So I’ve been on a bit of a bitcoin buying spree as of late. Because the investment (or currency) is still new, there is a lot of confusion about what it is, how to buy it, and how to trade it. So in this post, I will attempt to dymysfify the process of buying your first bitcoin and trading other types of cryptocurrencies (digital currencies, such as bitcoin, litecoin, dogecoin, worldcoin). Keep in mind, this tutorial is a tutorial of what I had to do in order to start trading bitcoins and other cryptocurrencies. But before thinking about buying and selling any other type of currencies, you need to get ahold of bitcoints first.
Step 1: Get a Coinbase Account
Coinbase is the go-to source for buying and selling bitcoins. It is a very safe platform that is backed by over $30 million in venture funding. Once you sign up, it will take a few days to get verified. And once your bank account and credit card is verified, you can start buying bitcoins. They used to allow you to buy up to 10 bitcoins per day; however the threshold is now lowered to $3,000 per day.
Once you put in a buy order, it will take approximately 3 business days to get into your account. You cannot sell your bitcoins before it gets into your account.
The fees for buying bitcoins are pretty reasonable—I think they charge 1% of the price of the total purchase.
Step 2: Transfer bitcoins from Coinbase to a cryptocurrency exchange
Now if you just want to hold onto bitcoin to trade/sell, then you can just stop at Step 1. However, if you want to get into smaller cryptocurrencies such as litecoin, dogecoin, or worldcoin, you will have to transfer your coins from Coinbase to another exchange. I use BTER as my go-to exchange.
Unlike Coinbase, BTER is platform for trading, not buying—meaning you are unable to buy digital currencies with cash. So essentially, to start trading cryptocurrencies, you will have to send your bitcoins from Coinbase over to BTER and then use that to buy other digital currencies. To send your bitcoins over to BTER, you will need a unique bitcoin address given by BTER and put that address into Coinbase.
Once you have your unique bitcoin address from BTER (or any other exchange), you will then go to Coinbase and put in that address by doing the following:
Once you have entered in the address, the bitcoins should arrive in your BTER account in approximately 5-10 minutes.
Once you have the bitcoins in your account, then you can use that as currency to trade for any other digital currency.
Risk of Investing in Bitcoin and other Cryptocurrencies
Because cryptocurrencies are still new, there is no government involvement, therefore it is not FDIC insured. So essentially, if your account is hacked, there is no guarantee that you will get your money back. This happened with Mt Gox not too long ago. They lost $474,000,000 (yes $474 million) worth of bitcoins and investors had no recourse to get back their money. Mt Gox was the biggest exchanged and it was hacked. So those investing in bitcoins should heed that cautionary tale to not spend their life savings on bitcoins.
I have various reasons for suggesting BTER, and here are several:
- Extremely wide selection of digital currencies to trade.
- Fast deposits/withdrawals.
- Big platform with good security.
- Trading fees are one of the lowest in the industry.
Minimalize Your Risk of Getting Hacked
There are definite risks to getting your personal account hacked. To minimalize that, take the following precautions:
- Use Google Authenticator for all your cryptocurrency accounts. It is an app you can download on your phone. The numbers change every minute and you will need to enter in that number in order to log into your account. It adds an extra layer of protection.
- Have super long passwords and change them often.
- If you only want to invest in bitcoins, keep your bitcoins with Coinbase (instead of transferring them elsewhere). They are backed by venture capital with a lot of money and have built a state-of-the-art platform that minimalizes the risk of getting your bitcoins stolen.
- If you want maximum protection, you can also keep your bitcoins offline, perhaps on a USB drive that you carry around. If you want to do that, here is a link that will show you how.