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Are you finally ready to dive into the world of cryptocurrency? It may seem complicated, but with a little research, beginners can buy and sell Bitcoin in no time.
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Bitcoin is the most popular digital currency on the market, so we’ll show you how to buy, sell and store it. However, these tips can also be adapted to other cryptocurrencies such as Ethereum (or Dogecoin if you prefer).
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At the time of writing, 1 Bitcoin(Opens in a new window) is worth less than $40,000. But don’t worry, even if you’re not super rich, you can still buy small amounts of Bitcoin. However, there are a few things you should do first before purchasing your Bitcoin cake. It includes:
It should also be understood that cryptocurrencies (especially Bitcoin) are volatile and their prices can fluctuate wildly from day to day. With this in mind, never invest more than you can afford to lose when buying cryptocurrencies.
Before you can buy digital currency, you need a place to store it, and that’s where crypto wallets come in. They go by many names: hot wallets, hardware wallets and software wallets, but there are two main types:
Over the years, certain companies have become trusted manufacturers of hardware crypto wallets. For example, Ledger(Opens in a new window) has been doing cool wallets for years and might be a good place to start. Trezor (Opens in a new window) is another big name in the hardware wallet space.
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If you want to use a digital wallet, most cryptocurrency exchanges bundle their online wallets with their own user accounts. Coinbase, perhaps the biggest cryptocurrency exchange right now, does just that. Its wallet is highly rated, so you don’t need a Coinbase account to use the app.
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If you’re using a software wallet (called a hosted wallet because it’s hosted on a third-party server), all you need to do is create an account with a username and password and enable two-factor authentication. If you’ve set up your wallet as part of an account on a cryptocurrency exchange and the exchange uses KYC, you’ll need to provide documents such as a driver’s license to verify yourself.
Non-custodial warm wallets are not hosted by third parties and have more security measures than standard wallets. Users are given a randomly generated “private key” or “passphrase” that they can use to access their wallet. These keys are usually 12 words long and are known only to the user. It is recommended that you store this password somewhere safe and offline – it will be difficult to crack. However, if you miss the phrase, you will be locked out of your wallet.
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Cold wallets only allow users to create a known key phrase and access the wallet. This passphrase is usually a randomly generated 24 word string that you will use to generate a PIN to gain access. Cold wallets work with software and software on your smartphone or desktop device, so you can install them if you want while setting up your cold wallet.
A paper wallet is a cold wallet that prints the public and private keys needed for paper transactions. No transaction can be done without the information on this paper, which can be created online and then printed. They are more widely used for long-term or highly confidential investments and are deliberately slower than other types of cryptocurrency wallets.
Regardless of the type of wallet you use, you must connect your payment method to make a purchase. This can be a bank account or a payment service such as PayPal or Apple Pay. You must sign in when entering your payment information.
Once you’ve chosen and set up your wallet, it’s time to find an exchange and make your first Bitcoin transaction. Not all cryptocurrency exchanges are regulated by the SEC, so look for exchanges that are regulated by the SEC. Some reputable and regulated cryptocurrency exchanges are pretty safe bets, including:
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You’ll need to do your homework to determine which exchange will best suit your needs. Since Bitcoin is the first and most popular cryptocurrency, you can trust that all of the exchanges listed above will offer it. If you want to expand your portfolio, you might want to check out the other cryptocurrencies they offer.
Find out what each company is doing to keep people’s money safe. Do they have insurance? If so, how much? What security measures do I take? Do they have a KYC policy for identity verification? Find out the answers to all these questions before proceeding.
Whichever exchange you choose, you’ll need to provide proof of identity when you register, or if you’re in the US, usually a driver’s license or state-issued ID. You may also be asked to send scanned copies of proof of address and other documents such as passports.
Once you’ve done your research, chosen an exchange, created an account and funded it with cash, you can start buying bitcoins.
How To Buy And Sell Bitcoin Safely In 2023
Now that you are ready to buy bitcoins, you will go through the process of buying as much as you can afford. The process will vary depending on the exchange you use.
Some only have “buy” and “sell” buttons where you can specify how many currencies you want to buy or sell. Others allow you to place orders similar to traditional exchanges. Most cryptocurrency exchanges allow you to buy and sell with three types of orders.
Some exchanges offer even more order types than those listed above. At the time of writing, Kraken currently offers the widest range of order types (opens in a new window), including stop loss and take profit orders. Start with the basics mentioned above and go from there.
As cryptocurrencies have grown and gained public attention, cryptocurrency exchanges have evolved to become almost synonymous with traditional exchanges. Some allow you to choose a fixed dollar amount to invest daily, weekly, or monthly (Opens in a new window).
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There are various P2P cryptocurrency and bitcoin exchanges, but if you don’t know anyone who does P2P exchanges, we recommend using traditional exchanges to trade and buy bitcoin.
Choosing your investment strategy is critical to a successful investment. A common strategy is to buy and hold bitcoins, hoping to ride out the ups and downs in value for higher average returns.
JPMorgan analyst Nicholas Panigirtsoglou supports the strategy. He recently told Insider (Opens in a new window) that “it’s better to focus on cryptocurrencies currently held by institutional investors, such as Bitcoin and Ethereum, and allocate a small portion of your portfolio to cryptocurrencies and buy them “.
Another popular strategy is Dollar Cost Averaging (DCA): buy a small amount of Bitcoin each week or month without paying much attention to price fluctuations. That way, you can continue to invest at a steady pace that you establish and maintain over the long term.
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Experts recommend allocating a very small percentage of your portfolio to cryptocurrency investments, especially at the beginning. A single digit figure of 5% of your total portfolio is reasonable. If you have doubts about whether you need to pay taxes on cryptocurrencies, we are ready to answer all your questions.
Cryptocurrencies can be a great investment prospect. While the countless uses of digital currencies make them an interesting and attractive investment option, every new investor should understand that cryptocurrency investments are not guaranteed to generate huge returns. You’re more likely to lose more money than become an overnight billionaire, so it bears repeating: never invest more than you can afford to lose.
The FTC has warned consumers that there are so many crypto scams out there, including fake cold wallets, Twitter hacks, mining apps, scam calls, database hacks and more. Therefore, we recommend that you find a trusted wallet and exchange that offers reliable security features. Use all the tools available to protect your assets so you are less likely to have problems in the long run.
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