How Bitcoin Works
Bitcoin is a proof-of-work cryptocurrency that was developed amid the 2008 global financial crisis. The goal of the developers was to create a cryptocurrency that was independent of central banks and politicians.
Instead of being printed, the currency would be created by solving complicated mathematical calculations using a chain of computers. Today, Bitcoin mining has become a major industry that employs thousands of people. At the same time, the process of mining Bitcoin has become relatively complicated and unaffordable to many people.
Bitcoin’s role as a digital currency has not been successful because of its volatility and high cost of transactions. As a result, very few companies accept it as a payment option.
Instead, most of the Bitcoin in existence today is held by investors who want to benefit when its price jumps. Some of the best-known holders of the coin are MicroStrategy, Coinbase, and Tesla.
How to Buy Bitcoin
Buying Bitcoin has become a relatively easy process, thanks to the several exchanges and wallet companies that are in existence today. All you need to do is to go online, create an account with an exchange like Coinbase and Binance, deposit money and buy your coins. You can then store them in these exchanges or move them in a cold or hot wallet depending on your needs.
Still, it is necessary that you do several things before you buy Bitcoin. First, you need to look at your financial situation since Bitcoin is well-known for its volatility. As such, if you are buying it for investment purposes, we recommend that you allocate a small portion of your portfolio to the currency. The rest of the funds should go towards relatively stable assets like stocks and bonds.
Second, you need to do research about the exchange or broker that you will use. This is because you want to use a broker that is credible and one that has a long history in the industry. In most cases, go for a mainstream exchange like Gemini or Coinbase.
In the past, we have seen many people lose millions of dollars by buying Bitcoin using companies that have a bad reputation. For example, customers of a Canadian company known as QuadrigaCX lost millions of dollars when the company’s CEO “died.” He was the only one with the security key for the coins.
How to Buy Bitcoin With Cash
In addition to the mainstream exchanges, another way of buying Bitcoin is using cash. There are several options to do this.
First, there are Bitcoin Automated Teller Machines (ATMs) that are available in several cities. These ATMs allow you to buy and sell Bitcoins with cash. All you need is a Bitcoin wallet and your cash. After finding a wallet, check the transaction fees that it charges. After this, scan a QR code that is presented and then deposit your funds in a normal way. After doing that, you will receive Bitcoins of the equivalent amount in your digital wallet. The only challenge with this option is that the number of Bitcoin wallets is relatively limited.
Second, you could use peer-to-peer marketplaces to buy Bitcoin with cash. This is the process where you use exchanges like LocalBitcoins and LibertyX to complete the transactions. You should do it by first signing up and getting verified by the company.
After this, you should select Bitcoin and then look for the best offers that accept Bitcoin in your area. After doing this, you can initiate the trade and agree on where you will meet with the person. After meeting and confirming the transaction, you should complete the transaction on the platform.
The other option is that of using peer-to-peer marketplaces like PaxFul. You should visit the website and select that you want to buy Bitcoin. After this, you should select the best seller and then handle the transaction. You will then receive Bitcoins in your account.
In all, you should consider the reasons why you are buying Bitcoin, the cost of the transaction, and how you will store the coin.
With Bitcoin becoming mainstream, there are many ways to buy the coin. You can buy it using a platform like PayPal and Cash App. You can also buy the currency using mainstream exchanges like Coinbase and Gemini. Additionally, you can buy Bitcoin using proxies. For example, you can buy shares of a company like MicroStrategy that has loads of Bitcoin in their balance sheet. Also, you could buy the new Bitcoin Futures ETF if you have access to American stocks.