Bitcoin is also vulnerable to some forms of hacking, which is why it is important to keep your digital currency accounts extremely secure. If someone gets your Bitcoin wallet address and password (private key), they can take your Bitcoins and you will likely have no way to recover any losses. If you keep your Bitcoin offline, it is essential to keep your access information safe and available, as losing your wallet information could leave you unable to access your currency.
Relatively easy to buy: You can easily buy Bitcoin using a cryptocurrency exchange, broker, or other account that supports Bitcoin. It’s as simple as buying stocks and other common investments.
Offers an alternative currency and investment strategy: Bitcoin can serve as a hedge against inflation and other currency risks. It also offers a unique investment outside of traditional financial markets.
Security: The blockchain technology behind Bitcoin makes it very secure and difficult to hack. All coins are tracked from creation to current ownership in a public ledger.
Very risky and volatile: The value of Bitcoin is very volatile. The currency lost about half its value in about three months in the first half of 2021. Potential for hacking and other losses: If you do not protect your Bitcoin credentials, hackers can access and steal your funds. In some cases, even major exchanges suffered losses.
Requires a certain level of technical knowledge: While no advanced computer or programming skills are needed, you will need to use a computer and the Internet to buy, sell, and trade Bitcoin and other cryptocurrencies another death.
How to start investing in Bitcoin
Open an account
Once you have chosen your broker or trading platform, start by opening your account. For most cryptocurrency exchanges, the process of opening an online account only takes a few minutes if your information is available. You need a cryptocurrency wallet, found in most cryptocurrency exchange accounts, to store your digital assets.
Plan to enter your name, address, phone number, email, and social security number to activate your cryptocurrency account. Some require additional information, such as a photo of your driver’s license or passport, to access full account features. The experience is similar to opening any regular brokerage or bank account.
Bitcoin is the largest and most popular cryptocurrency in terms of market capitalization. While Bitcoin is arguably the most important digital currency, most exchanges also give you access to currencies like Ethereum, Cardano, Stellar Lumens, or Dogecoin.
Each currency has its own use cases, potential benefits, and market risks. Most cryptocurrencies are considered riskier than Bitcoin, so invest with caution. Make your first trade
To buy Bitcoin, enter the amount of Bitcoin (“BTC”) into the trading tool on your exchange. You will need enough local currency for the transaction to go through once you click the submit button.
Bitcoin transactions happen instantly on some exchanges, while others may take some time to process transactions on the Bitcoin blockchain. According to an exchange called Kraken, standard Bitcoin transactions require four confirmations and take about 40 minutes.3 However, you can choose to pay higher transaction fees for faster processing times with some exchanges.