How to Buy and Sell Cryptocurrencies Safely and Securely
Bitcoin’s rising popularity can be measured by the thousands of daily transactions it processes. Crypto users have traded it since 2010, yet the subject of cryptocurrency remains a mystery to many individuals.
For beginners, Bitcoin is a virtual currency for online shopping and investment. Bitcoin is a decentralized digital currency that operates independently of central authorities. Coins can be “mined” for free or purchased with fiat cash.
This Bitcoin education guide will equip you with the knowledge and strategies to purchase cryptocurrency safely and avoid scams.
Best Way to Buy Bitcoin
Some individuals often ask crypto users how to buy Bitcoin. Making a crypto purchase is easy if you follow the right steps. With this in mind, we’ve devised a safe way to make a Bitcoin purchase.
Pick an Exchange Platform and Create an Account
An exchange platform is the best way to buy crypto. They are a practical choice since they provide access to a larger selection of tradable cryptocurrencies and a wider range of features. This facilitates the buying, selling, and holding of cryptocurrencies by investors.
You can also withdraw Bitcoin to an online wallet. Ensure you use a lengthy, unique password and two-factor verification when registering an account on a Bitcoin exchange. This password is a mix of uppercase and lowercase letters, numbers, and symbols.
There are a wide variety of crypto exchanges to make a Bitcoin purchase. Some are decentralized and don’t need users to verify their identities before they may trade. However, U.S. law requires users of popular exchanges to provide identification.
Add Payment Method
After creating an account with your preferred Bitcoin exchange platform, you need to add at least one payment method to make a crypto purchase.
Depending on the nature of the transaction, you may be asked to provide a means of identification. This includes a driver’s license, national ID, or social security card. Setting up a trading account is quite similar to opening a normal bank account.
Most crypto exchange platforms allow you to link your bank account or a debit/credit card. You may use a credit card to make a Bitcoin purchase, but the price fluctuation of the coins and the interest you’ll pay on the card could increase the final price. Although Bitcoin transactions are legal in the United States, certain banking institutions may still refuse to process crypto transactions.
Deposits made with a bank account, debit card, or credit card incur varying fees, and exchanges may impose additional transaction costs.
Buy Your Cryptocurrencies
Crypto exchanges now offer many of the same functions as traditional stock brokerages. Most crypto exchange platforms provide several order types and investment strategies. Customers can dollar-cost average into their preferred assets by using the automatic investing features provided by several exchanges.
Store your Cryptocurrencies
After making a crypto purchase, Bitcoin wallets are a safe and convenient way to store Bitcoin and other cryptocurrencies. Investors may guarantee they will always have access to their crypto by storing it in a wallet rather than on an exchange. While an exchange wallet is available, you shouldn’t use it to store more than a small amount of Bitcoin for the long term.
Types of Crypto Wallets
If you plan on making frequent trades, having your money in your exchange account is a good idea. If the opposite is true, then you need to create a crypto wallet. There are two popular options for storing cryptocurrency: a software (hot) wallet or a hardware (cold) wallet.
Cold Wallet
A cryptocurrency’s security is increased when stored in a “cold wallet,” which is not connected to the Internet. These offline wallets, or hardware wallets, encrypt a user’s private key with an offline medium. This enables users to check their holdings without exposing their private keys to the internet.
Paper wallets are produced online and printed with the corresponding public and private keys. These paper wallets are often laminated and kept in a safe at home or in a bank’s safety deposit box.
A hardware wallet is a USB drive-like device used to store private keys in an unconnected environment safely. These cold storage wallets are preferable to hot wallets because they are immune to computer hacks and viruses.
Hardware wallets ensure private keys are never exposed to a compromised machine or program. A cold wallet is one of the safest places to keep your Bitcoin or any other cryptocurrency. However, they are more complicated to use.
Hot Wallet
Hot or online wallets are digital currency storage solutions that can be accessed from any Internet-connected device. These wallets generate your coins’ private keys on your linked device.
When using this form of wallet, the user does not control the private key to their Bitcoin. Also, users’ funds might be at risk if the exchange is hacked.
Crypto stored in a hot wallet is vulnerable to theft if the owner hasn’t taken adequate precautions. Passwords of at least eight characters, two-factor authentication, and secure web browsing need to be the bare minimum. Cryptocurrencies that are actively traded on an exchange are best stored in “hot wallets.”
How to Sell Cryptocurrencies
Bitcoin may be sold on the same P2P and crypto exchanges where it can also be bought. In most cases, selling Bitcoin on such exchange platforms works in much the same way as a crypto purchase. Fees for using a crypto exchange are often deducted directly.
There are often daily and monthly withdrawal limitations on exchanges. As a result, the investor could have to wait to get their hands on the money after a big sale. However, there is no cap on how much Bitcoin may be sold.
Conclusion
Learning the ins and outs of Bitcoin and the market to maximize your returns requires time and effort. Do your homework beforehand to know the best way to buy Bitcoin and how trading works. Researching the benefits and drawbacks of various exchanges and payment methods is crucial to making a Bitcoin purchase. Also, following this educational guide and the recommendations found here will save you a lot of stress.