How to Make Your First Bitcoin Investment: A Step-By-Step Guide

Are you interested in investing in bitcoin but the technical explanations of how to buy bitcoin seem daunting to you? In that case, you have come to the right place. In this article, you will find a simple step-by-step guide on how to make your first bitcoin investment.

Your First Bitcoin Investment

Bitcoin is the currency of the Internet. The Bitcoin network allows you to send or receive any amount of money from anyone anywhere in the world without the need for a third-party payment institution. These payments are impossible to block and your account cannot be frozen.

The value of this decentralised payment network has increased over time and those who invested early in the potential of bitcoin have made superior returns. However, it may not be too late to invest in bitcoin as the digital currency is still at a development stage. Hence, there is still a possibility of making a high return on your investment as adoption continues to grow all over the world.

Today, making your first bitcoin investment is easier than ever. Below you will find the steps you need to take to buy your first bitcoin online.

Step 1: Get a Bitcoin Wallet

Just like you get a bank account to store fiat money, you need a digital wallet to store your bitcoin. However, while banks charge you fees to hold your money, a cryptocurrency wallet allows you to directly control your money without paying unnecessary fees to a financial intermediary.

There are various bitcoin wallets you can download and install on your smartphone or personal computer. As a beginner, it is highly recommended that you go for simplicity and safety.

An alternative is to use a wallet provided by a cryptocurrency exchange. Most exchanges offer their users with a wallet to store their bitcoin. However, you will not be in direct possession of your investment, which means if the exchange goes under you could lose all your money. Hence, it is recommended to withdraw your bitcoin to “cold storage” if you plan to buy a large amount and want to store it for an extended period.

There are two primary ways of storing your bitcoin: using a hot wallet or cold storage. Hot wallet means your private keys (which gives anybody access to your bitcoin) are stored on the Internet while with cold storage your private keys are stored offline.

The most popular hot wallet – available both online and on mobile – is Blockchain while the most popular offline wallets are Ledger Nano S and Trezor.

Step 2: Choose an Exchange

To buy bitcoin, you need to access a bitcoin marketplace where you can buy and sell digital currency. There are hundreds of cryptocurrency exchanges across the globe. So, it is important to choose an exchange that suits your investment needs and provides local currency payment options.

Once you have chosen an exchange or a bitcoin trading app, you need to sign up using your email, a username and a password. The sign-up process may also involve a KYC check that will require you to provide a copy of your ID and proof of address. Once that process is completed, you can start trading.

Step 3: Choose a Payment Method

Bitcoin exchanges and trading platforms will usually offer several payment methods. Most exchanges accept debit cards like Visa, Mastercard and bank transfers. However, some exchanges also allow you to use other forms of payment such as gift cards, mobile money or cash deposits. LocalBitcoins and Bisq are two examples of exchanges that provide a wide range of payment options.

In most metropolitan cities around the globe, you will also find bitcoin ATMs that enable you to buy bitcoin using cash.

Step 4: Buy Your First Bitcoin

Once you have signed up on an exchange of your choice, making your first bitcoin investment becomes as easy as shopping online.

While the procedure will differ slightly from platform to platform, generally speaking, you will need to input the amount of bitcoin (BTC) you want to buy and then click execute to complete the purchase.

On exchanges, you will often also need to determine the price you want to trade at whereas ‘buy bitcoin’ apps, like Coinbase, will provide you with the execution price when you make your bitcoin purchase.

Expert Tip: You can use Bitcoin DCA services for dollar-cost averaging bitcoin if you would like to start investing in bitcoin regularly over the long-term.

Step 5: Securely Store Your Coins

Congratulations! Now you are officially a bitcoin investor.

After buying on an exchange or a trading app, you should transfer the coins into your personal bitcoin wallet for safekeeping. It is important to note that when you transfer bitcoin (BTC) from one wallet to another you will be charged a miners’ fee. That fee is paid to the individuals and companies who help to secure the Bitcoin network by verifying and processing transactions.

If you are planning on keeping your bitcoin as a long-term investment, then you should consider storing your coins in an offline wallet as that provides you with the safest option for safekeeping. Moreover, it would be recommendable to stay on top of the latest bitcoin news to stay informed about key drivers that could affect the price of your bitcoin investment.

To learn more about Bitcoin, download the Bitcoin Beginner’s Handbook for free.