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Buying and securing Bitcoin for dummies
A 3 step process.
Want to buy bitcoin but don’t know how to acquire some of this fancy internet money you’ve been hearing about? Concerned that the dollar is going to hell in a handbasket and you want to diversity into a more sound form of money? You’ve come to the right place!
This is designed to be as simple as possible – a non-technical set of instructions for how to buy bitcoin, and just as importantly, explain how to secure your bitcoin properly. There’s a lot of technical mumbo jumbo to back the importance of securing your bitcoin, but just remember: If you don’t have possession over your bitcoin, it’s not really your bitcoin. Custodial solutions for bitcoin are a very bad idea, and it subjects you to potential costs and middlemen, among other unnecessary issues. Anyway, let’s get started.
Step 1: Buy Bitcoin
There are a handful of solid, trustworthy exchange options out there that allow you to buy bitcoin (and keep possession of your bitcoin). The exchanges below have a painless, relatively fast process from account creation to being able to buy bitcoin.
The CashApp (available on the app store) has an extremely user-friendly experience. It’s probably the best option for starters because of its simplicity.
There’s always Coinbase.com, a favorite of many.
You have Gemini.com (owned by the Winklevoss twins).
Kraken.com is another established exchange with a solid track record.
Binance.us is another major player in the space.
All of the aforementioned exchanges allow you to secure custody over your bitcoin. Don’t be alarmed if they ask you for your identity or some other form of verification. They need to comply with U.S. laws. On some sites, you should be ready to buy your bitcoin within hours of signing up to trade. It’s much easier to link a bank account than it is to link a credit card, which might be hit with exorbitant fees. If you’re buying bitcoin from these exchanges, expect to be charged with around 1% of your total purchase price in fees. Yeah, it sucks, but that’s the reality of these places at the moment. But if you believe in bitcoin’s long term value, 1% won’t kill you.
Do not buy bitcoin from Robinhood or Paypal. They currently do not support allowing you to take possession of your bitcoin. Given this custodial arrangement, you are completely beholden to the whims of these companies, and you may not have access to your bitcoin when you need it. Plus, Robinhood is beholden to the hedge funds and oligarchs on Wall Street. Screw those people. Don’t give them your money.
Step 2: Buy/Download a Bitcoin wallet
Here’s the two easiest venues for newcomers to send your bitcoin from an exchange and into your possession.
Download a mobile app wallet
Although the first choice is free, I would not recommend it. An iOS or Android mobile app wallet is much less secure than a hardware wallet and it creates complications if you upgrade, change, or in the event you lose your mobile device.
Instead, consider investing in a hardware wallet, which is a small, secure storage device for your bitcoin, similar to a USB flash drive. They’re now well under 100 bucks, and it’s a great investment when you consider the potential reward of owning an incredibly innovative asset like bitcoin. The two best brands for this, in my opinion, are Ledger and Trezor. There’s a bunch more, but these two have well-established track records in the cryptocurrency space. They make taking possession of your bitcoin a super easy and secure process.
Step 3: Send your Bitcoin to your wallet, and into your custody!
Once you have purchased your bitcoin and set up your wallet (storage device), it’s time to take possession of your fancy internet money. One of the cool things about bitcoin is that unlike centralized stock exchanges, you can take complete custody over these own assets. You can then choose to hold onto your bitcoin, send it back to an exchange to sell it (don’t be weak like that), and send/receive bitcoin to anyone with a bitcoin wallet, and without any middlemen. It is a truly peer to peer currency. All you need is an internet connection, and you can send/receive your bitcoin, without any hurdles, to any address on earth.
Sometimes you may have to wait a few days — while your bitcoin purchase clears through your fiat bank — before being able to send your bitcoin off of the exchange. This is normal.
Reminder: You should not keep your bitcoin on these centralized exchanges long term. By doing so, you are making yourself vulnerable to the possibility of losing your bitcoin. Bitcoin is a very valuable and scarce asset, and Bitcoin holdings are not FDIC insured. If your password is stolen and someone steals your bitcoin, or if the exchange faces some major issues, you might be shit out of luck.
Anyway, don’t worry, you’ll be fine. The good news is that there are many easy ways to move your bitcoin off of an exchange. All of the exchanges I listed above make the process VERY simple. The tab you’ll want to look for is “send bitcoin” or “withdraw bitcoin.” You aren’t going to have to call someone or dig through a maze to withdraw your bitcoin. Don’t sweat it. When you send/withdraw the bitcoin to your wallet, you will want to send it to the receive/deposit address created by your wallet. It is CRITICAL that you send your bitcoin to the correct address. Once you send your bitcoin into cyberspace, there’s no return trip or cancel button. Read over the address several times to make sure that you are sending it to your wallet.
I hope this helps!