In the world of cryptocurrency, bitcoin is one such digital currency that has gained immense popularity in a short period. Consequently, its price has also boosted in the last few years. Several traders have made millions due to the bitcoin price swings.
If you are also willing to participate in this race and wish to gain massive profits, you have many options to purchase bitcoins.
You can buy bitcoin directly or indirectly from brokers already working in this industry for years. You can also consider buying bitcoins from newer upstarts. Undoubtedly, buying bitcoins has never been as easy as it is today and at a small amount of commission.
Let’s find out a few ways to buy bitcoin and discover some essential factors that you should consider when purchasing it:
What is Bitcoin?
Bitcoin can be defined as a type of cryptocurrency or digital currency, which can be used to pay for anything that has virtual existence only.
This currency was introduced in 2009, and it managed to capture the attention of traders and investors in 2017. If you want to discover some excellent purchasing bitcoin tips, then keep reading!
5 ways to buy bitcoin best way
Trading bitcoin is not a daunting task anymore. You need not open any specialized or separate account for trading bitcoin. Several major brokers are sitting in the market who offers you ways to purchase them. Additionally, some other players like CashApp and PayPal allow you to buy, hold and sell Bitcoins.
Following are some methods to buy bitcoin best way. Each technique offers various cost combinations and holds potential benefits and drawbacks:
- Financial Apps: Financial apps today, different financial apps like Venmo and PayPal enable you to trade cryptocurrencies. With PayPal, you can easily sell or buy bitcoin directly, apart from using this app for making online payments.
The fee you incur is $ 0.50 for any trade that does not exceed $ 5, and this fee keeps rising after the $ 5 limit. For instance, trades that involve $ 200 to $ 1,000 cost you 1.8%, whereas trades exceeding $ 1,000 cost 1.5%.
If you hold cryptocurrency in your Paypal account, you are not required to pay any fee. Here, you can also trade Litecoin, Ethereum and Bitcoin cash. Likewise, the fee amount for Venmo is the same as PayPal owns it
- Trading apps: One way to buy bitcoin best way is using trading apps. You can choose some bitcoins with zero direct commission with the trading app. These trading apps include Robinhood and Webull. However, through this method, you incur a cost in spread mark-up.
When you choose Robinhood, it charges no commission. But as mentioned earlier, it sets a certain amount of spread mark-up, the value of which is unknown. By using Robinhood, you can purchase bitcoins directly.
Another essential feature that is only offered by this app is that you can have access to different digital currencies. This feature is not offered by other brokers.
Webull allows you to trade over twenty-five cryptocurrencies, including Bitcoin. You also incur a cost as a mark-up of 1% on every transaction. With Webull, you also have the option of trading stocks and ETFs.
Crypto exchanges: Another option to buy bitcoin best way is from crypto exchanges. As a trader, you gain certain benefits if you go to exchanges to purchase bitcoins.
First of all, with crypto exchanges, you incur a minimum cost for trading cryptocurrencies. Thus, if your primary goal is to cut down costs, they are the best bet for you.
Secondly, there are several exchanges that avoid charging hidden fees in the form of spread mark-ups. Lastly, there are some exchanges that offer wallets that allow you to store your cryptocurrencies safely.
An important factor to consider when choosing a cryptocurrency exchange is the fees each exchange charges differ a lot. Therefore, do your research and go for the exchange that offers the best service, price, and crypto choice. Some of the well-known options include Binance, Coinbase, Kraken and Crypto.com.
- Traditional brokers: There exist some traditional brokers as well who have entered into the cryptocurrency world. These include TradeStation and Interactive Brokers.
Through Interactive Brokers, you can trade bitcoin directly and buy future contracts on bitcoins. The broker usually charges $ 10.02 for each future contract that offers you exposure to 5 bitcoins. For trading bitcoin directly, a commission of around 0.12% to 0.18% of the trade value is to be paid.
- Bitcoin ATMs: You can purchase bitcoins directly by using a Bitcoin ATM. However, with this method, you pay more commission than other methods mentioned above.
There are few ATMs that let you sell the bitcoins as well by using a debit card or cash. Bitcoin ATMs charge a high commission, up to 7% for each transaction.
Things to consider to buy bitcoin best way
If you want to buy bitcoin the best way, you should first analyze the following factors. This is because they play a vital role in deciding where to purchase bitcoin or avoid it completely.
- Ownership: Firstly, you should know what you actually want to own. This means you may decide to purchase bitcoin directly, or you can own a derivative. This can be in the form of a future contract, where you get profit on currency movement.
- Upside and downside: Whatever amount your gain directly relates to if you own the bitcoin directly or through future contract. If you own the bitcoin directly, you gain a profit of one dollar for each dollar increase in the currency.
On the contrary, future contracts enable you to gain profit in a shorter span of time without investing heavy capital. However, the chances of losing money are more in future contracts, whereas your loss is limited in a direct ownership of bitcoin.
- Cost: The amount of commission to be paid varies a lot depending on the method you opt for purchasing bitcoin. In future contracts, a lower commission is charged compared to brokers, who may charge you a high percentage to purchase directly. This, in turn, results in lower profit if you go for the direct purchase of bitcoin.
- Security: Every investor wants surety that his investment is secure. There are few cryptocurrency players in the market who encountered serious issues as far as security is concerned. For instance, Binance, a well-known cryptocurrency exchange got hacked in 2019. Therefore, traditional brokers seem to be a better alternative to purchasing bitcoin as they are used to dealing with such problems and are pretty experienced.
What information is needed to buy bitcoin best way?
Some of the best purchasing bitcoin tips have already been mentioned above. Now, you must understand what important information you need to provide to buy bitcoin best way.
To open an account at a cryptocurrency exchange or with a traditional brokerage, you must give some basic personal details. These include your name and other information like your address, social security number, bank account number, and contact number.
Additionally, they may also ask you about your trading experience and your level of comfort in the trading business. By using this information, the firm identifies you and verifies you as a person. This information is of great significance for tax purposes when the crypto exchange or broker prepares documents depicting your profits and losses.
Buy Bitcoin Best way and store it safely
Depending on your intention and how you wish to use bitcoin, you choose the place for storing them. For instance, if you intend to trade them, it is best to place them with a broker or cryptocurrency exchange. This is especially helpful when you are involved in frequent trading or wish to trade in the near future.
Other option to store bitcoin is a crypto wallet if you plan to spend it or even want to keep it safely. Keep in mind that if you take hold of your assets, and you become careless regarding these assets, then you will be held responsible for any loss incurred.
If you are holding bitcoin in crypto wallet, then you have two options to choose from. These include cold wallets and hot wallets.
- Hot wallets: With a hot wallet, you can use or move around cryptocurrency without hassle. Since software secures your coins rather than hardware and has a connection to the internet, the coins are less secure than cold wallets. However, a hot wallet is the best option if you wish to use cryptocurrency. You can find hot wallets in various varieties.
- Web wallets: Web wallets help you in connecting to the blockchain. You can make quick transactions with web wallets. However, it is not very secure because of the internet connection.
- Mobile wallets: Mobile wallets mean you install software on your mobile device if you use cryptocurrency to make payments or make any transaction.
- Desktop wallets: Here, you can download wallet software on your computer and manage your cryptocurrencies from there. As soon as your transaction completes, you can also take it offline. That is the reason why it is highly secure.
- Cold wallets: Cold wallets are useful if you are highly interested in locking down your cryptocurrencies and making them almost impervious. Another important feature of a cold wallet is that it depends on hardware, which is a physical device for securing your holdings. Cold wallets appear as a USB drive. Therefore, you can disconnect them from the internet.
This feature also makes it a secure option. You can easily plug it in and do your dealings whenever you want to make transactions. Some of the risks with a cold wallet include device theft, loss of password or even wallet. Hence, cold wallets are also not completely secure.
Final Words: buy bitcoin best way
If you want to buy bitcoin best way or any other cryptocurrency as an investment, you must try to minimize the cost. Since the crypto market is unpredictable, several brokers want to earn maximum commissions. High commission leads to lower profits. Thus, you should try to reduce these frictional costs.
Although the bitcoin price has risen high within a shorter span of time, it also holds some serious risks that cannot be ignored. If you are interested in conservative investments, or if you cannot take the risk of losing money, then avoid purchasing bitcoin. Alternatively, you can trade in a small amount if you are ready to take a small risk.