You’re a new investor looking to purchase some Bitcoin, right? This guide will lead you through the strategies of investing in Bitcoin.
Set up a Bitcoin purchasing account
First, you need to sign up for a Bitcoin exchange that allows you to buy Bitcoin with your credit card or bank account. The best choice for new investors is Coinbase because they offer support for most banks and offer instant purchases when you pay by credit cards (but not Bank Account routing transfers). Setting up the account is very straightforward. Perhaps the most annoying step is verifying your identity by providing either a Driver’s License, Passport, or another personal identifying document. You might also need to provide some sort of utility bill that has your name and address on it.
Once you’re set up with Coinmama (or another similar site) you’ll make your first purchase with a credit card. If you don’t have a credit card (instead a checking account) you might have to wait some time before your coins arrive. If you’re patient, then this is no problem at all. However if you want to purchase something right away then you’ll definitely want to purchase the coins with a credit card as the transaction will be instant.
After you receive your Bitcoins / Ethereum / Litecoin
If you used Coinbase you’ll want to transfer those coins to GDAX. (This is only if you purchased through Coinbase.) Why do you do this? GDAX is a sister company to Coinbase and they have a very rare benefit of allowing you to transfer Bitcoins to an external wallet/exchange without paying a transfer fee. If you don’t know, Bitcoin is getting increasingly costly to transfer. For example, the other day I transferred 0.003 to a friend and paid $16 (usd) worth of Bitcoin to fund that transaction. That’s perhaps one of the major benefits of using Coinbase/GDAX because somehow they allow for free transfers!
Transferring your coins to GDAX
You have to first access gdax.com. It will guide you through the process of finalizing your account if more steps are necessary. You’ll need to access the “Deposit” screen. Then select “Coinbase Account” and confirm the deposit. Your coins will be instantly available to sell or transfer!
If you want to buy or sell more Bitcoins then you’ll want to use GDAX for this. Their interface is very straightforward. If you have no idea what you’re doing, then you might as well do a “Market” order (also known as a “taker” order) which purchases at the rate of selling. Keep in mind you’ll pay a very small fee to make this happen. This fee is not very much, but it adds up if you buy and sell a lot using market values. You can avoid this fee if you place a Limit order (also known as a “maker” order) but you might not get your coins right away because the exchange price has to hit a certain point before it goes through.
Keeping Bitcoin long-term in a cold storage
If you have no intention of selling your Bitcoin any time soon then you will want to transfer them to a cold storage wallet. This kind of wallet is either on your computer or printed out on a piece of paper. I’m not going to explain this process, but you can easily perform a Google search learn how to make a secure cold storage wallet. Keep in mind that… the more secure you want this wallet to be, the more steps you have to take. This over-caution approach is to prevent any sort of malware/virus from scraping your private keys. Most of the time it’s overboard BUT there are stories of people’s Bitcoin being stolen even though they rarely use their computer. You must decide how cautious you want to be!
Transferring to an exchange
If you want to use your new Bitcoin to purchase another cryptocurrency, then you’ll need to transfer them to an exchange with more options to buy other cryptocurrencies (known as AltCoins). If you’re interested in remaining committed to cryptocurrency long-term then you’ll want to take a lot of time to acquaint yourself with the top 20 coins to see their unique value propositions. I encourage you to invest a little bit in several AltCoins to see how their value goes up (or down) over time!
Consider the story of the guy who invested $10 in each of the top 100 coins and experienced about 50X increase in his investments after 1 year! This shows you that cryptocurrency is growing tremendously… and hopefully it’s here to stay!
I’ll be adding on more to this guide soon! In the meantime, click here to go back to our Bitcoin & Cryptocurrency FAQ page!