Learning how to invest in bitcoin reminds me of learning how to use the internet in the ’90s. Few investments are as confusing. Stocks have been trading for more than 400 years. But cryptocurrency is barely a decade old. Questions and confusion are inevitable.
If you’re willing to put in the extra effort today, you’ll beat the masses tomorrow. I’m convinced bitcoin will only grow in scale and opportunity. The crypto revolution is just beginning.
Being on the outside means you can’t profit from it in the future.
How to invest in bitcoin step 1: Before you begin
When you’re learning how to invest in bitcoin, I recommend buying an extremely small amount to start. Don’t invest more than 1 or 2% of your investable assets. Keep in mind, you don’t have to buy an entire bitcoin either. You can buy as little as 0.00000001 bitcoin.
Familiarise yourself with the process of buying, moving and storing bitcoin. It’s not like traditional online banking. Passwords are long and complicated. The terminology is new. Some wallets aren’t intuitive.
If you make a mistake, do it with a few dollars … not hundreds of dollars.
Step 2: Getting started
To buy your first bitcoin, you’ll need:
- A computer
- A mobile phone
- A notebook
- Identification (i.e. your passport or driver’s license)
- Proof of address (a recent utility bill with your name and address)
- A printer
- Your bank details
Remember, you’re responsible for your account when you buy bitcoin. If you forget your password or private key, you can lose everything.
If you send bitcoin to the wrong location, you can’t call up your bank and cancel your transaction either. That’s it. There are no refunds.
Make backups and hard copies of everything. Buy a physical notebook or folder and use it to store usernames and passwords.
You may look at this list and think, “this is too much like hard work.” But remember, the crypto banking revolution is coming first. Then, crypto will permeate just about every industry on the planet.
Step 3: On-ramps
To start buying bitcoin, you need an “on-ramp.”
An on-ramp is a website where you can convert traditional currency into bitcoin. People call them “exchanges.”
Gemini is one I’ve used. Creating an account on an exchange is very similar to creating an online bank account. You’ll first create a username and password. Then, you’ll provide the documentation you gathered in Step 2.
After a 1-2 day verification period, you’ll be able link a bank account with your exchange account. Deposit some fiat money. When your deposit clears, you can use it to buy bitcoin.
Beyond Gemini, there are several options:
These exchanges let you buy bitcoin, but I don’t store my bitcoin on them. They can (and do) get hacked.
Which brings us to step 4 …
Step 4: Wallets
After purchasing bitcoin on an exchange, transfer it to a wallet. Your bitcoin “wallet” is a single place to store, send and receive bitcoin – one that’s not owned by the exchange.
There are several types of wallets:
- Software on a mobile or desktop device
- A dedicated hardware device
- A USB stick
- A piece of paper
Some wallets are only designed for bitcoin. That means they only interact with the Bitcoin blockchain.
Other crypto assets have their own wallets. There are even wallets that support dozens of different crypto assets.
One popular hardware wallet is called Trezor. It allows you to store bitcoin offline.
Wallets like Electrum let you store bitcoin on a computer. If you want to store your bitcoin in a web-wallet, look at Blockchain.com’s wallet.
When you’re comfortable transferring bitcoin from an exchange to your wallet, go back to the exchange. Try trading bitcoin for another cryptocurrency like Ethereum. Not only will you know how to invest in bitcoin before the masses, you’ll be even further ahead of the pack.
As of this writing, Fred Marion was long bitcoin.