What You Should Know Before Buying Your First Bitcoin
If this is your first time buying Bitcoin, then naturally, you will have lots of questions, such as what is the best place to buy Bitcoin, or where do I store Bitcoin? You might as well consider buying just a fraction of it and whether it’s possible to do so. You should know that buying Bitcoin isn’t necessarily complex. You can break down the entire process of buying Bitcoin in a few simple steps that we will discuss below.
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Get Your Wallet
The first step of buying Bitcoin is to get your very own Bitcoin wallet. However, before you proceed to do so, we recommend that you get educated on cryptocurrencies, especially what is bitcoin, and how the Bitcoin market works. A Bitcoin wallet enables you to send, receive, and store Bitcoin. You can choose from two types: cold wallets and hot wallets. You might as well refer to these wallets as software wallets and hardware wallets.
Software vs. Hardware Wallets
Software wallets essentially run on your computer or mobile device in the form of apps. On the other hand, hardware wallets are small physical devices that you can link to your computer to send and receive your digital currency. The latter is a safer option for storing your digital currency.
If you want to buy a fraction of Bitcoin, then you might want to opt for software wallets, as these are great for small amounts and are also free to use. However, if you are planning to accumulate a large amount of Bitcoin, then you’re better off with the hardware wallet, as it is great for safe storage.
Get Your Bitcoin Address
You need to get a Bitcoin address to receive Bitcoin. Your Bitcoin address comprises a long string of numbers and letters. The address either starts with the number three or the number one. Your Bitcoin address will serve as a unique identifier that will enable you to receive and send Bitcoin.
You might want to think of the Bitcoin address in terms of bank account numbers in the traditional banking system. Similar to bank account numbers, the Bitcoin address is crucial for any transaction that involves Bitcoin, whether you are paying for services or goods or receiving a transfer from another Bitcoin user.
Buy Your Bitcoin
Once you have your Bitcoin address, it is time to buy Bitcoins. To buy bitcoins, you must find an online exchange. Exchanges can be categorized into two groups: trading platforms and brokers. The process of brokers is fast and easy, as they will sell you bitcoins directly. However, brokers will charge you higher fees. Nonetheless, as a beginner investor, we recommend that you buy your Bitcoin from brokers as these are simple to use and great for beginners.
On the other hand, trading platforms come with more trading options, and they match buyers and sellers anonymously. Compared to brokers, trading platforms charge much lower fees. Buying Bitcoins from trading platforms is better suited for the more experienced Bitcoin users, which is why we recommend that you partner with a reputable broker for your first purchase.
