How to buy Bitcoin
Buying Bitcoin for the first time can seem like a daunting prospect. However, it is not as complicated as it might appear.
Bitcoin was the cryptocurrency that kickstarted the current boom in decentralised, virtual currencies when it launched in 2009. Since then many other currencies have emerged – more than 1,300 according to some estimates – but Bitcoin remains the best known.
Bitcoin’s value has been volatile and it has proved as attractive to speculators as well as those who wish to use it as currency. At the beginning of 2017 a single Bitcoin was worth $1,000. By the end of the year that had risen to more than $14,000. Since then the value has reached enormous highs followed by precipitous drops – often with little warning.
With that in mind, it is worth watching for a little while before buying Bitcoin so that you understand what you are getting into. Don’t worry about how much a single coin costs – it’s possible to buy as little as 0.00000001 of a Bitcoin.
To buy Bitcoin you will need to use an exchange, broker or an online marketplace. Cryptocurrencies, though virtual, must be stored somewhere so you will need a ‘wallet’ too.
Most exchanges and brokers will require you to sign-up and link your traditional bank account so that they can charge you. Some will require you to submit identifying documents as you would to a stockbroker or bank. Some will provide a wallet – others will require you to have a third-party wallet.
Your wallet is where you store the private key that allows you to access your Bitcoins and that you use to sign transactions and transfer funds. It is extremely important to keep this safe because losing it means losing access to your wallet. And if somebody else gets hold of it then they will be able to access your wallet.
The private key will also make it possible to move to a new marketplace; once you have bought your Bitcoin, you are not tied to the broker that sold them to you. You can buy or sell from a different broker later. You can also move to a new wallet, if you wish.
Wallets come in two forms: software and hardware. The former are apps that store your information or connect to online services. These are simple to use but some online services have been targeted by hackers and people have lost their coins. It is important to make sure you secure your wallet, especially if it is a software wallet.
Hardware wallets, like this one, are generally viewed as safer because they can be disconnected from the internet. These are usually memory stick-like devices that retain your private key information.
Wallets can also be encrypted – requiring anyone who wants to use them to know the password – and backed-up, so that they are protected in the event of a hardware or software failure.
Once you have bought Bitcoin, you might later want to turn it back into your local currency. Keep in mind that this can be difficult in some parts of the world. However, Bitcoin can now be used to pay for an increasing range of goods and services.