Investing in cryptocurrencies like bitcoin is a potentially lucrative way to explore novel investment frontiers. But beware, any cryptocurrency investment should carry a warning label like cigarette packs: “This product may be dicey to the condition of your finances. Never acquire more than you can bear to lose”. Certainly, cryptocurrencies, even the best known, such as Bitcoin, are extremely volatile assets whose price can fluctuate quickly from one minute to the other.
Bitcoin is presently the most popular cryptocurrency and has had its price increase over the years to amazing new highs. As with all cryptocurrencies, bitcoin is experimental. Therefore, it is subject to much more volatility than many traditional investments, such as stocks, bonds, and mutual funds (FCPs).
It is recommended that you don’t invest more than 10% of your portfolio in individual stocks or cryptocurrencies like Bitcoin because they are highly volatile and come with high risks. If you’re looking for how to buy Bitcoin in 2022, this post will show you some ways you can achieve that.
First, What Are Bitcoins?
Even the question of what a bitcoin looks like shows that this system is something completely new. While we encounter euro coins or giro cards every day and have a clear idea of other financial products such as a share or a gold bar, the digital sequence of numbers and letters is different. But even if there is hardly an article about bitcoins without an imaginative illustration, these are purely symbolic images.
Literally translated, Bitcoins are coins that only exist on computers – i.e., only digitally. Some also speak of digital currency or internet currency as equivalent to digital coins. The idea behind bitcoin is that the owner can use it to pay – as an alternative to state money.
In addition, bitcoins also stand for a secure exchange system. The idea: members of the network can transfer money to each other worldwide and check all transactions themselves – no bank is needed for this. Even afterward, nobody in the network should be able to manipulate transmissions of bitcoins.
The core of the technology is the so-called blockchain. It is the digital record where all bitcoin transactions are stored. All members of the network can verify transactions (peer-to-peer technology), and powerful computers embed them in a laborious computational task. This makes fraud more difficult.
Bitcoins are also referred to as cryptocurrency. Cryptography, i.e., encryption technology, plays a crucial role in creating the blockchain. After all, something that usually happens with purely digital goods should be avoided: that a copy cannot be distinguished from the original and that “counterfeit money” floods the market.
There are now other cryptocurrencies as well. Some, like Bitcoin Cash, are derived from Bitcoin; others, like Ether (Ethereum), were developed separately. With around 42 percent of the market capitalization of all cryptocurrencies, Bitcoin itself is still the best known and most widespread (as of March 11, 2022).
What is the Current Bitcoin Price?
Before you think of how to buy Bitcoin in 2022, you should know the present value of the BTC coin. Bitcoin took the financial world by surprise when it hit an all-time high of $50,000 on February 16, 2021. Check out the price of bitcoin today according to coinmarketcap.
How to Buy Bitcoin and Other Cryptocurrencies in 4 Steps?
Step 1: Decide which online broker/trading platform you want to use
There are very few classic online brokers offering the service of buying and selling cryptocurrencies, including Bitcoin. A few popular Bitcoin/cryptocurrency buying platforms are:
- Binance: Binance is an excellent platform with pleasantly competitive fees (maximum 0.1% of your transaction amount).
- Anycoin Direct: Anycoin Direct is a fantastic platform for buying Bitcoin. The platform makes the whole process super easy, making it the perfect choice for beginners. It has all you can imagine in a crypto platform; security, low fees, customer support, etc.
- Bitpanda: Bitpanda is another interesting platform. It is a pleasant alternative for those who also want to invest in stocks (and receive dividends) or ETFs.
- Bittrex: Bittrex has some advantages, particularly in terms of security and the number of crypto-currencies available.
- Coinbase: Coinbase is probably the best-known platform, especially since its IPO. It is a great platform, but it is relatively expensive in terms of service charges.
- Coinhouse: The coinhouse platform is ideal for those who wish to invest in the long term.
Step 2: Decide how you want to store your cryptocurrencies
You will need a secure wallet to store your bitcoin and other cryptocurrencies alike. There are two different wallet types; the hot and cold wallet. With a Hot Wallet, transactions are faster, while a Cold
Wallet often incorporates additional security measures that help keep your assets safe but also take longer. The major difference between the two is that a Hot Wallet is directly connected to the internet when a Cold is not, thus preventing hacker attacks.
Step 3: Place your order by deciding how much you want to buy
When you have done the two above, the next thing is deciding what you will buy. It is important to only invest money that you are prepared to lose because cryptocurrencies remain extremely volatile assets.
Step 4: Decide what to do with the bitcoin you bought
Buying bitcoins is not the end of the road. The purchase phase is only a means to the end. The end is the proper management of your cryptocurrency investment and making some profits from it. Decide if you want to buy and hold till the value appreciates. Buying and holding is a long-term investment. You may also decide to trade and make some immediate gain.
Other Ways to Buy Bitcoin
They work exactly like traditional ATMs, except they dispense Bitcoin cryptocurrencies. You just have to exchange your cash for this BTC. The drawback is its unavailability in many developing countries and very few in most developed nations. Be careful when using Bitcoin ATMs because there are some which belong to the Shitcoins Club brand and are used for money laundering.
The Peer-to-Peer Bitcoin Purchase
This is another way you can buy Bitcoin. It involves buying your BTC directly from people that also have Bitcoin. This is just like buying items on Craigslist. There are dedicated platforms that offer various peer-to-peer tools to help users easily buy their BTC. However, you need to be extremely careful if you are buying bitcoins directly from individuals. There are many scammers in the Bitcoin ecosystem who have defrauded many unsuspecting victims in the past.
Buying Bitcoin Futures
Several platforms offer investors a way to trade Bitcoin futures, but this is a professional-level tool not intended for amateurs.
Via specialized investment funds, Grayscale–GBTX
Their flagship fund “GBTC” is well known to investors as it holds around $31 billion worth of Bitcoin. It is difficult to invest there as an individual. The minimum amount to invest is very high ($25,000)