Investing in Bitcoin has become much easier over the past few years, but there are still a few hurdles to overcome if you have a traditional stock investing background. Read on to learn different ways to invest in Bitcoin and a step-by-step guide to buying your first Bitcoin.
Investing in Bitcoin has been compared to investing in “digital gold.” Setting aside the inflation-hedge claims of Bitcoin enthusiasts, comparing it to gold is a good analogy when considering the myriad ways to invest in Bitcoin.
The first step in buying Bitcoin involves choosing a cryptocurrency exchange to make your purchase. These exchanges offer a platform to buy and sell Bitcoin and many other alt-coins. Each exchange generally has different fees and consumer services provided.
After purchasing Bitcoin, it is stored in a wallet. There are two kinds of wallets: a “hot wallet” and a “cold wallet.” Most cryptocurrency exchanges automatically provide you with a hot wallet that allows you to access your coins through the internet and facilitate easy transactions. Cold wallets are a safer option for the long-term storage of your coins.
To buy and sell Bitcoin, you will need to link a bank account to your cryptocurrency exchange or wallet. This process is similar to connecting a bank account to a traditional investment account and allows you to exchange dollars for crypto coins.
Once your account is set up and your bank account linked, you are ready for the easiest step, placing your order. Most exchanges offer multiple ways to place orders, such as market orders, limit orders, and stop-loss orders.