Learn how to buy, sell, and trade Bitcoin with these helpful tips.
For many, Bitcoin (BTC) is almost synonymous with cryptocurrency. As such, it may be the first cryptocurrency you consider buying. But how do you go about learning how to buy, sell, and trade Bitcoin?
In this article, we’ll help you understand Bitcoin better and discuss best practices for buying and selling it as part of a larger strategy.
What Is Bitcoin?
Bitcoin is a digital currency issued on a decentralized network, using cryptographic approaches that make it nearly impossible to hack or manipulate. It allows for secure transactions between individuals without the need for third partiesn.
Bitcoin also helps parties in a transaction to remain relatively anonymous by keeping two keys related to transactions — a public key viewable by anyone and a private key known only to the crypto owner. The public key facilitates transactions; the private key is required to authorize them.
Today, Bitcoin has morphed from a basic payment system into an investment aseet in its own right, representing almost half of the $1 trillion-plus cryptocurrency market.
Bitcoin owes much of its transformation to a remarkable and highly volatile increase in price since its inception. This volatility can be attractive for speculators but potentially acts as a deterrent to more risk-averse investors.
For example, in 2016, a single Bitcoin cost around $500. In May of 2022, the same Bitcoin approached $30,000. More recently, it has traded for just over $22,000. Even during the same day of trading, its price can fluctuate wildly.
So, before buying Bitcoin, it’s important to fully understand its potential value and risk. But if you’ve decided to give Bitcoin a try, how exactly do you go about buying it? Let’s take a look.
How to Buy Bitcoin
When you’re ready to buy Bitcoin, you’ll need to consider where to buy it, how you’ll pay for it, and where to store it once you own it.
To buy Bitcoin, you’ll need to find an exchange (or platform) that offers crypto for purchase and allows you to sell or trade it. Some payment services allow you to buy crypto, but with a catch, which we’ll share more about later.
Crypto platforms provide a marketplace where crypto buyers and sellers connect. They may offer a range of associated services and products related to cryptocurrencies. They charge fees for transactions to cover their costs and generate profits.
They also require you to fund an account that will be used to buy your Bitcoin. How you fund your account may vary by platform, but, most commonly, they accept bank transfers, credit or debit cards, domestic and international wire transfers, or other established payment services.
Finally, some platforms may provide a method for you to store your Bitcoin once you’ve purchased it, such as a crypto wallet.
With this information under our belt, let’s go step-by-step through how to buy Bitcoin.
Buy Bitcoin in 4 Simple Steps
Step 1: Set Up an Account
First things first, sign up with the exchange or crypto platform of your choice. Provide any required personal information.
Platforms like Binance.US allow you to create your account and start buying and selling cryptocurrencies in minutes.
Step 2: Fund Your Account
Depending on the platform you’ve selected, you may be able to transfer money from a checking account, provide a credit or debit card, or use wire transfer to move money into your account to pay for your Bitcoin purchase.
Remember: When you fund your account, you haven’t bought any cryptocurrencies. Your money is still sitting in an account waiting to be put to use.
Consider carefully how you fund your account. Transferring money may be most cost-effective, depending on any fees charged for this by your bank, financial institution, and/or the exchange. Binance.US, for example, does not charge any fees for USD deposits made using bank transfer (ACH).
Step 3: Buy Your Bitcoin
Using your platform’s web interface or app, complete your purchase. Depending on the crypto platform, you may be given a choice of placing a market order — “buy now at the current market price” — or placing a limit order — “buy when the price reaches this amount.”
Step 4: Put Your Bitcoin Somewhere Safe
It may be digital, but Bitcoin still has to be safely stored. Some exchanges allow — or even require — the crypto to remain on their platform for safekeeping. This, of course, requires complete trust in the platform.
Another option is to transfer your Bitcoin to a crypto wallet that you hold and control. These come in software or app versions or hardware, such as a dedicated USB drive. Both have distinct features, advantages, and limitations.
For example, digital wallets put you in the driver’s seat for security — you are holding your crypto’s private key. They also give you more flexibility since you control access to your Bitcoin. On the other hand, some exchanges, place limitations on when you can move or sell your crypto.
This brings us to an option for buying Bitcoin mentioned earlier: using a payment service, such as PayPal, to buy Bitcoin directly. While simpler, it may come with a limitation: You can’t move your Bitcoin to a digital wallet. It must remain on the payment service’s platform.
How to Sell or Trade Bitcoin
The same crypto platform that enabled you to buy Bitcoin will support you doing the reverse. And selling your crypto is pretty much as straightforward, minus the initial steps of setting up and funding your account.
Sell orders can also be made at the current market price or at some predetermined price if the exchange supports them.
Benefits of Buying, Selling, and Trading Bitcoin
You don’t have to be an investor to buy Bitcoin. It began as an innovative decentralized digital payment system. So, it’s possible to purchase Bitcoin for transactional use only.
But the lion’s share of attention for Bitcoin and other cryptocurrencies has undoubtedly been as an investment.
What are some reasons people find Bitcoin a compelling investment?
Many look to Bitcoin as a valid alternative store of long-term value. Compared to fiat currencies, which can be affected by government policies and eroded by inflation, Bitcoin is untethered to such policies.
It also has a finite supply — there can never be more than approximately 21 million Bitcoin. This should prevent it from losing value due to oversupply and other inflationary pressures.
Given its history, many expect it to continue to offer the potential for meteoric price increases (despite its rocky road of volatility). This causes speculators to be drawn to it and other cryptocurrencies.
Finally, for many, Bitcoin represents the future. It is based on relatively new technology — blockchain — and may be a foundation for future financial innovation. Many would like to be in on the ground floor of that future.
Viewing Bitcoin as an investment opportunity means just that — viewing it with the same clarity of purpose and frank assessment of risk and reward as any other investment. This includes examining other options besides just buying, holding, selling, and trading.
Depending on the platform, Bitcoin “derivatives” may be available. These financial instruments draw on Bitcoin’s underlying value but don’t require an actual Bitcoin purchase.
They include futures and options – even crypto staking – which may be part of an overall investment strategy.
Choosing the Right Crypto Platform
As we’ve seen, there are plenty of options when considering how to buy, sell, and trade Bitcoin. Bitcoin even offers a dedicated website and app that enables you to “buy direct.” But you may want the option to buy and trade more than one type of cryptocurrency.
Binance.US allows you to trade over 120 cryptocurrencies with low fees and state-of-the-art storage technology to keep your digital assets safe.
With dedicated support and access to a community of like-minded users, you can take your cryptocurrency journey to the next level.
For more information on choosing the right crypto platform, visit Binance.US today.
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