How to Buy, Sell, and Invest in Bitcoin

What to Look for Before Buying or Investing in Bitcoin?

Before you begin buying or investing in Bitcoin, there are several things that you need to be aware of. One is the current state of the virtual currency market. While virtual currencies are growing at a rate many times faster than traditional investments, they are still much more volatile. Look at what Bitcoin's current value is and where it is regarding how much it has increased or decreased. Now is always a good time to invest in Bitcoin, but there are certain times that are better than others. When people are afraid that their investments might lose value, they tend to sell them off, hoping to regain as much of their value as possible before losing it all. If Bitcoin is in a bit of a slump — say, its value has decreased by 10% over the past week — that is actually the best time to buy. When people are worried about the value of Bitcoin and are selling it, you can get it cheaply. Its value has recovered after every single slump, so if it has lost value over the past few days, you will be able to get more Bitcoins for the amount of dollars that you invest. The first part of the adage "buy fear, sell greed" definitely applies in this situation.

Many other virtual currencies have come onto the scene and exploded in value since the rise of Bitcoin. These so-called “alt currencies” include Ether (used to power the Ethereum network), LSK (used to power the Lisk network), dogecoin, and Litecoin. Their values have increased tremendously, and some cryptocurrency experts predict that the Ether may soon surpass Bitcoin in value. If you are serious about investing in Bitcoin, you may want to invest in some other cryptocurrencies as well. That way, your portfolio will be diversified and have more potential for growth. In the extremely unlikely event that Bitcoin should tumble, you won’t lose all of your investments.

Another is your own goals for buying or investing in Bitcoin. Are you hoping to become an overnight millionaire? Do you like the principles behind the Bitcoin movement and want to become a part of that community? Do you want to save for retirement or buy a new car or home through the money accrued through Bitcoin? If you are hoping to get rich, you probably should look into Bitcoin trading as well as mining. Wanting to become a part of the Bitcoin movement and reaping the benefits of its increasing value as a side benefit is definitely a viable and worthy goal. However, using it to save for retirement is probably not the best idea. Its value will most likely continue to increase for the foreseeable future; however, you do not want to risk your retirement on the possibility of a crash. If you are willing to take that risk, make sure you diversify with multiple cryptocurrencies.

Only invest what you are willing to lose. Instead of investing your nest egg, a great way to get started with Bitcoin buying and investing is to use the extra money that you may receive. Your Christmas bonus at work, a surprise check in the mail, money from a garage sale, or extra cash gained by working a side gig are all great forms of income for Bitcoin investing. If you lose the money that you made mowing your next-door neighbor’s lawn, the damage is not nearly as catastrophic as losing $100,000 from what would have been your retirement fund.

Where and How to Buy Bitcoin ?

To buy Bitcoins, all that you need is a private address, which is provided when you first get your Bitcoin wallet. There are multiple different exchanges that you can use to buy Bitcoins, all of which come with their own advantages and disadvantages. Coinbase is the world's largest Bitcoin broker and is available in about 33 countries. It has high liquidity, meaning that the company is solvent and not engaging in risky trading practices, and high buying limits, meaning that you can buy more Bitcoins through it than with many other exchanges. Its simple interface makes it probably the easiest of all exchanges for new Bitcoin users, and you can buy Bitcoins instantly using a credit card. It charges an exchange fee of 3.75%, which is in the low range of what other exchanges charge. However, the payment methods that it accepts are limited, and there is some question about whether Coinbase may actually track how users spend their Bitcoins. Anonymity on the Bitcoin network is more difficult with Coinbase, as it requires the disclosure of some personal information to buy Bitcoins.

CoinMama, based in Israel, is another large exchange. Its fees are higher than those of Coinbase, especially for people using a debit or credit card instead of a virtual currency to purchase Bitcoins. However, it is available in a larger number of countries, as well as some states in the US. Users can buy up to $150 worth of Bitcoins without uploading any personal information, making it more anonymous than Coinbase.

Local Bitcoin is a peer-to-peer exchange, so unlike other exchanges, it does not utilize a third party for users to buy Bitcoins. Users agree to meet in person at an agreed-upon time and place to exchange Bitcoins in person for a pre-determined price. It is the most anonymous, private, and secure of all Bitcoin exchanges because all of the transactions occur in-person directly between the users. No validating personal information is required. All payment forms that the person holding the Bitcoins will accept are considered to be valid. In some countries that either have outlawed Bitcoin or that exchanges do not operate in, Local Bitcoin is the only way for people to obtain Bitcoins. However, users must constantly be on the lookout for scams, as some unscrupulous users may try to sell fake Bitcoins for cash.

CEX.IO is an exchange that charges low fees for credit card users. It is valid in many countries and states in the US, and Bitcoins purchased are usually available in a couple of days. Bitcoins can also be transferred to credit or debit cards, but for higher fees.

One thing to keep in mind about all Bitcoin exchanges is that while Bitcoins may have an actual exchange rate based on the currency as a whole, the exchange may use a much higher exchange rate. For example, say that the current value of one Bitcoin is $5000. The exchange may actually use a rate of $7000 or even higher. Be aware of this potentially higher exchange rate, as it will impact how many Bitcoins you can buy with the dollars that you have.

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Mastering Bitcoin for Beginners - Neil Hoffman