those that can be delivered to your door, such as jewellery and those that you can download to your computer, such as Microsoft Office. Remember that no bank is involved in these transactions. The market simply checks the individual blockchain of your Bitcoin and completes the purchase.
The current Bitcoin markets where you can spend Bitcoin include Bitify, Glyde and even a Reddit community called BitMarket. Remember, you can also sell your own Bitcoin products, making these markets a simple way to boost your Bitcoin investment.
Buy and wait
Of course, like any good investor, the key to making money on Bitcoin is to subscribe and let it go. Cryptocurrency prices can fluctuate by several hundred dollars in a single morning, and watching the value and falling value of Bitcoin every day can drive you crazy.
Bitcoin investors often say that the money you invest in Bitcoin should be money you are willing to lose. With this in mind, the best way to take advantage of your investment is to let it sit, to try to sell personal items that could make your Bitcoin account grow and check the price of Bitcoin once.