It can seem a bit complicated to invest in Bitcoin, especially for those entering the market for the first time. But it’s not as difficult as it might seem. The market is now easier to enter compared to a few years ago when those who wanted to buy Bitcoin had limited options.
The legitimacy of wallets and exchanges is growing bigger and better, which has made it easy for people to buy Bitcoin and store them too.
But you have to take the necessary steps to make sure your Bitcoin is safe and protected from scammers and hackers.
The following is a guide to help and direct you on the process to take when buying Bitcoin in the USA.
Things You Need to Have
Unlike fiat money where you can withdraw paper cash from an ATM, Bitcoin is completely digital. This means you need to have some storage system for the Bitcoin when you eventually buy them. In this case, you will need a method of payment, a secure internet connection, and a cryptocurrency exchange. Additionally, you may need your identification documents if you are using a platform that requires Know Your Customer (KYC) filing.
Apart from registering with a cryptocurrency exchange, it’s recommended to have your wallet, especially if you want to store Bitcoin for a long time.
Several payment methods include credit cards, debit cards, and bank accounts through wire transfer.
A Step-by-Step Guide to Buying Bitcoin in the USA
Set up an account with an exchange that supports Bitcoin in three steps.
Step 1: Choosing an Exchange to buy BTC
Selecting a cryptocurrency exchange is one of the first things you need to do when deciding to buy Bitcoin in the USA. When you sign up at a crypto exchange, it will enable you to hold, sell, or buy Bitcoin.
It will be better if you select an exchange that gives users the chance of withdrawing their Bitcoin funds directly to their Bitcoin wallet, which is in the form of a bank account for Bitcoin.
Several platforms and exchanges don’t allow this, so it’s important to research very well. That way, you can confirm whether the exchange allows withdrawal into wallet accounts.
However, if you want to trade Bitcoin consistently and have no intention to hold the token, you do not need a Bitcoin wallet.
With Bitcoin having a decentralized nature, some exchanges give users the freedom to remain anonymous while trading on the platform. These exchanges are decentralized and don’t require users to entire their personal information. You can choose a decentralized exchange if you’re concerned about your privacy and want to stay anonymous when buying Bitcoin.
But if you wouldn’t mind submitting a KYC document before completing your registration at an exchange, there are so many exchanges in the U.S. you can try.
Step 2: Deposit Funds to Your Account
After choosing the right exchange to buy Bitcoin, the next step is to keep all the basic requirements ready when they are needed. These include personal documents such as social security number, driver’s license, information about your source of funds, and employer. However, the information required may depend on the state and the laws that apply to that state. This process is no different from setting up a brokerage account.
Once the Bitcoin exchange approves your submitted information, the next step is to link your exchange account to a payment method, which may be a credit card or a bank account.
Different exchanges have varying fees when depositing through credit card, debit card, or via bank account. But almost all exchanges charge higher fees for deposits using credit or debit cards compared to bank account fees. So, if you’re making a huge deposit, it’s better to choose a cost-effective payment method.
Step 3: Buy Bitcoin
After linking your payment option to the cryptocurrency, the next step is to buy the Bitcoin equivalent of the amount you’re paying.
Exchanges in the US now have more features than a few years ago. Their liquidity and transaction times have also improved.
Several order types are now offered by Bitcoin exchanges in the USA, allowing users to choose the best investment option for them.
To buy Bitcoin on an exchange, go to the market’s section on the exchange to find the right Bitcoin pairing, which is usually with the dollar if you’re in the US. Go to the “Buy Bitcoin” section and type the amount of Bitcoin you want to buy. The current market rate is always displayed so you know how much you have to pay. Review the transaction details before clicking o the order.
If you intend to trade with the purchased Bitcoins, the chosen exchange should provide several order types, including take-profit limit orders, stop-limit, and stop-loss orders.
Store Your Bitcoin Securely
After buying the Bitcoins, you may want to store them for a long time in anticipation of a price increase. As we mentioned earlier, a Bitcoin wallet will come in handy in this situation. When you keep your Bitcoins in your wallet, only you will be in control of the funds. It gives you the ability to keep your Bitcoin funds safely from an exchange. So in case, the exchange gets hacked, you will not lose your funds.
There are different types of wallets, and some come with more features than others. If you intend to trade other cryptocurrencies apart from Bitcoin, you should get a wallet that can accommodate both Bitcoin and altcoins. But if you’re storing only Bitcoin, it’s okay to get a Bitcoin-specific wallet.
Again, you have to decide whether you want a hot wallet or a cold wallet.
Hot wallets are wallets that run on internet-connected devices. Although they are more liquid and can be used at any time, they are also more vulnerable to hacking activities.
But a cold wallet can be kept in your hardware and stored offline. These are safer especially when you are storing a large amount of Bitcoin and don’t intend to trade with them regularly. Whichever type of wallet you chose, it’s important to maintain all the tenets of online security to keep your funds safe.
Things to Consider When Buying Bitcoin in the USA
Okay, now that you know how to buy Bitcoin in the USA, it’s important to consider certain things before buying your first Bitcoin.
Understand that Bitcoin is very volatile
The Bitcoin market is one of the most volatile markets in the world. Price can rise pretty fast and fall in the same manner within a short space of time. That’s why you have to prepare your mind when going into the market. When you understand the level of volatility in the market, you will trade more carefully to avoid burning your entire funds.
Know how to store your Bitcoin securely
As we have mentioned earlier, Bitcoins are stored in e-wallets, just as cash is stored in a physical wallet. The wallets take the form of either hardware or software, and they have a key that unlocks the funds in the wallet. It’s your responsibility to protect the wallet and keep the keys safe from any external interference.
Know the tax implications of your investment
You also need to consider the tax you are expected to pay when trading or investing in Bitcoin. However, the tax laws for digital currencies vary depending on your state. So, it’s important to find out from your accountant or a credible source about the tax implication of your Investments in Bitcoin.
The above are the steps to take when buying Bitcoin in the USA. As long as you have a payment method and meet their basic requirement, it should be very straightforward to buy Bitcoin in a crypto exchange.
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Virtual currencies are highly volatile. Your capital is at risk.