Investing in Bitcoin is a stepping stone for most cryptocurrency investors. It’s easy to buy, and even stock brokerages like Robinhood support the asset. The cryptocurrency industry is full of opportunities, and Bitcoin’s just the tip of the iceberg.
Bitcoin was the 1st notable use of a blockchain. Blockchains are decentralized networks of computers, making it impossible for one single entity to control. This way, Bitcoin can have a maximum supply that nobody can manipulate.
Luckily, it’s extremely easy to buy Bitcoin. Before doing so, follow these steps to choose the best investment option for you.
- Compare your options.
Even if you already have an account with Robinhood, it’s a good idea to use a cryptocurrency exchange to buy your Bitcoin. You can’t send or receive cryptocurrencies on Robinhood, so it greatly limits how you can store your crypto as well as what you can do with it. Some great options for U.S investors are Coinbase, Gemini and eToro.
If you’re also interested in investing in altcoins, you should do some research to find out which cryptocurrencies are supported by which platforms. Coinbase supports over 50 cryptos, while Gemini only offers 33.
Another important factor you should consider before choosing a Bitcoin exchange are fees. Coinbase has a 1.5% transaction fee, which is comparable to most other exchanges. However, Coinbase also has a conversion feature that allows you to convert your cryptocurrencies for free. - Make a Cryptocurrency Exchange Account.
Once you’ve chosen the best cryptocurrency exchange for you, you’ll need to make an account. Usually all you need to register for an account is an email address and password, but you may need to verify your identity before you can buy Bitcoin.
Common documentation you may need to provide includes your Social Security number, birthday, driver’s license and home address. - Buy your Bitcoin instantly.
If you’re looking to buy your Bitcoin as fast as possible, then you should place a market order. Most exchanges use market orders by default, but some may use limit orders. Market orders purchase bitcoin for you instantly at market price, and limit orders only execute at a specified price.
- Get a wallet (optional).
Once you have Bitcoin, you need to keep it safe. It’s not recommended to store your bitcoin on an exchange, as exchanges are large targets for cryptocurrency hackers. Instead, you should use a software or hardware wallet to keep your crypto safe.
Software wallets are computer programs that securely store your cryptocurrencies. They’re generally free to use, and there are hundreds of options on the market. Hardware wallets are the safest way to store Bitcoin, as it keeps them on a physical device offline.
Benzinga's Recommended Bitcoin Exchanges
- Best For:Buying & selling DogecoinVIEW PROS & CONS:securely through Robinhood Crypto's website
Benzinga's Recommended Bitcoin Wallets
You can choose a hardware wallet or a software wallet. Here are 2 options.
- ERC-20 tokens
Ledger
Ledger is a well-known cryptocurrency wallet brand that many investors use to store crypto assets. The company has been in business since 2014, and its hardware wallets support over 1,000 different cryptocurrencies.
The brand features 2 cryptocurrency wallets: the Ledger Nano X and the Ledger Nano S. The Ledger Nano S is an affordable choice for most crypto investors, costing just over $50 on Amazon. The Ledger Nano X is Ledger’s flagship wallet, offering even more cryptocurrencies and Bluetooth connectivity.
- Active Crypto Traders
Coinbase
Coinbase is among the best ways to store your cryptocurrencies. The exchange is regarded as one of the safest trading platforms, as Coinbase stores 98% of investors’ crypto funds in a hardware wallet. Also, the exchange has a unique crypto conversion feature, allowing you to swap your Bitcoin for any other cryptocurrency supported by the exchange.
Coinbase Wallet is among the most innovative crypto wallets on the market. It allows you to store hundreds of cryptocurrencies and NFTs. When you download Coinbase Wallet, be sure to store your private keys somewhere safe –– it’s the only way you can recover your crypto if you lose access to your wallet!
How Does Inflation Work for Bitcoin?
Through its impenetrable code, Bitcoin has a finite supply of 21 million coins, and over 18 million of these have already been mined. The last 3 million or so bitcoins are slated to be mined until 2140, with the amount distributed halving every 4 years.
Since Bitcoin is being minted at a decreasing rate, the price should naturally increase over time. Of course, this is only the case if Bitcoin continues to gain adoption.
How Fast Will I Receive My Bitcoin?
If you place a market order for your Bitcoin on a cryptocurrency exchange, you should see your bitcoin in your account within a few seconds. If you receive Bitcoin from a transaction on the blockchain, it may take 10 to 20 minutes to appear in your account.
Current Bitcoin Price
Investors who’ve held Bitcoin through the bear market saw the price of Bitcoin dip to $3,200. Now 2 years later, Bitcoin has skyrocketed to new all-time highs over $64,000. Since then, Bitcoin has stabilized in the $50,000 range, which is a bullish sign for the cryptocurrency market as a whole.
Pros and Cons of Buying Bitcoin
Gone are the days of getting rich from a small investment in Bitcoin. The market capitalization of Bitcoin is over a trillion dollars, so the radical gains over the last decade won’t be seen again.
However, there still may be a lot of potential for Bitcoin, so you should weigh the pros and cons before investing.
Pros
- There is a fixed supply of 21 million bitcoin ever in circulation, so it’s supply is finitely scarce.
- More and more people own cryptocurrency. According to Coinbase co-founder Fred Ehrsam, 10% of U.S citizens own cryptocurrency.
- There is major upside potential. Some JP Morgan Analysts predict Bitcoin will reach well over $100,000 by the end of the year.
Cons
- Like other stores of value, Bitcoin doesn’t have revenues, profits or a balance sheet to base its worth on. This makes it hard to assess the intrinsic value of Bitcoin.
- Cryptocurrencies are much more volatile than other investments. If you’re not looking to take on significant risk, Bitcoin may not be for you.
Is Bitcoin a Good Investment?
Bitcoin has been the best performing asset class of the decade. The cryptocurrency traded for just a few cents in 2009, appreciating roughly 200% annually since its inception.
However, Bitcoin’s price hasn’t always gone up. There have been several bear markets where the cryptocurrency dipped over 80% in value, so if you’re not willing to take on high levels of risk, Bitcoin may not be for you.
Frequently Asked Questions
Can I buy Bitcoin without verification?
Most exchanges need to verify their customers before allowing them to invest. However, there are decentralized finance (DeFi) protocols that let you trade crypto anonymously. Although not recommended, you could also use a VPN to bypass verification.
Is it smart to buy Bitcoin?
Smart investors are allocating some part of their portfolio to Bitcoin. Many investors speculate there will be high inflation rates in the coming years, which would help Bitcoin rise in value compared to the U.S. dollar.