The Beginner's Guide To Bitcoin Part 3

How To Buy And Store Bitcoin

How To Buy Bitcoins
Bitcoin Buying Guide

HOW TO BUY BITCOINS

Bitcoin Buying Guide

HOW TO BUY BITCOINS

Similar to how you would exchange any Fiat currency at a foreign exchange (for example US dollars to Euros), “buying” Bitcoin is simply exchanging it at a Cryptocurrency Exchange.

It’s important to remember that bitcoin is a spendable currency, and in the future it will be accepted by more businesses as mass adoption takes place.

You wouldn’t necessarily say that you are “buying Euros” - just that you’re exchanging US dollars for Euros, which is exactly what’s happening with Bitcoin on the cryptocurrency exchanges.

There are two main “types” of exchanges:

  1. Fiat to crypto exchanges that convert US dollars, Euros, Yen, etc. into certain major cryptocurrencies like Bitcoin, Ethereum, Litecoin, and Bitcoin Cash
  2. Altcoin exchanges that convert Bitcoin and Ethereum to lesser known coins like DASH, NEO, Ripple, etc. (which we cover in our free guide to buying altcoins).

To buy Bitcoin, we’re only concerned about the first type of exchange, which will convert your country’s currency into Bitcoin.

The two most popular exchanges that do this are Coinbase and Gemini.

In order to buy Bitcoin, here’s what you need to do:

  • Go to a cryptocurrency exchange like Coinbase or Gemini
  • Set up an account (which will include some identity verification)
  • Hook up your bank account or credit card
  • Decide how much money you want to convert
  • Make the purchase or exchange

At a high level, it’s really as simple as that. However, there are a few other important points we need to address, like how much to invest, where to store it once you’ve bought it, and what you can actually do with it.

Bitcoin Investment

HOW MUCH SHOULD I INVEST?

Bitcoin Investment

HOW MUCH SHOULD I INVEST?

While this question is obviously dependent on how much money you have and how much you want to invest, we definitely recommend that you start small and build up.

This is ESPECIALLY true if you’re completely new to Bitcoin and cryptocurrencies, as we want you to be comfortable with the process, understand how it all works, and feel confident in your ability to use the systems the way they were designed.

The last thing we want is someone investing $100k without knowing what they are doing, and then accidentally sending it to the wrong address or giving out their private keys and losing it all.

So if you’re completely new to Bitcoin, you might wanna start with somewhere between $20 and $200 and watch/play with that amount until you feel ready to invest more.

We discuss all the strategies for creating, tracking, managing, and perfecting your portfolio in our upcoming course, Perfect Portfolio, which takes you from zero knowledge of bitcoin and cryptocurrencies, all the way to owning and understanding your full portfolio of multiple cryptocurrencies that can result in big financial gains. You can sign up for the waiting list here.

If you want to invest more than this and you have an understanding of how everything works, then you can invest in the $200-$2000 range. Again, we want to make sure you get comfortable with how everything works so that you don’t make a mistake that will cost you your investment.

Finally, if you’re going to invest more than $2000, then you probably either:

1.Already know what you’re doing, in which case why are you reading this article?

-Or-

2.Need to invest a smaller amount to start, in order to get comfortable with it before putting all that money in.

Once you’ve decided the amount you want to invest and set up your account on a cryptocurrency exchange, you can make your purchase, which will then be available on your account.

After your purchase, this amount of Bitcoin is claimed by you, and you can do whatever you want with it. You have all control over it, which is part of why Bitcoin is so great.

store bitcoin

WHERE DO I KEEP MY BITCOIN?

store bitcoin

WHERE DO I KEEP MY BITCOIN?

An important thing to realize with Bitcoin is that you don’t actually “hold” it - it always exists in the network, and by purchasing it, you’ve “claimed” it as yours, and only you can access it or spend it.

This is similar to how storing your photos on the cloud works - you are the only one that has access to your photos on the cloud, but you don’t actually store those photos on your phone or computer.

Instead, you access it in the cloud, where you have claimed that space as yours.

The same is true of Bitcoin - it stays in the network, and you simply “claim” that Bitcoin when you buy it, and the only way to access that claimed Bitcoin is through your specific private keys from your wallet or exchange.

When you buy Bitcoin through an exchange like Coinbase of Gemini, you could choose to simply keep your money on the exchange and call it a day. However, this is risky in that you’re trusting these exchanges to keep your funds safe.

And while these are solid, reputable exchanges, and it’s very unlikely that they would get hacked, we’ve seen it happen in the past with Mt. Gox and even seen well-known companies like Target and Playstation get hacked in recent years.

Because of this, it’s safer to transfer it to a digital “wallet”, that only you have access to.

Wallets can be “hot” or “cold”.

Hot wallets mean that it’s still connected to the internet and the network, meaning that while it’s relatively safe, if someone hacked into your computer, they could steal your money.

Cold wallets, on the other hand, are completely disconnected from the network and can only be accessed by the person with the wallet and the private keys. Because of this, cold wallets are the safest way to keep you Bitcoin. These are typically special USB drives that can store your Bitcoin, and they cost around $100.

So what should you choose?

It really depends on how much money you’re putting in, how much you trust third-party sites like Coinbase, and how much personal responsibility you’re willing to take on. After all, if it’s in a cold wallet, your Bitcoin is just like money in your physical wallet right now - if you lose it, it’s gone.

Then again, if your exchange loses your money, it’s also gone.

If you’re completely new to Bitcoin and you’re just investing a small amount of money ($20-$200), then it’s probably okay to leave it on the exchange, as long as you recognize there is a little risk in that.

If you’re investing more ($200-$2000), then it’s recommended that you get a hot or warm wallet of some kind - we like myetherwallet and Exodus to start, but read our full series on wallets for more recommendations.

This takes your money off the exchange, and while your money is still connected to the internet, it’s in a much safer place and you have much more control over it.

Finally, if you’re investing a lot of money ($2000-$20,000+; only recommended if you know what you’re doing after investing a smaller amount for some time), then we definitely recommend putting it in a cold wallet, like a Nano Ledger. This is the safest way to keep it, as it’s unhackable - you just need to make sure you keep the private keys safe and put the wallet in a safe place.

Remember - the responsibility is yours, which is part of what is so appealing about this movement.

Side note: We at GCA have a vision of owning multiple cold wallets in glass cases with foam cutouts to keep them, with each drive holding a good bit of different cryptocurrencies. This is like the new version of a basement vault filled with gold and silver, and it’s exciting to think about.

Spend Bitcoin

CAN I SPEND MY BITCOIN?

Spend Bitcoin

CAN I SPEND MY BITCOIN?

One important and final point here is that while Bitcoin is currently more of an investment, what sets it apart from things like stocks and bonds is that Bitcoin is actual money. You can spend it like you would normal cash, wherever it is accepted.

In the coming years, more and more businesses will begin accepting Bitcoin, which will drastically increase its use as a currency.

For now, it’s best to simply hold onto it, especially since it’s still increasing in value so much.

However, one option to look into now is something called a “Shift” card from Coinbase that works like a credit card that will immediately transfer your bitcoin to Fiat currency when you use it on any goods.

With a card like this, you could go grocery shopping with your bitcoin, because the card will convert your bitcoin as soon as you spend it.

On top of this, there are several other ways you can spend your Bitcoin.

cryptocurrency_newsletter

JOIN THE BITCOIN MOVEMENT AND PROFIT FROM IT

cryptocurrency_newsletter

JOIN THE BITCOIN MOVEMENT AND PROFIT FROM IT

Bitcoin and other cryptocurrencies are incredibly revolutionary and give power back to the people and take it away from the power structures and institutions that are in place right now.

That’s why we’re such big advocates of cryptocurrencies - we see how they can change the world, and make it more honest with less corruption.  

But stepping away from the future, the theory, and the potential, and coming back to practicality and our current reality, Bitcoin can be a life-changing investment and a huge money-maker.

By investing money in it, you’re essentially showing your support of the movement, which will reward you as it gains in value and becomes successful.

Therefore, you can have your cake and eat it too - you can support an important movement while also getting something out of it for yourself.

Even if you just start with $20, getting into Bitcoin and cryptocurrencies is worth it.

If you want more step-by-step help in buying Bitcoin, be sure to snag our free guide that walks you through the entire process so that you know that you’re doing it right.