How to Buy Bitcoin — Beginner
By Parth Patel (A Bitcoin Investor)
A simple guide for beginners
The best way to understand bitcoin and other cryptocurrencies is simply to buy some of them and try it out. In this guide, I’ve included instructions on how to purchase bitcoin. I always recommend everyone buy $10 worth as an interesting learning experience. Whether to invest, what you invest in, and when you invest is up to you. This guide is not investment advice. If you want to read up on bitcoin before buying, check out this Bitcoin Source.
The first thing to know about buying bitcoin is that you will need two things:
- A place to buy it called an exchange.
- A place to store it called a wallet.
So imagine you want to convert your USD into Indian Rupees. You take your cash to a foreign exchange shop (the exchange). You give them USD, they take a cut and give you the rest in Rupees. You then put the Rupees in your wallet (the wallet). Buying bitcoin is similar to that, but the transactions are digital here.
Step 1 — How to Get a Wallet?
Coinbase is not the best wallet you can choose from a security standpoint, but the reason it is recommend for beginners is that is it both a wallet and an exchange, so it makes your first experience buying bitcoin much easier.
The reason behind bitcoin is that you own your money and no one can take it from you. The only way this is true is if you own something called your “private key” — like the password to access your money. Other than the most wallets, Coinbase stores your private key for you. For a lot of people that’s handy, because if you lose your private key, your money is as good as gone. Like if you have a safest locker that you lost the password to. You know where the money is, but you have no way to access it. The danger of having Coinbase store your private key is that if they get hacked, you lose your money. If they go bankrupt or disappear, you lose your money. If the US government decides Coinbase can’t operate anymore — you lose your money. All of these are highly possible. Long story short, Coinbase is good for learning and getting started. But if you want to put material amounts of money into crypto, this is not the place to do it.
Step 2: How to sign up for a Coinbase account?
Remember the first time you registered for a bank account? It may have seemed easy at that time, but in back, the process was pretty intensive. You had to show up at a physical bank near you. You also had to show up during banking hours during the middle of your work day. You had to present government issued photo ID or passport to the bank and if the manager wasn’t there, you had to come back another day. Getting set up to purchase crypto currency is not all that different, it’s just done online. Remember that when you get frustrated at any point in the process.
To get started, fill in the boxes and verify your email like you would with any other signup process. Then click the big blue create account button! (Other countries may ask significantly more questions as a part of their regulatory compliance).
Coinbase is required to verify your identity just like a bank would be. Take a photo of your ID and they will verify you are human. This verification process could take minutes or hours or days or weeks. And you won’t know which one it’s going to be, so you’re best to set up your account before you’re in a hurry to buy.
Step 3: How to connect to a Money Source?
In order to buy crypto currency, you need a way to pay for it. You will need to add a payment method to your Coinbase account the same way you would add your debit card to your amazon account. Enter in either a debit or credit card. Note that there will be a much lower threshold for purchases on a credit card for risk reasons.
Step 4: How to buy the crypto currency?
Click on “Portfolio” at the left of the page or if you are in app, it will at the bottom. You’ll see an awesome list of a whole bunch of different cryptocurrencies. These are all the cryptocurrencies Coinbase offers on their exchange. If you don’t see the token you want to buy here, you will have to sign up for a different exchange.
If you want to buy bitcoin and ether but don’t know which one is which, then the ones you want are BTC and ETH.
The most important rule of buying crypto currency is only invest what you are willing to lose completely. Those of us who have been around for a while are used to watching half our investment disappear overnight. That’s the downside of a volatile market. If you can’t handle this or will need your money to maintain its value in case you need it in the short term, then investing more than a few bucks in crypto currency is not for you.
The other thing to remember about it crypto currency is that’s it’s still taxable as income or capital gains. Start tracking your purchases and sales right from the get-go or you’ll find yourself in a bad mess at tax filing time.
Yes, we did it!
Hurray! You are now the happy owner of a cryptocurrency. Have fun with your investing mind! I wish you become a wealthy one.
Hit a follow if this gained you some knowledge on crypto.