how to Invest in Bitcoin? It’s a common question asked on google. Read our full guide to find out the right answers or this question. It is the first cryptocurrency and now the most powerful one. This individual cryptocurrency has generated more than 700% return in the past year. Investors are attracted due to this percentage of return.
The price of Bitcoin faces some downfall but then starts rising again, and currently, the price is at an all-time high. This is the reason why it is among the best choices of the investors.
What Is a Cryptocurrency?
Cryptocurrency is a virtual currency working on blockchain technology. It records all the transactions in a unique way through the technology that is known as cryptography. It is also known as a medium of exchange. The ownership of cryptocurrency is recorded and stored in the digital format known as the digital ledger.
It works in a decentralised manner, and no central banking system or government looks into any cryptocurrencies. These currencies are not like fiat currencies they are regulated only on digital platforms.
What Is Bitcoin?
Bitcoin is one of the cryptocurrencies working of the decentralised network. It was launched in 2008 by Satoshi Nakamoto and it is the first cryptocurrency. There are several owners of bitcoin as well as digital wallets where the owners store the coins. It is a good source to earn money from investments.
The motive behind the creation of bitcoin was to replace the various kinds of fiat currencies run by the government. Several platforms have now accepted the coins as a medium to exchange. Due to this reason also the price of the coin is increasing day by day.
How to Invest In Bitcoin?
The investment in cryptocurrencies is increasing due to their higher generation of returns. If you want to buy bitcoin but thinking that it is too costly. Here is a piece of good news for you, bitcoin can also be purchased into fractions.
This means investors have two options whether to buy a complete bitcoin or to purchase it into a fraction. There are several exchanges from where you can execute your bitcoin purchase. All the exchanges are working electronically and traders need to open an account with them.
Essential Elements to Buy Bitcoin
When you have decided to invest in bitcoin, you need these three things near you so that you can continue the process more simple. The three things are:
- Personal documents for address and identity proof – The documents are required for verification while you are creating an account for yourself.
- Bank account and its information – Your bank account needs to be linked to the trading account for day-to-day transactions or making deposits or withdrawals.
- A secured internet connection – All these activities are needed to be performed on a secured internet connection and not on any of the public networks.
The Process to Invest in Bitcoin
Traders need to follow this simple process to invest in bitcoin and to store it in a safe and secure manner. Follow this step by step simple guide for investing in bitcoin from any exchange:
Step 1: Open an Account with any Bitcoin Exchange
If you are looking for an official company to buy bitcoin, there is no such thing. However, there are several exchanges from which you can purchase bitcoin. Some of the leading exchanges are XBo.com, Coinbase, Binance, Bitfinex, ABInvesting, and others, but you can trust others also after finding their background.
Online exchanges are offering traders to buy bitcoin and other cryptocurrencies. On the other hand, you can store them in online wallets or crypto wallets offered by them. Before choosing an exchange, you have to make sure that you research all the information about it. Then open a cryptocurrency exchange account with it.
Step 2: Get an Online Bitcoin Wallet
After a successful purchase of cryptocurrency, you will need a wallet to store them. There are two types of wallets that are:
- Hot Wallets (Online Wallet) – The wallets offered by the exchange are known as a hot wallet or online wallet. They are easy to manage as you can buy and sell coins directly from your wallet. However, they are not secured like a cold wallet.
- Cold Wallets (Hardware Wallet) – A cold wallet is a real piece of hardware in which you can store your coins or bitcoin. This is the reason why they are also known as hardware wallets. They are less convenient but much secure as compared to a cold wallet.
Step 3: Connect Your Wallet and Bank Account
Once you have successfully opened an account and verified the same. In the next step, you need to link your bank account to your trading account. Without linking your account, you cannot make transactions for buying or selling cryptocurrencies. Choose your bank account as your primary payment option.
Step 4: Place Order to Buy Bitcoin
It is time to purchase bitcoin or other cryptocurrencies with your trading account. You need to determine how much quantity you need to purchase. Always keep in mind to put your extra money in trading. Do not put that part of the money which you will need for daily expenses.
If you are new in trading and facing difficulty, you can help an expert determine the investment amount. Make an investment strategy and invest accordingly. Invest the figured amount in bitcoin or other cryptocurrencies. Cryptocurrency exchanges might also charge transaction fees, so research before making an account.
Step 5: Manage Your Investment for Better Profits
Once you have bought coins, you have to manage the same. You can use them for online payments or use price fluctuations to make money. The prices of coins go up or down like the stock market, making profits from the changing prices.
Some traders also take advantage of the price difference from one exchange to another. The difference arises because any centralised system does not manage cryptocurrency. They are decentralized and traders can make profits from them.
Ways to Invest in Bitcoin and Make Money
There are two most common ways to make an investment in any cryptocurrency. The buyer must collect data and then make the cryptocurrency investment. The ways are:
Day Trading: Trading and closing your transaction is a single day it usually said as day trades. These traders take advantage of short price changes to earn profit. It is because they are the most active traders in the market and make daily profits from their money.
The primary job of these traders is to earn money from day trades. They target short-term profits from the market. It requires a lot of experience to become a day trader. Trading tools provided by exchanges are also helpful in making trade decisions.
CFDs Trading: Another method to make quick profits from cryptocurrencies is CFD trading. CFDs are Contracts for Difference, they are a type of trading instrument that can be used to make money. It does not involve the direct buying of coins, rather than speculating on their prices.
The net difference between the opening and the closing prices can be settled into cash on the predetermined closing date of the contract. The difficulty level for CFD trading is hard, and you require proper experience for trading CFDs.
Investment: Investment is referred to putting your money in bitcoins for the long term. The time period may vary from months to years. Investors generally look for big price differences in the price of bitcoin. They are the least active traders in the market.
The money earned from the investment is treated as their side income and not as the primary income. Long term policies are studied by the investors and not the short term strategies like day traders.
Pros of Buying Bitcoin
Traders must be thinking why we should invest in bitcoins. There are several advantages of investing in bitcoin that traders must know. The market is highly volatile and you can earn good profits from the volatility. You should grab proper knowledge before invest in bitcoin. Here are the reasons why you should invest in bitcoins:
24/7 Availability: Traders can access bitcoin 24/7 for buying or selling bitcoins. The crypto market works 24/7 and people are free to enter and exit the market at their convenience. You can use any exchange to access the market.
Along with accessibility, the market is liquid, and traders can easily find buyers and sellers for bitcoin. Traders from Japan, China, London, New Zealand, Australia, and others are actively participating in the market.
Volatile Market: The cryptocurrencies are highly volatile and traders can take advantage of the ups and downs of the price of bitcoin. Volatility is a game-changer and traders need this thing to earn a good profit from the market.
Investing in bitcoin can also be very profitable for you as the same is facing high volatility. The price of the coin moves up and down quickly, and traders can easily make money with this price movement. Study the market for better opportunities.
Transparency: The transactions of bitcoin are recorded in an electronic ledger and this ensures complete transparency of transactions. No one can make a false entry or hack the system to take coins. It is protected and that same is 100% transparent as well as secured for all the users.
Control over Coins: After purchasing bitcoin you will have complete control over them. Traders can hold them for as long as they want or they can make quick money from them and exit the trade. The value of coins is increasing day by day as well as the technologies operating them are the best.
This ensures that an investor has complete control over the bitcoins purchased by him/her. Multiple devices can be used to access them.
The Bottom Line
Bitcoin is a growing investment and investors are generating good returns from it. There are various types of trades through which you can earn a return. You will need a good cryptocurrency exchange or brokers for completing your day to day activities.
An investor can store bitcoin in wallets or can use it as a medium of exchange. For long term investment, a hardware wallet can be used to store bitcoin. If you are day trading use stop-loss to minimise your loss. Stick to an investment strategy that can drive the best value for your money.