The world’s most well-known cryptocurrency, Bitcoin, is currently worth over $54,000 and the total market cap exceeds $1 trillion. As influencer Elon Musk buys Bitcoin (BTC) over Dogecoin (DOGE), there’s never been a more exciting time to buy BTC.
First, you need a broker that supports cryptocurrency before you start investing. Our guide will help you choose a trading platform, open an account and get started with your 1st Bitcoin purchase.
Bitcoin Supply List
Before you can invest in Bitcoin or make your first purchase, you’ll need to have a few supplies and information available.
Here are a few of the things you’ll need before you purchase any type of crypto:
- A brokerage account: Though it is possible to purchase cryptocurrency outside of a major exchange, it’s significantly safer and easier to buy Bitcoin using a broker’s trading platform. A brokerage account allows you to place requests to buy and sell cryptocurrency through orders submitted through your broker. The broker then fills the order on your behalf, sometimes in exchange for a fee.
- Your personal information: Like opening a stock brokerage account, your cryptocurrency broker will need to collect a little of your personal information before they can grant you access to the cryptocurrency market. You can use this information to accurately track your profits, as converting crypto to fiat and crypto to crypto are both taxable events.
The specific information you’ll be required to provide before opening your account will vary depending on which broker you work with. As a general rule, be prepared to provide your full legal name, your phone number, an email address, your physical address and your Social Security number to open your account. Most brokers also require you to scan a photo ID (like a driver’s license or a passport) to access higher funding tiers. You’ll also need some form of payment method to fund your account — most investors choose to link a credit card or bank account to their investing account for easy transfers.
- A digital wallet: A digital wallet is a smartphone or computer app that allows you to safely store any cryptocurrency you purchase. Cryptocurrency wallets provide you with an enhanced layer of security for your tokens and limit the possibility of a hack or theft when compared to keeping your tokens on an exchange.
Get a Cryptocurrency Wallet (Optional)
A cryptocurrency wallet is an app that allows you to safely store your bitcoins off the exchange you purchased them on. Holding your bitcoin in a wallet is a more reliable choice for long-term storage because it limits the possibility of losing your tokens in an exchange hack.
Some of the factors you might want to consider when choosing a wallet might include:
- Security features: Always choose a wallet that offers two-factor authentication and encryption to ensure that your tokens are secure. For the highest possible security, consider a wallet with multisig features, which requires multiple keys to access tokens.
- Compatibility with your tokens: Not every digital wallet supports all types of cryptocurrencies. Be sure that you’re choosing a wallet that supports Bitcoin transfers before you open it or send your tokens.
- Online vs. hardware wallets: If you store a large amount of Bitcoin, a hardware wallet might make sense for you. However, if you lose your hardware wallet, it’s virtually impossible to regain access to your tokens.
Not sure which wallet is right for you? Consider starting your search with a few of our favorite cryptocurrency wallets, listed below.
Open an Account
After you have your cryptocurrency wallet open and secure, it’s time to open an account with a broker for access to the crypto market. You can place orders through your broker to buy and sell Bitcoin and the broker fill them according to your instructions. Once your order fills, you’ll see your tokens in your brokerage account.
Dozens of cryptocurrency brokers operate online. Some of the factors you may want to consider when you choose a broker include:
- The broker’s trading platform: Some brokers focus on offering a streamlined, easy ordering system. Other brokers take a more expert-aimed approach, providing you with a range of investment analysis tools, charting platforms and screeners to help you analyze market movements before you invest. Consider the type of platform and buying experience you’d prefer before you open an account.
Select brokers (like Coinbase) focus on providing a streamlined platform and easy access to Bitcoin purchases.
- Accessible assets: As the most well-known cryptocurrency on the planet, any investing platform that offers access to cryptocurrency will allow you to buy Bitcoin. If you’re only interested in purchasing Bitcoin, you’ll have a wide range of platform options to choose from. However, if you’re interested in investing in stocks or ETFs on the same platform, choose a broker that supports these assets.
Some brokers (like Webull) provide you with access to stock, metal and altcoin investments alongside Bitcoin.
- Other crypto: You might also want to consider the other cryptocurrencies you can buy and sell through your broker of choice. Over 2,000 individual cryptocurrencies exist and no single broker will allow you to access all of them. It’s helpful to create a list of cryptocurrencies you want before you begin comparing platforms and account providers to ensure that you’ll have access to every asset.
- Fees and commissions: Fees and commissions vary by broker and asset. If you plan to trade frequently, pay special attention to commission rates.
Trade or Invest
After you place your order and your broker fills it, you join the ranks as a Bitcoin owner! Now you’ll need to choose whether you want to be an active trader or a long-term investor.
Traders speculate on day-to-day (and sometimes hour-to-hour) price movements, attempting to sell their Bitcoin when prices rise and buy back when the price drops again. These investors focus on taking advantage of small, quick price movements to accumulate more Bitcoin over time. Cryptocurrencies can present plenty of opportunities for profit.
Investors take a more long-term approach, holding their Bitcoin for months or even years at a time before selling. Investors believe that the price of Bitcoin will rise over time and focus less on small price fluctuations. If you plan on investing over a long period of time, move your Bitcoin to a cryptocurrency wallet for enhanced security. These wallets offer less susceptibility to hacking attempts than exchanges.
Other Ways to Buy Bitcoin
In addition to buying Bitcoin through an online exchange, you can access Bitcoin in 2 using a standard brokerage account.
A Bitcoin ATM works in much the same way as the ATMs issued by your bank or credit union. Insert cash into the machine, purchase Bitcoin at the current market rate and transfer your tokens to a secure digital wallet. Websites like Coin ATM Radar can help you track down a Bitcoin ATM near you.
Peer-to-Peer (P2P) Exchanges
P2P exchanges like LocalBitcoins connect Bitcoin buyers and sellers together directly using a marketplace format. Users holding Bitcoin can post sales ads, while buyers can respond to the ads that interest them.
The site facilitating the transaction offers escrow accounts that protect both the buyer and the seller. If you’re interested in buying Bitcoin with payment methods like Cash App or Zelle, a P2P exchange can facilitate these types of transactions.
Add Bitcoin to Your Portfolio
With a long history of price improvements, Bitcoin can provide your investment portfolio with a unique layer of diversification. However, remember that unlike stocks or ETFs, cryptocurrencies are not regulated. It’s possible to lose 100% of your investment.
If you do decide to buy Bitcoin, remember to never invest more money than you can afford to lose. Use our guide to help you add Bitcoin to your portfolio today.
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