As the word Bitcoin continues to break into the mainstream, the question keeps coming up: ‘what exactly is it’? It is something that is intriguing and enticing a lot of people with its stories of massive growth and creation of overnight millionaires, but it is often very poorly understood.
Walkthrough Video that Explains How to Buy Bitcoin Online
What Are Bitcoins?
Bitcoin, in a very basic sense, is digital money.That statement alone raises a lot more questions, but it at least put a frame on what Bitcoin is. Money itself is a worthless piece of metal or paper that has a value put into it by agreeing parties, and that is the same for Bitcoin.
It is defined as peer-to-peer payment system that uses cryptography to function as a private yet transparent ledger system.
What Factors Influence the Bitcoin Price?
Bitcoin derives its value from the mere fact that people have agreed to place value in this piece of software. It is similar to gold in many respects as it is also a finite commodity, meaning it can run out, and it is digitally ‘mined’.
Just like gold then, the price of Bitcoin fluctuates as the marketplace moves around it. Basic economic principles of supply and demand are at work driving the price up and down. In this sense, Bitcoin acts as a valuable commodity, like gold, or even like stocks and shares, but there is one major principle difference.
Bitcoin is Different
Bitcoin was created to be used as a digital currency, but it was also hoped that it would be a revolutionary currency that was not under the control of any centralised system. There are no banks, there are no central powers. Bitcoin is accessible to everyone regardless of where they are in the world.
Banks run the monetary system at present, and as such, people are merciless to their rules and regulations. Money is difficult to move across borders, banks charge fees for accessing your own money, and even spending money is regulated by banks. Not so with Bitcoin, it is a decentralised monetary system, and it is also an anonymous currency.
Bitcoin transactions are sent to and from digital addresses which are simply long anonymous lines of numbers and letters. There is no indication as to who owns the Bitcoin wallet, or where a transaction comes from.
Should I Buy Bitcoins?
If you are asking this question, you are asking yourself either if you should get into digital currencies at all as Bitcoin is the granddaddy of them all, and usually the first place new investors go. But you could also be asking whether Bitcoin, as one of the multiple Cryptocurrencies out there, is the right one? Does it have the potential for further growth? Will it be stable enough to work with? Does it have longevity?
To address the first point, which essentially asks if you should get involved in digital currency, the short answer is yes. No doubt, the reason people are looking up things like Bitcoin is the massive wave of FOMO (fear of missing out) that is sweeping over a lot of people.
Bitcoin’s value has gone from being worth $500 a coin this time last year to topping $3000, this is in less than 12 months. There is nothing else on this planet that can boast such returns for an investor, especially a casual investor because Bitcoin is so simple and available for anyone to get involved in.
People see the coin as the future of money, a revolutionised currency, but its primary function for the casual investor is as an asset. It is the definition of high risk and high reward because, despite the rocketing growth, Bitcoin has also been known to drop up to 20% of its value in a day, something that is also totally unprecedented in investing.
It can be a scary rollercoaster of a ride, but it is the only ride that offers such possibility. But it does call for a lot more caution in terms of investing only what you can afford to lose.
Bitcoin or another Cryptocurrency?
If you are already involved in digital currency and want to know if Bitcoin is the right one to buy, then again the answer is a resounding yes. Bitcoin is the original, and while there are other coins coming in and trying to improve and usurp the granddaddy's throne, there is no denying that Bitcoin is still King. When there is a dip in digital currency, all other coins follow Bitcoin in that dip, and they always fall far further.
Furthermore, Bitcoin is the most adopted, easiest to get your hands on, and most functional. It has the most support, stability, and recognition. It is and should be, a digital investor’s first port of call.
How to Buy Bitcoin at CoinBase.com - Step by Step
Bitcoin, as the original, is by far the easiest digital currency to get your hands on. There are a huge array of exchanges that trade with Bitcoin as their primary, requiring you to even use it, rather than fiat currency, to buy other coins. Exchanges are but one of the ways to buy Bitcoins, but they are also the easiest, safest, and most common.
One of the most popular exchanges to buy from is known as Coinbase. It has a huge customer base and services a large portion of the Bitcoin traffic around the world, especially in the United States.
- Visit Coinbase and set up an account with the basic information, such as name, last name, email and password.
- An important, but optional, second step is to set up your two-step verification. This is an added level of protection that makes you input a second password that is constantly changing and is only available to you on your mobile device. Because you are dealing with money, and digital currency, there are always fears of hacking and online thieves, so this simple step offers peace of mind from the exchange.
- Once you are set up on Coinbase, you can begin to add payment methods. This is the beauty of places like Coinbase, it is as simple a linking your bank account, making a direct deposit into your new Coinbase wallet, and getting on with buying your Bitcoin. Click on add a payment method and select the most appropriate one - in this instance a bank account. Because of the banking laws, there will be a period of verification as Coinbase confirms your account, it could take some time because of the upswing in popularity of Bitcoin and their exchanges.
- Once verification is complete, you will be able to fund your exchange account with USD and from there you can make your first purchase of Bitcoin. At first, there will be little other verification needed, but as you get more involved, spending and buying more, Coinbase will need more and more verification, asking you to verify your identity and proof of residence.
How to Buy Bitcoin with a Credit Card
Linking of a bank account is just one of the options you can use to buy Bitcoin at a place like Coinbase. You may have noticed when selecting a payment method that there was also an option to buy with a credit card.
This option has its advantages, but it also has a few drawbacks. Firstly, there is less waiting and verification with buying Bitcoin with a credit card, it is almost instant. However, there is also a limit on the amount of digital currency you can buy, and the associated fees with using a credit card anywhere also come into play.
There is a step where you will have to verify that the credit card is indeed yours. Coinbase will charge the card a small amount and you will have to confirm that figure for your card to be accepted on their platform.
With a credit card, you will be limited daily on the amount of Bitcoin you can buy, it is not a great option for those looking to spend big on the exchange.
How to use PayPal for Bitcoin
There was a possibility of buying Bitcoin through PayPal at one stage, but because you can charge back transactions with PayPal, that option has been removed from places like Coinbase. Instead, they do still allow you to withdraw from your exchange wallet into a PayPal account. So, instead of taking money from your Bitcoin transactions back into your bank account, you can move them straight into your PayPal account instead.
This also requires verification and linking of your PayPal account to Coinbase to make the transaction seamless.
For this to happen you will first have to verify your ID with Coinbase. Then PayPal will need to be manually added as a payment method via the payment method page. Next, verification will be required so that Coinbase can access your PayPal account.
How to Trade Bitcoin
Bitcoin is the most widely and commonly traded digital asset in the cryptocurrency sphere, therefore it is relatively simple, and there are plenty of options to choose when trading. Exchanges like Coinbase allow you to trade once you have funded your account, but there are other options out there that provide better options to certain users.
A popular trading platform that goes beyond what Coinbase can offer is AVATRADE, and just like setting yourself up with Coinbase, it is just as easy to get started on AVATRADE.
- Firstly, go to the website: www.avatrade.com and sign up by again providing basic personal information. In fact, AVATRADE makes it even easier offering you a choice to sign up with Facebook or even Google+.
- Once you are into your profile, you will need to fill in further personal information from your date of birth to your preferred choice of trading platform - something we will get to laterAVATRADE is more focused on being an efficient tool for actively trading digital currencies, and other assets, so it will ask your level of experience when it comes to trading. This will help you with the level of support you need from the site.
- When it comes to electing your trading platform, if you are looking to trade Bitcoin, it is best to select Floating Spread Account with MetaTrader 4. This will give you the option to work with Bitcoin, as well as other Cryptocurrencies.
- From here, you can fund your account, and much like with Coinbase, it is about linking a bank account to AVATRADE and making a direct deposit. Once there are funds present, you can buy your Bitcoin and start trading by clicking ‘Web Trading’.
- Once you reach the trading platform (below), a list of all the available Cryptocurrencies will come up, running down the left-hand side of the screen. Begin your trading of Bitcoins here by using your available funds to purchase Bitcoin as a start.
The Future of Bitcoin Trading
Of course, there is still a lot of skepticism and fear around Bitcoin and its longevity as a tradeable asset, however, the one advantage it holds in its class is that it is the original, and it is still the go to for anyone in the game.
There are a lot of superfluous coins on the market now that are trying to be what Bitcoin is, and but for a handful, they are failing. Bitcoin has the most support and the most stability in a highly volatile market so it makes for a good investment option in the digital currency sphere.
There are of course issues surrounding Bitcoin though, as the original, it's the one that has had to make the mistakes, and currently it is going through a tough phase as people debate how to scale the currency. Bitcoins growth is giving it growing pains and this in turn is causing some uncertainty, meanwhile, others such as Litecoin and Ethereum have done things to avoid these issues and are seen as a step ahead, but not nearly as stable.
Bitcoin will continue to have a future for some time, and the debate is whether there will be a new upstart that is strong enough to improve and take over from the original, but that does not seem possible just yet.
Enjoyed this Bitcoin guide? Then see our other cryptocurrency guides:
- How to buy and trade Bitcoin
- How to buy and trade Dash
- How to buy and trade Dogecoin
- How to buy and trade Ethereum
- How to buy and trade Golem
- How to buy and trade Litecoin
- How to buy and trade Monero
- How to buy and trade NEM
- How to buy and trade NEO
- How to buy and trade Peercoin
- How to buy and trade Potcoin
- How to buy and trade Ripple
- How to buy and trade Stratis
- How to buy and trade Tezos
- How to buy and trade Waves
- How to buy and trade Zcash