Investing in bitcoin (
BTCUSD) can seem complicated, but it isn’t.It only requires an account at a service or a cryptocurrency exchange, and a way to store your purchases safely.
Bitcoin
investors need a cryptocurrency exchange account, personal identification documents if you are using a Know Your Client (KYC) platform, a secure connection to the internet, a method of payment, and a personal digital wallet outside the exchange account.Valid methods of bitcoin payment include bank accounts, debit cards, and credit cards.It’s also possible to get bitcoin at specialized ATMs and via peer-to-peer (P2P) exchanges.
Key Takeaways
– Bitcoin’s value comes from its store of value and payment system and its finite supply.
– Because a bitcoin wallet or exchange account can be compromised, it’s key to find out about safe storage and practice it and to take the necessary crypto security measures.
– Services such as Coinbase, PayPal, and Robinhood, among others, sell bitcoin.
Before You Buy Bitcoin
Privacy and security are important issues in the Bitcoin world.Investors who gain the
private key to a public address, which is a cryptographic code similar to a password that allows a user to accept cryptocurrencies in their account on the Bitcoin blockchain can authorize transactions.Private keys should be kept secret, and investors must be aware that the balance of a public address is visible.
Individuals can create multiple public addresses and distribute their collection of bitcoin over many addresses.A good strategy is to keep significant investments at public addresses, which aren’t directly connected to those used in transactions.
Less Than 1 Bitcoin
Investors can buy less than a whole bitcoin.Whether a wallet is 1 bitcoin, 15 bitcoins, or 0.01 bitcoin, investors are equally exposed to the cryptocurrency’s ups and downs.
Coinbase requires a minimum investment of 1 of your local currency, such as $1 or €1.
The history of transactions made on the blockchain is transparent, but identifying user information isn’t.On the Bitcoin blockchain, only a user’s public key appears next to a transaction, making transactions confidential, but not anonymous.
Bitcoin transactions are more traceable than cash because they are available for public view and it is very difficult to trace the transacting parties on the cryptocurrency’s blockchain.However, researchers and the FBI have claimed that they can track transactions made on the Bitcoin blockchain to users’ other online accounts, including their digital wallets.
When an investor creates an account on
Coinbase, they must provide their identification.If they send it to another wallet, it can still be traced back to the Coinbase purchase connected to the account holder’s identity.
Before buying bitcoin, be sure to check out the legal, regulatory, and tax status of purchasing it where you live.
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