How to invest in Bitcoin the beginner guide
In this guide we will explore the wonderful new emerging technology of Bitcoin, and we will guide how to invest in Bitcoin and give our answer to the question – is Bitcoin a good investment?
Since Bitcoin was created in 2009 by Satoshi Nakamoto it has had its ups and downs throughout time. But it’s still standing here today showing the enormous potential and value it brings. You might think it’s too late to invest in Bitcoin? Is Bitcoin a good investment?
That questions has been asked by so many people since the beginning of Bitcoin. It was asked when Bitcoin was valued at $1 dollar. Next at $10 dollars, later at $200 dollars, then $1000, etc. Here we have created a guide on how to invest in Bitcoin.
In this guide to investing in Bitcoin you will learn about:
- About Bitcoin
- How to invest in bitcoin
- Recommended wallets to store your Bitcoins at
- Where can I spend my Bitcoin?
- Taxes for Bitcoin
This guide covers a wide range of topics related to Bitcoin. Like the history of Bitcoin, how to actually invest in Bitcoin, what should you do after buying some Bitcoin – where to store them safely, how taxes work and much more. So this guide could be useful for you in different scenarios along the way.
“I think the internet is going to be one of the major forces for reducing the role of government. The one thing that’s missing but that will soon be developed, is a reliable e-cash.”– Professor Milton Friedman, a Nobel Prize winner in economics
At the end of this guide on investing in Bitcoin we will have hopefully helped you get answers on:
- Know the answer to internal questions like; is Bitcoin a good investment? Or is it too late?
- And you should be comfortable in knowing how to invest in Bitcoin and where to buy Bitcoin
No one knows the ‘true value’ of one Bitcoin. But tons of people know that it brings a lot value and is a unique investment. That’s why it’s called ‘digital gold’. It represents an investment we never seen before. And so does all cryptocurrencies. It was the same when stocks first entered the market as an investment. And similarly to gold you cannot simply created new Bitcoins. And like gold it have to be mined via digital means. And it as gold have a limited and finite supply.
In fact, there are only 21 million Bitcoins that can ever be mined in total. It’s impossible for the world’s population to own one whole Bitcoin each. That’s obviously one key part that attracted us to this space, that investing in Bitcoin was an opportunity of a lifetime. So, is Bitcoin a good investment? You will know at the end of this guide. So lets get right into it, and find out how to invest in Bitcoin!
What is Bitcoin?
Bitcoin is a cryptocurrency. It is also the first cryptocurrency, and also the birth of the blockchain (the underlying technology that most cryptocurrencies are built on). But today there are hundreds, if not thousands of cryptocurrencies. Some are like Bitcoin a store of value or P2P value exchange, some have added ‘smart contracts‘ like Ethereum to enable more features and opportunities.
Bitcoin is a digital currency that exist on the thing called the blockchain. And anyone in the world can send Bitcoin to someone else. It is not controlled by governments, the EU, or other financial institutions. It is built on a decentralised economy, where you and I have equal rights and power.
Who created Bitcoin?
Ah the million dollar question. And to be honest no one really knows. But the person or group behind Bitcoin is known by the name of Satoshi Nakamoto. And publicly no one knows who that is. A mystery that makes Bitcoin and blockchain somewhat more interesting according to us. You can find the original whitepaper to Bitcoin here.
What are cryptocurrencies?
A cryptocurrency is a digital or virtual currency designed to work as a medium of exchange. It uses cryptography to secure and verify transactions as well as to control the creation of new units of a particular cryptocurrency. Essentially, cryptocurrencies are limited entries in a decentralised database that no one can change unless specific conditions are fulfilled.
Read our full guide on what a cryptocurrency is and how the technology behind it all works here.
These are the steps that you need to take to get started with investing in Bitcoin now:
- Find an exchange where you can buy Bitcoins
We recommend that you research and find an exchange that you feel comfortable with – we have reviewed and listed the most trustworthy cryptocurrency exchanges here.
- Find a wallet where you can store you Bitcoins
Remember when it comes to Bitcoin and cryptocurrencies exchanges are not like a bank. You are in charge of keeping your Bitcoins safe. So make sure you are keeping them safe using a secure wallet.
If you want to buy some Bitcoin for an investment or other reasons then we will talk you through the steps. And provide some recommendations for how to invest in Bitcoin safely when you buy it, and safely later on when you store in on a cryptocurrency wallet.
The most common way to buy Bitcoin is through an exchange. An exchange is a trading platform where people meet to buy and sell for example cryptocurrencies like Bitcoin.
1 ) Using a cryptocurrency exchange to invest in Bitcoin:
Now if you feel comfortably and think that Bitcoin is a good investment then you need to find a suitable cryptocurrency exchange as step 1.
If you live in a country where you can register to an online exchange then we highly recommend you get started using that method. Here below we have collected our favourite exchanges where you can register and how to invest in Bitcoin using the best cryptocurrency exchanges.
The steps to use any of these exchanges are pretty much the same:
- Register an account with them
- Deposit money through a wire/bank transfer
- Buy Bitcoin using your deposited money
- Proceed to store your newly purchased Bitcoins at a safe wallet
Coinbase is perhaps the most well known cryptocurrency exchange out there. It’s often the initial platform that many new users start with after getting interested in Bitcoin. And that’s because they have done it so extremely well in making it easy for new users to understand and get started. So if you want to get started easily with Bitcoin we highly recommend Coinbase. So if you’re looking for the easy way in how to invest in Bitcoin then Coinbase is the right cryptocurrency exchange for you!
Get started with Coinbase here (Get $10 free when signing up via that link)
OKEx is the second biggest exchange for cryptocurrencies when comparing trade volume (24h). OKEx has their headquarter in Hong Kong, but has recently joined Binance in moving parts of their business to blockchain and tax friendly Malta. OKEx offers fiat-to-crypto and crypto-to-crypto trading on more than 100 digital currencies. OKEx is a great exchange to use for Bitcoin, but also for its vast offering of many different cryptocurrencies.
Get started with OKEx here
LocalBitcoins is different to your everyday crypto exchange, one of the early pioneers in the crypto space LocalBitcoins helped connecting people with each other via their platform. LocalBitcoins connects buyers and sellers together and they provide you with a wallet option on via their site. And they are one of the original places where most people got started buying Bitcoin. LocalBitcoins is one of the original Bitcoin exchanges and still a good option for people looking into different ways of how to invest in Bitcoin.
Get started with LocalBitcoins here
Kucoin launched in 2017 and fairly quickly made a name for itself in the crypto world due to its early adoption of certain altcoins and their own coin called Kucoin Shares (KCS) which is a passive income coin. Overall Kucoin has proven to be a worthy exchange and a great competitor to Binance. Kucoin holds most of the popular coins, but of course they also have Bitcoin for you to buy.
Get started with Kucoin here
eToro is very much part of the new wave of global Fintech companies that has helped to change the scene of finance, banking and much more. It is the world’s leading social trading network, with millions of registered users and an array of innovative trading and investment tools. And you can sign up quickly and easily with eToro to buy Bitcoin.
Get started with eToro here
Binance is right now the leading exchange in the world. They have been doing a lot of things right in the fairly short time they’ve been around. And at the forefront of all this is their well known and liked CEO Changpeng Zhao, or CZ. Binance for us is a great place how to invest in Bitcoin but also for you to stay around at and buy other cryptocurrencies in the future.
Get started with Binance here
2 ) Store you Bitcoins using a safe wallet
After looking into different ways of how to invest in Bitcoin using a cryptocurrency exchange, you should look into secure places to store your Bitcoins at. And with Bitcoins it’s up to you to manage your own private wallets. This is where you should store your coins. The safest and best place to store your Bitcoins are on a hardware wallet. Here below we have listed some of the most popular choices available on the market for storing Bitcoin.
We have created a guide to the different types of wallets for Bitcoin and cryptocurrencies here – but we recommend using a hardware wallet as they are the most secure wallets available.
Recommended wallets to store your Bitcoins at:
Ledger Nano S
The Ledger Nano S is one of the more if not most popular hardware wallets for your average Bitcoin holder. I mean the average holder that values the security of their Bitcoins. We all know or we should know about the hazards of keeping your Bitcoins at an exchange.
Buy a Ledger Nano S here
Ledger Nano X
Here it is, the new Ledger Nano X. The latest addition from the Ledger team, now Bluetooth-enabled. With Bluetooth the Nano X can be used with mobile devices, which makes sense in todays mobile world. Storing your Bitcoins on a Ledger Nano X is easy, and foremost secure.
Buy a Ledger Nano X here
Another hardware wallet option for storing your Bitocoins is Keepkey. It position itself as the simple wallet option on the market. KeepKey supports 54 coins and tokens through one native Chrome app.
Buy a Keepkey here
The Trezor wallet is also one of the most popular choices for hardware wallets. Trezor Model T supports more than 500 coins, it’s easy to use and of course it does the job to keep your coins safe. Storing your Bitcoin on a hardware wallet is a must to be, and feel safe!
Buy a Trezor T here
The Trezor wallet is also one of the most popular choices for hardware wallets, with the Ledger Nano S. The Trezor One is cheaper than model T but it still very much does the job to keep your Bitcoins safe, but with less features and without the colour touchscreen.
Buy a Trezor One here
Guide on the best Bitcoin and cryptocurrency wallets
If you want to find out more about the different wallets you can use to keep your Bitcoins safe, then read our complete guide on the best Bitcoin and cryptocurrency wallets. It will give a complete look into the different types of Bitcoin and cryptocurrency wallets. Providing you with the perfect insights to decide which cryptocurrency and Bitcoin wallet is the right one for you.
If you don’t want to hold (hodl) your Bitcoins as an investment, to see if they increase in price. Then you can look into where you can use your Bitcoins to pay for products and services. Like your morning coffee, the electricity bill or at a restaurant. Then we have created the nice little guide for you, it will showcase some of the hotel, shops, restaurants around the world that accepts Bitcoin payments. But also guides on how you can find more places to spend your Bitcoins at.
Depending on where you live, you might need to pay taxes for your Bitcoin trades, and if you’ve bought an item or service using your Bitcoins too. It is common that Bitcoin is classified as an assets. And any capital gains made on that Bitcoin could be taxed in your country. So after investing in Bitcoin you should look up your country’s tax situation on cryptocurrency assets like Bitcoin.
If you bought 1 Bitcoin for $4000 dollars and later on sold it for $6000, then you need to pay taxes on that $2000 gains. This also includes if you’ve bought 1 Bitcoin and then later on used that Bitcoin to pay for a product or service. If Bitcoin at that time had increased in value then you need to pay capital gains tax on that increase. Have a look at our guide on crypto taxes here. And check with your country’s tax agency if unsure.
If you’ve done a lot of Bitcoin trades
If you’ve made a lot of trades with Bitcoin or other cryptocurrencies it could become quite difficult to compile them all at correct prices and dates. We know that from previous experience. So that’s why we put together this review of different Tools to help you do your taxes.
Make sure you’re avoiding these common risks with Bitcoin and cryptocurrencies
- You need to be in control of your own Bitcoins. That means don’t leave your Bitcoins on an exchange for too long. Use a safe hardware wallet for example, read our wallet guide here.
- Make sure that any link you click on is genuine – check for the HTTPS part. Don’t open emails from people you don’t know.
- Use strong passwords, no ‘password1234’, ‘2019password’, etc.
- And do your research before investing in new projects and ICOs. For the full guide on how to be safe with crypto click here.
Last important tips to consider before you get started with investing in Bitcoin
- Bitcoins are a great store of value, over time it can fluctuate in price. But since Bitcoin is a deflationary asset, the value of bitcoin raises over time and prices of products get reduced against the value of bitcoin. We believe this is one of the key factors that answers is Bitcoin a good investment or not!
- Don’t store your Bitcoins on an exchange! You can have them there for a shorter time when you are buying or selling more Bitcoins. But remember the safest place to store your Bitcoins are on a wallet.
- You don’t have to buy whole Bitcoins! You can buy them in fractions. From 0.1 Bitcoin down all the way to 0.00000001฿
- You are responsible for the safety of your Bitcoins. After figuring out how to invest in Bitcoin, you need to know how to store your Bitcoins safely. According to us that means a secure hardware wallet. Make sure you keep the wallet safe and the private keys to unlock the wallet safe too
- Do research before investing. Following this advice will mean that you will, educate yourself, be in control of your decisions, and less likely to be tricked/scammed. As there are people out there who might have some bad agendas for pushing their coins to you.
- Don’t rush in. Take your time to get started with Bitcoin. Maybe you can set up a standing order to buy a small amount of Bitcoin monthly. And as you get use to Bitcoin, the exchanges, the wallets then you can increase your investments. Using this method investing in Bitcoin will be easier, and you won’t invest more than you are willing to risk.
- Bitcoin are like stocks, fonds and other investments might change in price. Don’t panic. It’s easy to panic when you see your investment go down in price. Only make decisions that are planned and researched. By doing so you will minimise your risks and feel much more comfortable when you see price changes. So when investing in Bitcoin you need to be comfortable with sudden drops in value.
- Use our Crypto vocabulary to get use to the words most commonly used by the Bitcoin and cryptocurrency community.
- Follow the live prices of Bitcoin right here. It will update the price of Bitcoin and many other cryptocurrencies in real time! Making investing in Bitcoin and tracking your price goals even easier.
- Read more of our guides to learn more about Bitcoin, other cryptocurrencies and blockchain technology.
We hope that you found this guide to get started with investing in Bitcoin helpful. We hope that you know are more comfortable knowing what Bitcoin is, and knowing the answer to is Bitcoin a good investment? Please share it if you did. If you have questions or comment please feel free to leave them here below and we will try and answer them as soon as possible. In the meantime good luck and be safe.
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- HODL, DYOR, REKT the 41 cryptocurrency terms you need to know!
Per Englund – Founder of Go CryptoWise a cryptocurrency and tech fan that wants to see better and smarter products and services that makes our lives better and easier