How to buy Your First Bitcoin
Exchanges, Learn 2018-01-12This site is primarily for investors in cryptocurrency indexes but for most users Bitcoin is their gateway to investing. As a potential index investor you should have at least $1500 that your are able to lose completely (see disclaimers below). If the thought of this makes you lose sleep, it is not the asset class for you. Cryptocurrency assets are an exotic investment (like penny shares or emerging market companies) and conventional investment advice is these should not be be more than 5% of your portfolio. So, if you have savings of $30-$60k and would regard losses as learning experience and gains as an unexpected pleasure then read on…
How to buy your first Bitcoin
To buy your first Bitcoin you will need to open an account with an exchange and send them fiat currency from your bank account. In the USA, Coinbase is the most popular exchange for retail investors. In the UK, Coinfloor provide an excellent service for GBP and Euro purchases. There are many other operators in both countries and other parts of the world but you should choose one that operates strict Know Your Customer policies (KYC) and has a website that gives you a clear idea of who owns the company and where they are based. It can take several days to set-up an account and for your cash to appear in it so if you have an urgent desire to invest in cryptocurrencies you should start this process as soon as possible.
How to store your Bitcoin
It is considered unwise to keep your Bitcoin in an exchange or brokerage account because they might go bust or steal your money. Fortunately a key feature of Bitcoin is that your holding is stored in a public database on the internet called the blockchain and you can manage it yourself using a secret phrase called a private key. You cannot trust any computing device and therefore you should buy a hardware wallet to manage your private key. The Trezor and Ledger Nano S are excellent devices, a fuller listing is available here.
When you have set up your hardware wallet you will be able to link it to your exchange account and withdraw your Bitcoin.
How to sell your Bitcoin for fiat
When you want to sell your Bitcoin for fiat currency (eg, GBP) you simply transfer your coins back to your exchange account and sell them. You can then transfer (“wire”) the cash to your bank account. Once again, although cryptocurrency transactions are very quick, the conventional banking operations can take several days so you should not invest money that might need back quickly.
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