Bitcoin is the most valuable and popular cryptocurrency. It was the first to gain traction and is still the first that comes to mind when you mention crypto. Relative to other assets, its track record is one of extreme volatility and long-term growth. Knowing this, it’s no surprise that more and more people are interested in participating.
In this article, we will go over all the basics:
- A quick rundown of what bitcoin is
- How and where to buy and sell bitcoin
- The choices that anyone investing in bitcoin will need to make
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About Bitcoin and Other Cryptocurrencies
Bitcoin (BTC) and all other cryptocurrencies are digital currencies created and secured through cryptography. They are made unique by the same mechanism; they cannot be counterfeited. Most of them are also decentralized networks powered by a blockchain. Blockchains are distributed ledgers that are managed and enforced over a large network of computers.
By design, several unique characteristics distinguish cryptocurrencies from traditional fiat currencies. The first and dearest to the most dedicated crypto users is decentralization. Cryptocurrencies do not need to be printed by a centralized authority like the Federal Reserve or a Central Bank. This separates them from the effects of government monetary policy, including inflation and several forms of manipulation.
Cryptos are used as a secure medium of exchange. They are denominated as numerical representations of a digital token. The “crypto” in cryptocurrency is a reference to their different encryption and cryptographic makeups and functions.
How to Buy and Sell Bitcoin
The most popular place to buy bitcoin and get started with cryptocurrency investments is a cryptocurrency exchange, commonly known as Bitcoin exchanges too. These trading platforms allow investors to trade Bitcoin, place Bitcoin purchases, and sell using various payment methods, such as debit cards and credit cards, some through bank transfers.
Crypto Exchanges
Crypto exchanges are online platforms where Bitcoin and other cryptocurrencies such as Ethereum, Litecoin or Bitcoin Cash can be bought and/or sold. They enable:
- Purchases of cryptocurrencies with fiat currencies
- Trading one crypto for another (bitcoin is the most widely accepted cryptocurrency for purchasing other cryptos)
- Selling cryptos for fiat currencies
In addition, crypto exchanges can offer cryptocurrency wallets and custody solutions. So, they are used to buy, sell, trade, and store crypto.
What to Consider When Choosing a Crypto Exchange
The functions of crypto exchanges are simple to understand. However, these exchanges come in a large variety and may excel or lack in several key ways. These are the most important considerations to make when comparing crypto exchanges.
Ease of Use and Accessibility
Ease of use and accessibility are always important. But when you’re getting started with Bitcoin or any other crypto, these factors are even more important.
The best crypto exchanges for beginners make it simple to set up an account and start making transactions. They have simple interfaces and are easy to interact with.
Some popular exchanges are not as easy to use. But users trying to engage in crypto lending, staking, and other activities have normally spent enough time learning to navigate its complexities. Another thing to consider is whether they offer a mobile app if it is important for you to manage your investments on the go.
Coin Availability
All major crypto exchanges offer bitcoin. However, if you intend to diversify your crypto portfolio at any point in the future, it’s worth it to look ahead and consider what other options you want to have available.
The selection of available coins varies widely by exchange. It’s also worth noting that the coins available for buying or selling will vary. You may be able to buy many coins on an exchange while only being able to sell a few easily.
Invest in over 30 cryptocurrencies from your checking account with no trading fees with the Current mobile app crypto feature.
Titan is an investment platform with a team of experts actively managing your portfolio based on your chosen strategy, including cryptocurrencies.
Alto IRA allows you to invest in stocks, bonds, mutual funds, ETFs, real estate, cryptocurrencies, and even gold for your retirement.
Security
Security is a significant concern when it comes to crypto exchanges. There have been several past stories of successful hack attacks on exchanges.
Different exchanges can employ very different security apparatuses. You can normally find out what you need to know on the exchange’s about us pages or in their white papers. You can also lookup news about the exchange to determine if there have been any previous attacks and what the exchange did about them.
Security features to look for are how they handle your personal information, if they offer cold storage and private keys, and password protection.
Fees and Costs
The total cost of using a crypto exchange will also vary quite widely. Most exchanges charge some mix of:
- Account management fees
- Trading fees
- Withdrawal fees
- Other possible fees
Trusted crypto exchanges are transparent about their fee structures. You can compare different exchanges’ cost structures before making a final choice.
Customer Service
Questions or concerns can arise when using any kind of online service. Crypto exchanges are no exception. When you need help, customer service is the deciding factor as to whether your experience is good or bad. It’s important to research their customer service reputations and availability. The most comprehensive customer service includes typically at least a few of the following channels:
- Phone
- In-site text support
- Comprehensive FAQs sections
- Community forums
- Social media page support
How to Manage Bitcoin
Once you’ve found the ideal exchange for your needs and acquired some bitcoin, there are some remaining considerations. The first is concerning the storage of your bitcoin.
Crypto Wallets
There are many kinds of crypto and bitcoin wallets where you can store your bitcoin. We go over the most common and easy-to-use options in our article on crypto wallets here.
What to Consider When Choosing a Crypto Wallet
There are many kinds of wallets, and they all vary in the following ways.
Ease of Use and Accessibility
Some wallet types, primarily hosted wallets, are far easier to use than others. Typically, your storage solution is simpler when a platform does most of the work for you.
Of course, being easy to use and accessible doesn’t make a wallet superior to other options. Ease of use can often be rightly associated with inadequate security. For example, hardware wallets are harder to use than hosted wallets but offer better security because the private key is stored offline.
Security
Security and ease of use aren’t necessarily mutually exclusive. But for crypto wallets, they usually are. Regardless, it’s important to consider the security of your chosen crypto wallet.
Different types of wallets carry different security concerns. For example, hardware wallets are better for protecting your private keys. But if you lose the hardware, your crypto is gone.
Interest Earned
Some crypto wallets offer good opportunities for earning interest, while others make your path to earning interest more difficult.
Crypto wallets that provide interest typically provide far higher interest rates than what you can get with your bank. High-interest savings accounts seldom yield annual interest much higher than 2%—most wallets paying interest yield anywhere from 3% to 18%, depending on the cryptocurrency. Bitcoin interest rates are typically lower, while many other coins can easily yield over 11%.
Integrations
Some crypto wallets make it easy to integrate your wallet with exchanges. Third-party integrations can serve a variety of purposes that enhance your trading activities.
