Buying Bitcoin for Dummies

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Which are the best ways to buy bitcoin? We explain some of the best and simplest ways to invest in Bitcoin, as well as how to store your coins.

The cryptocurrency industry has grown rapidly in the past few years. The industry reached its peak in 2021 as interest rates remained at a historic low and governments provided trillions in stimulus cash. In this article, we will look at the best approaches to buying and storing your bitcoins.

Why invest in Bitcoin?

Bitcoin is the biggest cryptocurrency in the world. In January 2023, all bitcoins in circulation were valued at over $300 billion. At its peak, it was valued at over $2 trillion, which was remarkable for an asset launched a decade earlier. 

There are several reasons why people buy Bitcoin. Some buy it to diversify their investments. Others buy BTC because of their distrust of central authorities like central banks and governments. Further, you may want to buy Bitcoin because of its limited supply and as a hedge against inflation. Other people buy Bitcoin because of their value for privacy.+ So, let us look at how to buy BTC easily

Using a centralized exchange

One of the easiest methods of buying BTC is using a centralized exchange. These are companies that provide a platform where any person can create an account, deposit cash, and buy their cryptocurrencies. 

It is important that you do your due diligence on the best centralized exchange to use to buy your crypto. In the past few years, many people have lost billions of dollars using unsafe exchanges. For example, FTX customers lost over $8 billion when the company went bankrupt. Other centralized exchanges that went out of business were Voyager Digital, Mt. Gox, and Quadriga CX.

After purchasing Bitcoin, you can keep it in the exchange or transfer it to a separate wallet. Cold storage platforms like Trezor and Ledger are ideal since they are not connected to the internet.

Using a decentralized exchange 

A decentralized exchange (DEX) is a platform that facilitates the exchange of cryptocurrencies without a central authority. With these platforms, users don’t need to register and provide their personal information. Instead, they only need to link their crypto wallets. These companies rely on decentralized liquidity providers and smart contracts that ensure their safety. Most DEX platforms run on Ethereum, BNB Chain, and Tron. Examples of these firms are Uniswap, GMX, and dYdX.

Using a peer-to-peer exchange

Another way to buy bitcoin is through a peer-to-peer (P2P) exchange. These are companies that enable people to buy and sell cryptocurrencies among themselves. Unlike centralized exchanges, they don’t set the prices of cryptocurrencies. 

Instead, sellers set the prices and interact directly with the buyers. As a buyer, you will select your preferred seller, who will put the coins in an escrow account. The seller will then release the coins to the buyer, who can then transfer them to a cold wallet.

Using a payment wallet

Many wallets and other fintech companies make it possible for one to buy Bitcoin easily. Companies like Skrill, PayPal, and CashApp have integrated crypto features in their platforms. Buying bitcoin using these platforms is easy, especially if you have funds in them. For example, with PayPal, you just need to go to the “crypto” tab, select the coin you want to buy, and enter the amount. Your funds will be used to buy the coins.

Summary

Buying bitcoin in 2023 is significantly easier than it was a few years ago. Transaction costs have also declined because of the rising competition in the industry. While there are many exchanges, you need to do adequate research about the future of bitcoin and the safety of the exchange. Also, you should read the terms of service to ensure that the exchange is not lending your funds. 

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