4 Things To Do When Buying Bitcoin

Posted on: 7 September 2021

Bitcoin is a virtual currency that you can use to make certain types of purchases or hold and trade as an investment. Since Bitcoin is fairly new, many would-be owners aren't sure how to make their first purchase. Check out a few things you need to do when you buy Bitcoin

1. Determine How You Want to Pay for the Bitcoin

There are multiple ways to buy Bitcoin, though your exact options depend on your chosen cryptocurrency exchange. You can have money taken out of your checking or savings account via an ACH draft. Or, you can connect your credit or debit card to pay for the purchase.

If you receive payments for goods or services that you provide, you may accept bitcoins as payment from your customers.

2. Research Fees for Buying Bitcoin

Most cryptocurrency exchanges charge fees for purchasing Bitcoin. There may be a transaction fee whenever you buy, sell, or trade Bitcoin. Some exchanges charge additional fees when you use a credit or debit card to acquire Bitcoin; this is due to the processing fees associated with accepting card payments. 

Since fees will reduce your overall return on your investment, look for exchange options with lower fees and that clearly state the fees associated with your transactions.

3. Decide Between a Hot and Cold Wallet

You need a "wallet" to hold and store your Bitcoin. Your virtual wallet is often connected or used in conjunction with the exchange you use to buy the virtual currency. 

A hot wallet is an online wallet. To access it, you need a device with internet access, like a phone or computer. While hot wallets make it convenient to access your virtual currency for purchases or trading, they're viewed as less secure due to their constant connection to the internet. If you decide to use a hot wallet, make sure you enable two-factor authentication, create a strong password, and avoid sharing details about your holdings. 

Cold wallets are also known as offline wallets; they are not connected to the internet. This makes them less susceptible to theft or computer viruses. However, cold wallets are more complex to use and require additional software.

4. Pick an Exchange

Before you can start buying Bitcoin, you have to pick and set up your exchange. Stick with a reputable, well-known company. 

Choose an exchange the meets your most pressing needs. If you're concerned about fees, look for an option with minimal fees. Should you want additional education about buying and holding bitcoin, search for an exchange that provides members with educational resources.   

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