UPDATED: March 2022
How to Invest in Bitcoin – Bitcoin is one of the most popular and largest cryptocurrency currently around, but the central governments don’t back it unlike traditional currency. If you’re interested in investing in Bitcoin, you’ve come to the right place. Here is everything you need to know about how to invest in Bitcoin.
What Is Bitcoin?
Bitcoins are a decentralized digital currency, which isn’t issued by public corporations like bonds and stocks. They can be sent from one person to another electronically, anywhere in the world. The expectation for developing Bitcoin was to be used as an international currency that won’t be connected to any corporation, government, or bank.
Bitcoin came into the limelight when its price ballooned from $1 when introduced in 2009 to over $21,000 in 2018. It did suffer a significant drop but has recently gained even more attention after its price reached $37,000 in 2021. Investors were genuinely interested due to that impressive price leap.
How to Invest in Bitcoin
You won’t be able to invest in bitcoin through a bank or investment broker, but cryptocurrency exchanges offer you specialized services to trade in cryptocurrency. You will need to choose an investment app or a cryptocurrency exchange to purchase bitcoin. Apart from that, you will also need a wallet where you will store the bitcoin. Once you have all that, you can start trading in bitcoin.
You must remember that you will still need to pay taxes on any cryptocurrency or bitcoin that you are trading when you invest in bitcoin. The one thing that can define whether your bitcoin investments help you reap the rewards is to find a suitable wallet to hold your cryptocurrency.
How to Find a Bitcoin Wallet
Once you have purchased bitcoins, you will need to find a bitcoin wallet to store them. You can’t hold them in a bank account or brokerage account. There are two types of digital wallets available to you, which are software wallets and hardware wallets.
· Software wallets
These are known as hot wallets, and you can access them through your smartphone or home computer. You can find various software wallets from cryptocurrency exchanges, but finding one that doesn’t depend on a third party is preferred.
· Hardware wallets
These are known as cold wallets and offer you a physical storage place. The device is portable, and you can download and store the cryptocurrency here.
There are pros and cons of each type of digital wallet. For instance, software wallets can be acquired without any cost and allow quicker transactions than hardware wallets. However, they are less secure because hackers tend to target them.
On the other hand, hardware wallets are more secure as they aren’t connected to the internet, but they cost you money.
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