You may have heard a lot about Bitcoin, but you may not have learned what you need to know for getting started with Bitcoin. The community is very technologically savvy, so the assumption is usually that you need to have advanced technical skills in order to purchase Bitcoin. In reality, it is actually quite simple.
Risks of Getting Started with Bitcoin
As an important disclaimer for anyone who is a Bitcoin beginner, the risk involved in Bitcoin coin is actually quite complicated.
Not only is there the usual potential to lose money on your investment, as could occur for anything from real estate to Berkshire Hathaway stocks, but there is a risk of holding Bitcoin. When you put your money in a bank, you are as close to guaranteed as you can get that the money will be there when you check next.
Yes, there is the small potential for the company to get hacked. But that is very small and in order for a company to preserve its brand, it could never let a hack affect its customers anyway. The main drawback to how early on in the development of the Bitcoin ecosystem we are is that there are numerous security risks that can cost you your entire investment. This security risk is something you should be very aware of before investing as a Bitcoin beginner.
It’s Not Too Late for Bitcoin Beginners
When you hold Bitcoin, it is a little different. There are huge potential gains investing in Bitcoin because of how early on in the adoption process we are. Returns tend to normalize out to a standard risk/return ratio as more people start using it.
This is all to say that people who earn a lot of money on Bitcoin are just taking advantage of the fact that there are currently barriers to entry for those who would like to invest in Bitcoin. These barriers are what make getting started as a Bitcoin beginner much more complex than just opening a trading account at your local bank.
In this, it is important to remember everyone was a Bitcoin beginner at some point, but many have invested a significant amount of time to understanding the ecosystem and figuring out ways to mitigate the risks so they can be reasonably assured their money will be there when they go to check.
There’s No Regulatory Authority on Bitcoin
If you are just getting started with Bitcoin, you’ve likely done some research done some research to find the most reputable and authoritative Bitcoin exchanges, wallets, and news outlets. Part of what makes Bitcoin unique, however, is that there’s not a central authority – everybody plays a part in the Bitcoin community.
Decentralization comes at a price, and that is the risk attributed to having no central managing party who will take responsibility if something does go wrong. There are also a ton of benefits in terms of the trust and ability to transact using cash-like online currency. Bitcoin is in many ways an amalgamation of all the best parts of gold, cash, and a bank.
How to Get Started with Bitcoin
Getting started with Bitcoin may sound complicated, but you can typically own your first Bitcoin (or part of a Bitcoin) in a couple hours or less.
In terms of barriers to entry, you only need a Bitcoin wallet and access to a Bitcoin exchange in order to start your cryptocurrency empire. A Bitcoin wallet is a lot like a bank account. It stores your Bitcoin, and you have access to it while no one else does. There are other methods of storage such as a Trezor (an offline device for storing the Bitcoin information) or cold storage (writing down the Bitcoin information so it can never be “hacked”), but in the beginning, a wallet will do just fine.
To actually buy the Bitcoin, you will need access to a Bitcoin exchange. There are lots of different exchanges out there, but the largest and most reputable currently in operation is Coinbase.
You can deposit your fiat currency (money backed by a specific country) into Coinbase and then buy Bitcoin as you please. There are many other options, but Coinbase is usually considered the safest one in the beginning. As you progress in your journey to learn more about Bitcoin, you might decide to explore different exchanges.
Choose the Right Bitcoin Exchange
The two major things you should look for in any exchange is safety and low fees. Fees are necessary to fuel the blockchain, but that doesn’t mean you should consent to unnecessarily large ones. In terms of safety, some exchanges are more likely to get hacked than others – you can make an estimation of this based on their history – and the ultimate loss when investing in Bitcoin is having your cryptocurrency stolen from your account. As a caveat, this becomes less of a worry if you don’t keep your Bitcoin in the exchange and instead have it in a wallet.
Finally, Bitcoin is currently trading well above $3,000 USD, which is quite a hefty amount of cash. This doesn’t mean you necessarily need to invest that much in Bitcoin to join the excitement. Just like you can own part stocks or bonds, you can own part Bitcoins. This means there is no minimum investment.
So by setting yourself up with a wallet to store your Bitcoin and an exchange to trade it, you can make your first Bitcoin transaction quite easily. Good luck in the beginning of your cryptocurrency journey!