Buying Bitcoin for Beginners
I remember hearing about Bitcoin years ago. Back when it was $200. Mysterious internet money that increases quickly in value as I was told by some weird computer guy.
He called it the future. That fucking psychic.
Shortly after that I saw some acquaintances on facebook raving about it. I remember doing a bit of digging on how to get started, but never pulling the trigger. A million dollar mistake? Maybe.
Fast forward X amount of years to December 2017. Bitcoin currently sits at just under $25,000 CAD. That’s a roughly 6000% gain just this year.
I finally pulled the trigger a few months ago, buying not nearly enough. But I’m doing okay. Since October I’ve completely immersed myself in Bitcoin, cryptocurrencies and trading in general. As of writing this I’ve tripled my investment in about 2 months. I know people who have easily 10x their money over 5 months.
Enough about me, let’s talk about you. If you are already invested in Bitcoin, congratulations. You are winning. Probably much, much more than even I am.
If you aren’t invested yet, you haven’t missed the boat despite how you may feel. I wager there’s still a lot of growing room for this industry. There’s many minds much brighter than mine who agree.
This post intends to give a rough guide on how you can get invested. There will be steps and tips to owning Bitcoin and other cryptocurrencies. Before we begin, a few disclaimers.
INVESTING IN BITCOIN AND CRYPTOCURRENCIES IS DANGEROUS!
Let’s get that out in the open right away. Even if you are a seasoned investor and understand markets, money, human emotion and how to trade. Bitcoin and cryptocurrencies are more speculation than investing in my mind at this point.
The Crypto / BTC markets are unregulated, operate 24 and are prone to incredible swings. Not for the faint of heart.
So I must repeat, this is speculation and only invest what you are willing (and able to sleep at night) to lose. Despite how hyped I currently am with crypto’s, they represent only roughly 20% of my total portfolio – which is even probably too much in many people’s minds, but I am comfortable with that risk. The majority of my investment portfolio still sits in safer total market index ETF’s and a selection of marijuana companies.
DO YOUR RESEARCH BEFORE INVESTING
This is a rough guide, I am still fairly new with this, and I AM NOT A CERTIFIED ADVISOR. This is not financial advice.
Make it a priority to understand this market and industry if you are going to invest. Stay up-to-date on news and trends. This can flip in an instant. For example, Bulgaria’s government and banks shut down all exchanges in country over night. Exchanges and accounts have goten hacked for millions of dollars in the past. This is the wild wild west, baby.
Now that we’ve got the realities of the situation and the negative stuff out of the way, lets show you how to invest if you are still interested. Despite the risks, there is a lot of opportunity to make money, and more importantly, this techology is going to change the world as we know it. Think Bitcoin going from $1,000 to $25,000 in 12 months is crazy? You’ve haven’t seen nothing yet.
What is Bitcoin, Cryptocurrencies, and Blockchain
Bitcoin was created to be used as a digital currency. To send, receive and buy things with instantaneously. It was also originally thought of as a way to take control back from the banks and centralized government. Today it is used as a store of wealth more than anything. An asset. Here’s an article with more information on Bitcoin. Give that a quick read then return to see how to get started investing in bitcoin.
Bitcoin is the granddaddy of cryptocurrencies, which are digital assets and currencies. Other currencies are also referred to as Alt Coins. Many of these coins also operate as the stock of a company, which is created to serve some purpose. Though unfortunately some of these companies are mere shams, so be careful what you invest in.
These cryptocurrencies and bitcoin operate on what’s called the blockchain. Blockchain is a program that is decentralized and also’s for tracking of all actions and transactions. I am not too versed in this aspect of the industry, so here is an article that you can read up more on. Again, give that a read then come on back so we can get you invested in Bitcoin and cryptocurrencies.
How do I buy Bitcoin?
How can you buy bitcoin? Buying bitcoin is much easier than understanding blockchain, though I recommend you educate yourself on it even a bit so as to understand how important and revolutionary the technology is. Here are some steps to buying bitcoin and cryptocurrencies.
Sign up for an exchange
Exchanges are where you purchase and can hold your Bitcoin and cryptocurrencies. For Canadians the easiest to use exchanges are Coinbase and QuadrigaCX. Use those links to sign up and we both get some free bitcoin when you fund $100 or more on your first purchase. Any less than that and it’s probably not worth your time.
You will need to authenticate your account by sending in photos of yourself, your ID, a utility bill and passport. Most exchanges require this so it’s normal. Also set up the 2 factor authentication, so you have to enter a code from your email or a Google Authenticator app each time you log in. Security is paramount in this industry. Make your password complicated and don’t lose it!
It usually takes a day or two to get approved to begin trading.
Fund your account
You will need to send fiat money (CAD or USD) to this exchange. Each exchange has a variety of funding methods. I use Interac online, it’s the quickest and cheapest option. To do this you need an account with TD, Scotiabank, RBC or one other major bank. The kicker is that you CANNOT use a visa debit card. Most banks only give debit cards with VISA/Mastercard function, so you may need need to open a separate account and specifically tell them this. Scotiabank was unable to do this for me, so I opened an account with TD to send my money.
Bank wire transfers also work but take a bit longer to send. There’s a list of options for funding your exchange that you can choose.
Once you get your money onto the exchange you can start purchasing.
Choose your coins and purchase
Once your money is in your account on the exchange you can begin to purchase. The markets run 24 hours a day so the price is always moving. You can either purchase instantly at market price or set a ‘Buy Limit’ to purchase at a given price. Once you’ve chosen your coin you can purchase.
To do some research on the many coins available, check out Coin Market Cap. It’s a hub for information and current prices of all coins.
Choosing when and what coin to buy gets tricky. This is where research of the industry, investing and trading come into play.
At this point in time it’s probably smart to for sure hold a chunk of Bitcoin, and you probably couldn’t go wrong with any of the top ten coins.
I am not an advisor, please do your own research and make your own decisions. Remember, no one knows where this market will go in the future. It could explode either up or down.
How to purchase Alt Coins.
On both Coinbase and QuadrigaCX you will notice there are only 2-4 coins available to purchase, but on Coin Market Cap there are +1,000 coins on the market. These two exchanges can be thought of as the bank, where you can purchase the main currencies to purchase other currencies on alt coin exchanges, which can be thought of as a stock market.
Two Alt Coin exchanges I personally use are Binance and Bittrex. Both are large exchanges and hold a myriad of different coins. These exchanges can be a bit overwhelming for new investors, and I would use even more caution as these coins are more volatile than Bitcoin, and much less established. I would not start transferring and buying on these alt coin exchanges until you understand this market.
Selling bitcoins and cryptocurrencies.
Now you have some coins, you’ve been holding them and they’ve increase in value (25%, 100%, 1000%?) and you are ready to cash in on your profits. Or maybe you are ready to transfer some bitcoin to another exchange and buy some alt coins.
To do this, you need to select the sell option on either Coinbase or QuadrigaCX. You can sell at market price or set a ‘Sell Limit’ to instantly sell at a certain price. You can do this as soon as you buy if you have a specific goal in mind.
For example if you buy Bitcoin at $25,000 and want to sell if it reaches $50,000 you can set that limit right after you buy it.
Once you’ve sold your coins, you can withdraw back to your bank account. There are various options and fees to do this.
Transferring bitcoin and cryptocurrencies.
You may want to transfer some coins to another exchange or a wallet to keep your coins safe. A wallet is a place to store your coins for safe keeping. Coins left on exchanges are prone to theft through hacking, exchanges shutting down or being blocked for whatever reason. Anything can happen so the safest spot is in your wallet under your control. Wallets can be online, offline on your computer, on a paper hard copy via writing a code or on an external drive known as a ledger. The safest option is an external ledger, that is how I store my currency.
Ledgers can be bought here. I suggest any investment over $2,500 to be store offline in a ledger and not on an exchange.
To transfer, you need a special code from the wallet or exchange you are sending to. Be sure to copy this code correctly, and make sure it is the wallet compatible with your currency. Sending to the wrong address/code or to a wallet of a different coin type will result in losing your currency forever.
Bitcoin can only be transferred to a bitcoin wallet, Ethereum and Lite coin can only be transferred to wallets of their respective types. Ensure you send to the correct wallet.
Thousands of dollars can be lost forever in the slip of a finger, so be careful!
I always send a tiny amount to my destination first to make sure it goes through, and I recommend everyone practicing this. Better to be safe than sorry.
Final tips for purchasing bitcoin and cryptocurrencies
- This is disruptive technology. I don’t think you should bet the farm on crypto and bitcoin, but I think everyone should have some exposure. With +1000% gains in months.. How can you not?
- Research the market and read news to stay up to date on what’s happening. Coin Market Cap, Coindesk, and Coin Telegraph are great sources.
- Look into purchasing a ledger and never hold too much money on an exchange. Or look into a wallet. I don’t have any personal recommendations for online or paper wallets, please do your own research.
- Don’t invest more than you are willing to lose
- Make sure you have the correct addresses for each transfer. The address to where you want to send your coins is found on that exchange or ledger.
- Buy your coins at Coinbase or QuadrigaCX, and purchase alt coins at Binance or Bittrex
- Understand that these markets are very volatile and anything can happen. Expect wild swings.
- Track your coins using Blockfolio
- Join facebook groups, follow twitter trends, visit community forums, and read, read, read!
I hope you have a baseline understanding from reading this quick guide. If I have missed anything let me know in the comments! If you would like some clarification, please don’t hesitate with a question below!