How to Buy Bitcoin (BTC)

Crypto Expert

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Bitcoin emerged from the rubble of the 2008 financial crisis then rose to prominence during the financial debacle caused by the 2020 pandemic. The decentralized technology of Bitcoin has exposed the traditional financial sector’s lack of structure and trust in its institutional liquidity. 

Shortly after the launch of the Bitcoin network in 2009, its inventor, Satoshi Nakamoto, wrote: “The root problem with conventional currency is all the trust that’s required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust.” This is the inspiration behind Bitcoin’s use of peer-to-peer technology to operate autonomously. All transactions and the mining of new bitcoins are managed collectively by the network and have uses that any legacy payment system could not execute.

In early 2021, Bitcoin enjoyed a significant price run-up. The digital juggernaut hit an all-time high of over $64,000. Then in May, Elon Musk tweeted that Tesla would suspend accepting Bitcoin payments until miners moved closer to using about 50% clean energy. This stopped Bitcoin’s momentum and the asset subsequently had a dramatic fall into the $30,000 range. Bitcoin’s price proceeded to make new lows for about 9 weeks before starting another rally back above $40,000 in late July.

Bitcoin’s phoenix-like rising from the ashes has led some analysts to believe it’s in the midst of a run similar to its 2013 performance. In April 2013, Bitcoin fell from its all-time high price of about $270 down to around $50 in the same month. BTC’s bearish sentiment caused it to trade within a range for months before making a bullish reversal and reaching a new high of over $1,100 in November 2013. Reminiscent of 2013, analysts expect BTC to break its current all-time high and have a blow-off top in the vicinity of $100,000.

How to Buy Bitcoin

Purchasing your first cryptocurrencies can be a daunting task. The good news is that there are several trading platforms with easy-to-use interfaces making the process convenient and straightforward.

  1. Open an Account with an Exchange.

    The crypto world is vast, so it’s a good idea to research several exchanges and find the most reputable and secure ones. Most exchanges will require you to provide proof of residence and identity to complete the KYC (Know Your Customer) process upon registration.

    Because Bitcoin is the largest and most popular cryptocurrency, nearly all crypto exchanges allow you to trade it. Some brokerages like Robinhood and Webull also offer Bitcoin trading, but most don’t let you transfer it off of their sites. Others like IFC Markets allow for CFD trading, etc. Among the most popular cryptocurrency trading platforms in the U.S. are Coinbase, Gemini, Crypto.com and Voyager

  2. Buy a wallet (optional).

    You have the option to store your crypto on an exchange or in your wallet. Keeping your assets on an exchange may be convenient for day traders. However, long-term investors would be wise to store their crypto securely in their wallets because exchanges could suffer from a hack.

    Your Bitcoin is not completely safe in most exchanges because they hold the private keys that let you access and use the digital asset. The best solution to keep your crypto safe is to buy a hardware wallet or download a secure software wallet.

  3. Make your purchase.

    Once you add funds to your account, you’re ready to make your purchase. It’s a good practice to research a project thoroughly before investing. After you’ve decided, you can enter its ticker symbol and the number of tokens you’d like to buy. Remember, you can buy any fraction of a cryptocurrency; you don’t need to purchase a whole coin.

What is Bitcoin?

Bitcoin is an open-source, peer-to-peer and decentralized digital payment system based on cryptographic proof instead of trust. Bitcoin provides the settlement layer for all transactions on the network and is a Layer-1 protocol. Instead of trusting a 3rd-party intermediary, the network relies on cryptographic proof, making funds secure and transactions effortless. Bitcoin uses a proof-of-work (PoW) consensus protocol to verify transactions, which is energy and time-intensive.

The total supply of BTC is hardcoded and set at a limit of 21 million coins. The total circulating supply will all be mined by the year 2140. In a nutshell, Bitcoin was created as a way for people to send money over the internet. The purpose of the digital asset is to bring forth an alternative payment system that operates like traditional currencies but is devoid of a central point of control. 

Numerous cryptocurrency trading platforms are available to exchange Bitcoin for cash, allowing small businesses to accept Bitcoin. Although Satoshi spearheaded Bitcoin’s development, many programmers and developers have written code for Bitcoin. 

Brief History of Bitcoin

In October 2008, Satoshi Nakamoto introduced the idea behind Bitcoin in the middle of the throes of a financial crisis. Nakamoto released the BTC white paper titled, “Bitcoin: A Peer-to-Peer Electronic Cash System,” where he laid out the concept of Bitcoin as a decentralized, digital currency. In 2009, Nakamoto launched the BTC blockchain, and the first (genesis) block was mined. The first network transaction occurred when Nakamoto sent 10 bitcoins to developer Hal Finney. One year later, the first actual economic transaction occurred when a Florida man bought 2 pizzas valued at $25 for 10,000 bitcoins. This transaction established the initial value of a Bitcoin at about 4 bitcoins per penny.

Once Bitcoin became available on exchanges in 2010, it became easier to buy, sell, trade and store. This also gave way to BTC being able to be priced against the U.S. dollar. Bitcoin has had an arduous journey yet continues to be the most dominant and largest-capped crypto in the ever-expanding digital assets market.

Who is Satoshi Nakamoto?

Nakamoto emerged out of the ether in 2008, established the world’s first cryptocurrency, then disappeared just as suddenly as he appeared. No one has confirmed his real identity in over a decade, and Nakamoto hasn’t made a public statement in years.

In 2014, Newsweek magazine identified 70-year-old Dorian Nakamoto, a distinguished engineer, as Bitcoin’s creator. Dorian vehemently denied any involvement with the cryptocurrency. In 2016, Australian computer scientist Craig Wright claimed to be Nakamoto, and fellow Bitcoin developers backed up Wright’s declaration. However, the cryptocurrency community refuted it, and Wright backed away from the assertion.

The New York Times declared that Bitcoin team contributor Nick Szabo was the real Nakamoto. Researchers even went as far as analyzing Szabo’s writing. They claimed that there were definitive similarities between Szabo’s writings and Nakamoto’s. Szabo has gone on to deny these claims.

Since Bitcoin ultimately has the potential to topple fiat currencies, Nakamoto could fear potential legal actions by governments and therefore has strong incentives to remain anonymous.

Bitcoin Mining

The way the Bitcoin network is maintained and how new BTC is created is by the mining process. All transactions are broadcast on the network, and miners create the blocks by completing a complicated cryptographic calculation. The first miner to solve the puzzle correctly is rewarded with an amount of newly minted BTC. 

When Bitcoin launched, it was possible to mine 1 coin using a simple computer. Now it requires rooms full of equipment, high-end graphics cards that can power through the calculations, that sometimes are more expensive to mine than the rewards are worth.

Where to Buy Bitcoin

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IBKR is geared primarily toward experienced traders and investors but now with the availability of free trades with IBKR Lite, casual traders can also acclimate to IBKR’s offerings.

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Founded in 2006, IFC Markets is a popular forex and contracts for difference (CFD) broker that provides high-quality trading services to over 185,000 clients from more than 80 countries. The broker has oversight from the British Virgin Islands Financial Services Commission (BVI FSC) as well as the Labuan Financial Services Authority (LFSA) in Malaysia. 

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Gemini is a cryptocurrency exchange and custodian that offers investors access to over 100 coins and tokens. Founded in the US, Gemini is expanding globally, in particular into Europe and Asia. Offerings include both major cryptocurrency projects like Bitcoin and Ethereum, and smaller altcoins like Orchid and 0x.

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In addition to a host of platform choices, Gemini users also have access to insured hot wallets to store tokens without worrying about digital asset theft. Learn more about what Gemini can do for you in our review.

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Cryptocurrency Wallets for Bitcoin

Check out some crypto hardware and software wallets.

Trezor

The Trezor wallet is regarded as one of the most trusted and secure ways to store your BTC. It’s easy to use and intuitive for crypto beginners. Hardware wallets store your private keys (which give you access to your digital assets) offline, making it impossible for hackers to steal your funds via the internet.

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A Trezor wallet is one of the best crypto wallets in the crypto-sphere. Besides having top-notch security, it is relatively easy to use and provides fantastic support and updates. Although you might consider it a bit expensive compared to other hardware wallets, the services you’ll enjoy are worth it. Your coins are more secured in Trezor than other hardware wallets.

 

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Coinbase

The Coinbase Wallet is touted as the safest digital currency wallet to store your cryptos. It has several security features like 2-factor authentication. Plus, the cryptocurrency wallet is integrated with decentralized finance applications, so you can even trade your digital assets directly from your wallet.

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Though Coinbase doesn’t offer the most affordable pricing or the lowest fees, its simple platform is easy enough for complete beginners to master in as little as a single trade.

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Ellipal

The Ellipal wallet pairs with an app to serve the security of a cold wallet with the functionality of a hot wallet. The Ellipal is also capable of handling both Ethereum tokens and Binance Smart Chain tokens – a rare feature!

Some Ellipal wallets also feature touchscreen displays for ease of use on the go. Ellipal wallets are air-gapped, which means your precious private key is protected in a fully isolated environment that will never touch the internet.

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The Ellipal Titan looks more like a Cybertruck than a crypto wallet. It can handle Bitcoin, Ethereum, ERC tokens and Binance tokens as well.

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BZ

Bonus:

El Salvador uses the Lightning Network to facilitate BTC payments since the country now accepts Bitcoin as legal tender. More countries are expected to adopt BTC over the coming years. This may lead to a significant increase in BTC demand as well as price.

Public Keys vs. Private Keys

Encryption means converting plain text data into a long string of random, unpredictable characters that no unauthorized person can read, interpret or alter. Asymmetric encryption is when you use 2 separate keys to encrypt and decrypt data. The keys are the public key (encryption key) and the private key (decryption key). These keys are separate yet mathematically related to each other. That’s because they’re generated using an asymmetric algorithm that binds them.

Alternative Ways to Buy Bitcoin

Suppose you’re not ready to start buying Bitcoin outright. In that case, you can still gain exposure to BTC via the expanding number of companies and financial institutions that are now supporting the asset. You can acquire indirect exposure by investing in companies that hold Bitcoin on their balance sheets. The Grayscale Bitcoin Trust (GBTC) is a publicly-traded company that you can invest in through your traditional brokerage.

Trade, Sell or Convert your Bitcoin

Deciding on whether to trade, sell or convert your crypto is based on your goals and how much time you’re willing to devote to technical analysis. A best practice is to take profits on the way up while keeping a portion of your tokens for the long term. Most exchanges will allow you to convert your crypto into cash, and this will allow you to remain financially solvent while still having exposure to the market.

In general, day traders sell their tokens based on technical analysis for short-term gains. On the contrary, investors can ignore short-term price volatility to realize gains over the long term.

Current Bitcoin Price

Bitcoin
$20,915.000

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Read more >> Is Bitcoin a Good Investment?

Where is Bitcoin Going?

Bitcoin is starting to regain some of its bullish momentum and has historically performed well in the 4th quarter. On-chain metrics show that Bitcoin is being heavily accumulated and held off of exchanges for more extended periods. El Salvador looks to be the first of many countries to make Bitcoin legal tender in the coming years. These factors could combine to cause the price of Bitcoin to break to the upside and give investors incredible gains this year.

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