Making an investment in bitcoin may seem complicated at first but it is much easier when the process is broken down into steps. Purchasing bitcoin is a process that is getting easier each day, and the legitimacy of the wallets and the exchanges are also growing.
What to Know Before Getting Started?
There are more a few ways to buy bitcoin. Because of this, there are a few things to know before diving in. When someone creates a cryptocurrency exchange account, they must provide personal identification documents if someone is using a Know Your Customer platform, a secure internet connection, and an approved payment method. It is also necessary for an individual to have a wallet beyond the one provided with the exchange account.
Some of the accepted payment methods include debit cards, credit cards, and bank accounts. It is also possible for someone to receive bitcoin at P2P exchanges and at certain ATMs. Keep in mind, though, that the bitcoin ATMs are now requiring the use of a government-issued identification card for use.
Security and privacy are crucial issues for bitcoin investors. While there are no actual, tangible bitcoins, it is still not a good idea to brag about larger holdings. If someone gets access to a private key or public address on a bitcoin blockchain, they can begin to authorize transactions. Even though it is obvious that the private key needs to remain secret, criminals may try to steal the private keys if they have found out about a larger holding. This makes it a great idea to help maintain significant investments at a public address that are not directly connected to the ones that are regularly used for transactional purposes.
Anyone will be able to see the transactions that have been made on the blockchain. Even though these are traded publicly and recorded on the blockchain, user information is not provided. With the bitcoin blockchain, only the user’s public key is going to show up. This makes the transaction confidential, but it won’t be anonymous. In some situations, a bitcoin transaction is much more transparent and traceable than cash would be, but with bitcoin, everything will remain anonymous.
This is a distinction that needs to be considered. The FBI and international researchers have made the claim that they can track any transactions that have been made on the blockchain to a user’s other accounts online, which includes their digital wallets.
An example of this would be someone who created an account through Coinbase. At this point, they are required to provide identification. That means, when the person buys bitcoin, the transaction is linked to their name. If it is sent to a different wallet, the bitcoin can still be traced back to the Coinbase purchase, which is connected to the identity of the account holder. This is not a concern for most investors since bitcoin is considered legal in the country.
Select the Right Exchange
When someone signs up for a cryptocurrency exchange, they can purchase, sell, and hold onto cryptocurrency. In most cases, it is a good idea to use exchanges that allow a user to withdrawal the crypto in their personal wallet to ensure safekeeping. There are several different brokerage platforms and exchanges that don’t allow this. When someone is interested in trading bitcoin or another type of cryptocurrency, this is a feature that may not be as important.
There are several different options when it comes to cryptocurrency exchanges. With the fact that bitcoin having been decentralized and include individual sovereignty, there are some exchanges that let users stay anonymous and that do not require that a user enters any personal information. An exchange that allows this will operate autonomously and is usually decentralized. This means there is no type of central point of control. Put simply, there is no one person or CEO working for a regulatory body to pursue concerns related to illegal activity that has occurred.
Even though these systems have the potential to be used for certain, nefarious activities, they also provide services to the world beyond banks. Some of the people who use this world include refugees and those who live in a country where there is minimal government or little banking infrastructure to offer the state identification that is required to have an investment account through a bank. There are some who believe that the good in these services will outweigh the possibility of illegal use because unbanked individuals now have a method for storing wealth and getting out of poverty.
Some of the most popular exchanges used today are not ones that are decentralized and that do require KYC. For the U.S., these exchanges include Gemini, BinanceU.S., Kraken, and Coinbase. Each option has grown a lot in terms of the features offered.
Connect the Chosen Exchange to a Payment Method
After an exchange has been selected, it is a good idea to gather the necessary personal documents. Based on the exchange, this includes things like the user’s social security number, picture of a driver’s license, and source of funds. The information that is needed is usually dependent on where someone lives and the laws for that area. In most cases, the process of setting this up will be very similar to a traditional brokerage account.
Once the exchange has checked a person’s identity and their legitimacy, they can connect their payment option. With the exchanges mentioned above, it is possible for someone to link their bank account or to connect a credit or debit card.
Getting Started with Cryptocurrency
When it comes to getting started with cryptocurrency, there are more than a few factors to consider. Be sure to keep the information here in mind to know what to do and how to approach this. In the long run, knowing what to expect and how to use the cryptocurrency market is something that will pay off. Don’t underestimate the benefits of bitcoin. However, it is also important to learn how to trade, buy, and sell safely.