How to Buy Bitcoin in 4 Steps
1. Choose a Crypto Exchange
To buy Bitcoin or any cryptocurrency, you’ll need a crypto exchange where buyers and sellers meet to exchange dollars for coins.
There are hundreds of exchanges out there, but as a beginner, you’ll want to opt for one that balances ease of use with low fees and high security. Be sure to check out our top picks for best crypto exchanges, like Unocoin, WazirX, ZebPay, and CoinDCX if you don’t already have an exchange in mind.
You can transfer your cryptocurrency from one exchange to the other. For example, if you need to move your bitcoin from your WazirX wallet to another crypto exchange, you need to go through the procedure of withdrawing your bitcoins from your WazirX account. Get the deposit address from the crypto exchange you want to transfer your cryptocurrency. Once you have the deposit address ready, you are set to transfer your funds.
2. Decide on a Payment Option
After choosing an exchange, you have to fund your account before you can begin investing in Bitcoin. Depending on the exchange, you can fund your account through bank transfers, net banking, Mobikwik, a cryptocurrency wallet or UPI.
Keep in mind, though, that platforms may charge higher transaction fees for certain funding options. For example, CoinDCX doesn’t charge a fee if you use UPI and bank transfers. However, it charges 0.5% on net banking and 1% charges above INR 2,000 via Mobikwik wallet. On the other hand, WazirX charges INR 23.6 (including all taxes) via net banking or it requires you to top up your Mobikwik wallet using UPI or bank transfer before transferring the funds. Credit cards are not supported for wallet transfer and charges depend on the getaway you use.
Because fees reduce how much money you can invest (and therefore also how much money you have to grow and compound), it tends to make sense to use electronic transfers from a bank account rather than other methods.
3. Place an Order
Once your account is funded, you can place your first order to buy Bitcoin. Depending on the platform you’re using, you may be able to purchase it by tapping a button, or you may have to enter Bitcoin’s ticker symbol (BTC). You’ll then have to input the amount you want to invest.
When the transaction is complete, you will own aportionof a Bitcoin. That’s because it requires a large upfront investment to buy a single Bitcoin now. If Bitcoin’s current price was $38,000, for example, you’d need to invest that much to buy a Bitcoin. If you invested less, say $1,000, you’d get a percentage, in this case 0.026%, of a Bitcoin.
4. Select a Safe Storage Option
The crypto exchange you use probably has an integrated Bitcoin wallet or at least a preferred partner where you can safely hold your Bitcoin. Some people, however, do not feel comfortable leaving their crypto connected to the internet, where it may be more easily stolen by hackers.
Crypto exchanges are storing the majority of customer assets in offline so-called cold storage. If you want ultimate security, you can store your Bitcoin in an online or offline Bitcoin wallet of your own choosing. But keep in mind that if you move crypto off of an exchange, you may have to pay a small withdrawal fee. In addition, if you use a third-party crypto wallet custodian, you may also be permanently unable to access your coins if you lose the private key that serves as your wallet password. This has locked some Bitcoin millionaires out of their fortunes.
Selling Bitcoin
When you decide you’re ready to sell your Bitcoin, you can place a sell order through your exchange, much like you did when you originally purchased your BTC. Most exchanges offer multiple order types, so you can decide to sell only when Bitcoin reaches a certain price, or you can place an order that goes through immediately.
You can choose to sell your entire holdings of Bitcoin or only a specified amount. Once the sale goes through, you can transfer the money to your bank account. Your exchange, however, may have a holding period before you can make a transfer back to your bank account. This isn’t cause for concern; it simply takes some time to make sure the transactions are clear.
When you sell your Bitcoin, you may make a profit. If you do, you’ll be on the hook forcapital gains taxesas cryptocurrency sales must now be reported on your taxes.
Should You Buy Bitcoin?
Especially when Bitcoin’s price is skyrocketing, investing in the popular cryptocurrency can be tempting. But while it has the potential to be a lucrative investment, you should be cautious: It’s an incredibly volatile purchase that experts don’t recommend you allocate a large percentage of your investing dollars to.
If you’re not sure whether investing in Bitcoin or other cryptocurrencies is a good idea for your needs, consider meeting with afinancial plannerwho can help you figure out where cryptocurrencies fit into your investment strategy.
