Now that your mind is all set on jumping into the market, time to crack open your wallet a bit to get the ball rolling. As stated in the previous blog post, we will begin simply by buying a comfortable amount of Bitcoin. First lets dispel one of the biggest misconceptions I've heard, you don't need to buy an entire Bitcoin! Do not be discouraged if you check the current price and think, F*#^k this! I can use that money for a down payment on a house! Fortunately, Bitcoin is divisible by up to 8 decimal places, so the smallest amount of Bitcoin that can be handled in a single transaction is 0.00000001 BTC which at today price is valued at $0.000079. If Bitcoin does eventually value in at 1 million dollars per BTC which many project a possibility, that smallest value becomes worth $0.01 which today is the smallest unit of currency in regards to the U.S. Dollar. So no matter the value of Bitcoin, you can still purchase it in small chunks. Example: if $1,000 is used to purchase BTC when market price is $10,000 per Bitcoin, it means you will now own 0.1 BTC valued at $1,000 that will be stored on your wallet, able to be transferred, used to purchase other cryptocurrencies, or sold at the owners discretion. And of course, this 0.1 BTC you own will still fluctuate in value just as an entire Bitcoin does.
Lucky for you, it's 2019 and the community has grown quite a bit since the first time I attempted to make a purchase back in 2014. The good people who worked tirelessly since then have expanded the cryptocurrency ecosystem by creating multi billion dollar platforms now easing the process to go about purchasing Bitcoin. The most popular method is to simply download one of the many applications available that host online wallets for users to obtain their public and private keys. These keys will give you the ability to store your private data granting you access to your crypto assets (similar to a password) as well as give you a shareable address needed to send and receive cryptos freely (similar to an email address). Coinbase, Gemini, and Robinhood are all examples of user friendly applications that not only host these online third party wallets for their users, but also provide the marketplace to trade many of the most popular cryptocurrencies on the market (also called exchanges). Selecting which platform best works for you is a matter of doing your own research. Signup should be similar between all platforms, user experience and fees will be the deciding factors that separate them. Over the past couple years traditional banks like Chase and Bank of America have taken a stance against splurging on Bitcoin by eliminating the ability to use credit cards to purchase cryptocurrency. However, bank account transfer should be available for all customers.
There also exist Bitcoin ATM's just as there are ATM machines to deposit and withdraw U.S. Dollars. To find them within your local area visit coinatmradar.com. Though I personally have no experience using a machine, it is still a viable way to buy and sell Bitcoin. Just as the number of online exchanges has boomed over the past few years so have the number of these ATM machines.
Once you have signed up for a wallet and possess a small amount of Bitcoin, you now have the option to take your security to the next level. Remember, your private keys are now stored on whatever cloud based servers your chosen wallet provider uses, so your assets are at the mercy of their security protocols. It won't take you long to realize the primary target hackers go after are exchanges, so if the one you chose to store your crypto was to be breached you risk losing your entire stack. To combat this danger it would be prudent to choose an offline method of storing your digital currencies after you purchase them. This puts your private keys in your physical possession making theft from online threats an impossibility. The only drawback to using offline methods of storage is the inconvenience of having to go through the tedious user identification requirements in order to get your crypto back onto exchanges for trade. If you plan on purchasing and holding for the long term, offline storage is your best bet to sleeping like a baby knowing your Bitcoin is safe. If you absolutely feel your funds are best kept on the exchange for trading purposes, be sure to enable Two Factor Authentication protection most exchanges offer for an additional security layer.
The most popular offline storage comes in the form of hardware wallets. These are secure devices specifically designed for cryptocurrency protection. The only drawback is they cost money to purchase. The price of these devices fluctuate according to demand. Currently the price sits at around $60, back in 2017 during the peak of the bull market these devices were selling close to $200 per unit, so grab them while they're cheap. Keep in mind, when you get your hands on one of these wallets be mindful that they are not the most user friendly. Fortunately, there are plenty of online sources and guides showing step by step tutorials.
Paper storage is perhaps the oldest and absolute safest method of storing private keys because it's a piece of paper with your public and private keys printed on it, so it's not getting hacked into. Scan the printed QR codes onto an online or software wallet, and you can use them. But be careful not to lose it, unlike hardware wallets which have backup protocol if lost or stolen, once the paper with your keys is gone there is no bringing it back essentially leaving your funds inaccessible.
Now that your Bitcoin is purchased and you are aware of the methods of protection to keep your funds safe from hacker access, you are officially equipped with the beginner tools to navigate through the space safely. In Part 3 we'll expand past Bitcoin and begin to understand how to valuate individual altcoins in the market.