Currently the amount of interest being generated by bitcoins is increasing day by day. Bitcoins are soaring close to $12000 per BTC. The performance of bitcoins over the last six months has been nothing short of phenomenal. March 2020 saw global markets crash, it was a total market crash that saw every asset crash and so bitcoins crashed too but bitcoins soon recovered and the recovery shown by bitcoins has been very similar t that of safe haven assets like gold.
Many investors consider bitcoins akin to stocks in their performance, well it is easy to point out the similarities. An investor can buy bitcoins, wait for the bitcoins to increase in value and then liquidate the investment when the price is high enough. This is how stock investment is done as well but bitcoins and stocks are not the same thing.
For starters stocks can be purchased in a stock market where buyers and sellers come to trade company stocks. Bitcoin is a crypto currency and therefore it cannot be traded in a stock exchange. Bitcoins are traded in dedicated crypto market places such as crypto exchanges and peer to peer platforms. So no matter how similar bitcoin is in performance with stocks, they cannot be purchased on the stock market.
Pre Requisites for Bitcoin Purchase
In order to purchase bitcoins first a few pre requisites will have to be fulfilled. Bitcoin as mentioned above is a crypto currency that exists in the digital sphere, it is not like cash. You keep your cash in your wallet but you cannot keep bitcoins in your wallet as they are not tangible. Therefore bitcoin or crypto currency users require crypto wallets where they can store their bitcoins.
Crypto or bitcoin wallets are quite easy to set up. beginners can get free online wallets simply by signing up on a crypto exchange like Coinbase. Online wallets with Coinbase are quite secure but some of the more advanced users may not like to keep their wallets with another entity. There are also desktop wallets, smartphone wallets and hard wallets.
The wallet stores your personal and private keys, which are used while making transactions. Once you have got your wallet in order next thing you will need is quite obvious, a bank account or a credit card with enough funds to make your first purchase.
The next step to complete the pre requisites before you can buy bitcoins is to set up an account on a crypto exchange. For American users, Coinbase is the most popular and most visited crypto exchange, followed by Binance, CashApp, Bisq, Coinmama and others. Each crypto exchange will offer slightly different rates and terms, so make sure that you carry out your due diligence before choosing the crypto exchange of your choice. Some crypto exchanges have got specialties for instance Coinbase is a good exchange all round, Binance on the other hand is good for altcoins, CashApp is good for beginners and Toro is a crypto trading platform instead of your traditional crypto exchange. You can purchase bitcoins and trade them on the platform and benefit from the profit but you cannot withdraw the bitcoins that you purchase.
Make sure that you carry out proper due diligence. Once the choice has been made, you can sign up with the exchange of your choice. You may be required to submit your ID verification documents. Coinbase certainly asks for them and takes up to 48 hours to verify the account, Binance is much quicker. Crypto exchanges have to follow local regulations and therefore it is important to remember that if you choose a crypto exchange your data will be shared with relevant authorities.
After you sign up you will be required to connect your bitcoin wallet and your payment option. You can choose to connect your bank account or you can use the details of your credit or debit card if you intend to purchase bitcoins through a card.
Once you have successfully connected your wallet and payment options, you will be able to buy and sell bitcoins through your crypto exchange.
Peer to Peer Platforms
Another way to purchase bitcoin stock is through P2P networks. These platforms are market places where bitcoin sellers and buyers come together to trade bitcoins. It has generally been seen that bitcoin users prefer P2P platforms because it keeps their ID details anonymous, however P2P platforms are unregulated and for this reason the risk of fraud is high. In order to overcome this issue, P2P platforms rate sellers based on their selling history, this is something that buyers can use to gauge how trustworthy a seller is.
Purchasing bitcoins for the first time will require a bit of time to set up everything but once you have done your first purchase, every subsequent purchase will seem easier because you will not have to repeat the set up steps every time. From that point onwards it will simply become a seamless awy to buy and sell bitcoins whenever you wish to.