Bitcoin is the largest cryptocurrency in the world. For most people, the best place to buy Bitcoin is a crypto exchange. These are online platforms, similar to online brokers, that specialize in facilitating crypto trading.
The innovative technology behind Bitcoin (BTC) offers a revolutionary way of carrying out transactions and storing your wealth. While some of the jargon surrounding cryptos can be challenging at times, the ways to buy and hold crypto coins such as Bitcoin can be a lot more straightforward.
Bitcoin for Beginners
It can be intimidating to get into crypto, especially for the first time. However, buying bitcoin doesn’t have to be difficult. In fact, you can learn how to purchase bitcoin with confidence and ease as long as you follow these steps:
- Ask yourself the right questions: Think about all of the things you don’t yet understand about Bitcoin, or how to trade cryptocurrency in general.
- Learn about Bitcoin: Like all assets,including stocks and bonds, it is important to establish how a market works before entering into it.
- Buy Bitcoin: Make your initial bitcoin purchase somewhere you trust.
- Store Bitcoin: Make sure that your bitcoin is secure and accessible for future use.
Tip: Online social trading chat rooms can be a good place to start finding out more about Bitcoin.
How to Buy Bitcoin
Once you’ve established you do want to buy Bitcoin the next step is to consider the different ways of making your first purchase. You can buy bitcoin with a bank account using a broker platform, or even buy it in person. Each approach has its own benefits and drawbacks.
Broker platforms and exchanges
When it comes to buying bitcoin, exchanges and trading platforms are a good place to start. These online sites match buyers and sellers in an efficient manner and allow you to get the best price for your bitcoin purchase.
Multi-asset trading platforms support trading in Bitcoin as well as more conventional assets such as stocks, currencies and commodities. Once you’ve deposited funds into your account using fiat or crypto, orders to buy Bitcoin can be executed by clicking a button or tapping a screen.
Peer-to-Peer
The original advocates of crypto would transact in a peer-to-peer nature, whether it be through in-person meetups or online message boards and forums. Today, you can still buy bitcoin from online peer-to-peer marketplaces.
Sites still match crypto holders (i.e., crypto owners) with those looking to buy bitcoin and facilitate a transaction. The buyer and seller agree to a price and transact using the site’s escrow service.
While the P2P nature of LocalBitcoins makes it ideal for purists who avoid centralised entities at all costs, don’t expect to get the best price for your bitcoin purchase, as such marketplaces are much less efficient than traditional exchanges, and scammers have been known to flock to unsuspecting users of P2P sites.
How to Keep Your Crypto Secure
You can choose to have total control over your own cryptos, or hand over the reins to a trusted financial institution to provide custody for you. Storage and security is of the utmost importance, as those without proper storage are at risk of having their Bitcoin stolen or lost forever.
Digital wallets
Digital wallets hold an online record of your Bitcoin holding in the same way that a bank or broker keeps a record of your cash balance or stock portfolio. The pros and cons are also similar.
With digital wallets such as the eToro Wallet, you are relying on a third party to securely store your Bitcoin. Nothing is ever guaranteed, but proponents of this approach take the view that specialist service providers are in a good position to perform the task. Digital wallets also enable you to send and receive cryptocurrency from other wallets with relative ease.
Self-Custody
If you want to manage the security of bitcoin yourself, you could opt for self-custody and store your Bitcoin in “cold storage” using a hardware wallet such as a hard drive.
While storing your Bitcoin in a “cold wallet” reduces the risk of it being exposed to online security risks your bitcoin won’t be very accessible and losing the hard drive would equate to losing your Bitcoin.
How to Buy Bitcoin on eToro
In order to buy Bitcoin on eToro, you will need to sign up and deposit funds.
- Step 1: Sign up — If you’d like to buy bitcoin through eToro, all you need to do is sign up, using the online account registration page.
- Step 2: Deposit funds — Link your bank, and transfer fiat currency or crypto assets into your eToro account.
- Step 3: Buy Bitcoin — Bitcoin can be purchased fractionally, so you don’t need to buy a full bitcoin to own some. For example, if Bitcoin’s price is $60,000, you can purchase 0.1 bitcoin for $6,000.
Final thoughts
Bitcoin may be based on ground-breaking technology and offer a route to a wholesale transformation of the global financial system, but at the same time, mainstream adoption of crypto has resulted in a wider range of ways of buying it.
This doesn’t necessarily mean that the price of Bitcoin will go up, but carrying out research about how you buy and hold Bitcoin will at least allow you to avoid some of the pitfalls that used to be associated with the crypto markets.
Learn more about Bitcoin by joining the eToro Academy.
FAQs
- What are “Altcoins”?
-
Altcoins or “alternative coins” are cryptos other than Bitcoin. The list of altcoins includes Ethereum and Doge. Altcoins have often been designed to address the perceived limitations of Bitcoin or explore new applications of blockchain technology.
- What is a “hot wallet”?
-
A “hot wallet” is a digital cryptocurrency wallet that is always connected to the internet. It allows users to access their crypto holding with relative ease and carry out transactions, but it potentially poses a higher security risk compared to cold wallets, which store crypto offline.
- Can I hold Bitcoin in physical form?
-
No, you cannot hold Bitcoin in physical form. It is a digital currency where ownership and transactions are tracked using blockchain technology.
This information is for educational purposes only and should not be taken as investment advice, personal recommendation, or an offer of, or solicitation to, buy or sell any financial instruments.
This material has been prepared without regard to any particular investment objectives or financial situation and has not been prepared in accordance with the legal and regulatory requirements to promote independent research. Not all of the financial instruments and services referred to are offered by eToro and any references to past performance of a financial instrument, index, or a packaged investment product are not, and should not be taken as, a reliable indicator of future results.
eToro makes no representation and assumes no liability as to the accuracy or completeness of the content of this guide. Make sure you understand the risks involved in trading before committing any capital. Never risk more than you are prepared to lose.