Bitcoin is the world’s first and most popular cryptocurrency. Its market cap was over $1 Trillion at times throughout 2021, an amount greater than the combined market cap of most other cryptocurrencies.
That’s largely because it has remained as game-changing as when it first introduced a new standard for making payments and peer-to-peer transactions. In this article, you’ll learn how to get into bitcoin, including key tips for buying bitcoin and making the best of your crypto journey.
Understanding blockchain
As the pioneer cryptocurrency, bitcoin was the first digital currency to use blockchain technology. Blockchains are public databases that act like digital ledgers and a record of transaction data. This technology, as implemented by bitcoin and most of the other leading cryptocurrencies, is decentralized, meaning no central authority regulates its operations.
Bitcoin’s public ledger provides a few functions. It is open and transparent, which makes it a clear alternative to the current closed and private financial systems. Also, because the blockchain is distributed among nodes globally and because it is maintained by computers known as miners (that are also globally distributed) the network is very secure. The ledger updates every ten minutes, when new transactions are confirmed, across the entire network.
Understanding bitcoin
In 2008, a person or group of people (no one really knows which it is) under the pseudonym Satoshi Nakamoto published a white paper. This document explained how bitcoin works and the concept behind its blockchain. The next year, the bitcoin network was officially launched.
Bitcoin was designed to be a digital version of cash that facilitates quick and safe transactions over the internet. However, instead of its transactions running through banking institutions, bitcoin relies on digital cryptography (hence cryptocurrency) as a means to secure and verify transactions without the need for a trusted third party such as a bank or payment provider. This way, the network can process transactions while inherently eliminating duplicate or fraudulent transactions.
Because it isn’t a physical asset, bitcoin is essentially a digital confirmation of one’s currency ownership or a transaction’s completion. Bitcoin owners use private keys to show the network their ownership status — and it is possible to own a fraction of a bitcoin.
What is bitcoin mining?
Bitcoin mining is the process of verifying transactions on the cryptocurrency’s blockchain. As transactions are completed, new blocks are added to the chain. The bitcoin blockchain uses a proof-of-work algorithm to add new blocks to the network.
Bitcoin miners use advanced computer technology to solve complex math equations. Once a problem is solved, the network confirms the attendant transaction and rewards the miner with new bitcoin. About every four years, the amount of bitcoin miners can receive is cut in half. In 2009, miners were rewarded with 50 bitcoin. However, by May 2020, that amount had decreased to 6.25 bitcoin. The next halving is set to occur in March 2024.
Current bitcoin price
What do you need to get started in bitcoin?
Owning bitcoin can foster the token’s growth into additional products and services. It also adds tokens to your crypto wallet and, over time, inevitably expands your knowledge about crypto networks. Below are three things you’ll need to start owning bitcoin.
- Bitcoin budget
Before you begin buying bitcoin, you should determine how much money you’re willing to set aside. That’s important: Bitcoin’s value fluctuates often, and sometimes by significant amounts. For this reason, you shouldn’t buy more bitcoin (or any cryptocurrency) than you can stand to lose.
- Bitcoin wallet
Bitcoin wallets hold the private keys, which is what proves bitcoin ownership. A private key is like a password you use to access your bitcoin on the blockchain. There are two types of crypto wallets: hot wallets and cold wallets.
A hot wallet functions through a constant connection to the internet. With hot wallets, you don’t have to worry about keeping a physical device handy. However, because hot wallets are web-based, they can be vulnerable to hacks. As such, you might not want to use a hot wallet for long term bitcoin storage.
Cold wallets, on the other hand, are physical devices that look similar to USB sticks and connect directly to your computer. These wallets are often more secure than hot wallets because they aren’t actively connected to the internet, reducing the possibility that they can be hacked. Someone would have to steal the actual wallet before they could interfere with the tokens associated with it. That said, you still have to keep your wallet in a safe place. If you lose your wallet — or the wallet’s private key — you could lose all your bitcoin.
- A place to buy bitcoin
Once you’ve determined which wallet type suits you, then you can determine the platform through which you’ll purchase bitcoin. There are several options available, including online services and in-person locations. Some platforms accept credit cards, debit cards, and even bank transfers.
Unlike other bitcoin services, Coinme makes it simple to convert cash into crypto. More and more locations and partners are being added all the time. Check here to find a location near you!
Pros and cons of owning bitcoin
Like just about any asset, there are advantages and disadvantages to bitcoin. Before you own any bitcoin, you should assess its pros and cons. Here are a few to consider as you learn how to get into bitcoin.
Pros of owning in bitcoin
In its several years of existence, bitcoin remains the world’s most popular cryptocurrency.
- Growing acceptance. About 2,300 businesses in the U.S. alone accept bitcoin. Some major companies now accept bitcoin as well. As the token’s popularity and demand increase, so does its value. And as a bitcoin holder, you might see returns on this growth.
- Potential for profitable returns. While bitcoin’s short-term and long-term prices are somewhat unpredictable, bitcoiners often look at global acceptance to weigh a currency’s profitability. With its widespread adoption, bitcoin could continue increasing in value, giving holders significant profit opportunities.
- Decentralized. Because bitcoin is a decentralized token, it’s free from central authority control. Sure, agencies like the U.S. Securities and Exchange Commission (SEC) can impose regulations on some services that offer bitcoin. However, these departments can’t directly dictate operations on the token’s blockchain. Users have complete autonomy of their funds, which are also resistant to inflation.
Cons of owning bitcoin
Although bitcoin has its advantages, it’s not perfect. As you learn how to get into bitcoin, consider the below disadvantages.
- Volatility. As with most cryptocurrencies, bitcoin is highly volatile. You could check your crypto wallet one day and see positive growth only to see a steep drop the next day. These unpredictable price changes can be risky depending on your goals.
- Lack of regulations. While a currency free of government control can be a positive aspect, a lack of regulations leaves it without guarantees for legal protection.
- Security vulnerabilities. Bitcoin’s blockchain offers robust security, but users aren’t completely protected from security issues. Some platforms that facilitate bitcoin trades have fallen victim to attacks. If platforms that you use fall victim to such attacks, you could lose your assets.
How to buy bitcoin
Now that you have a solid understanding of bitcoin, its network, and growth possibilities, you might be wondering how to make your first bitcoin purchase. Below are several simple ideas for how to get into bitcoin and become a holder.
- Cryptocurrency exchange
A cryptocurrency exchange, or crypto exchange, is an online service that allows you to trade, buy, or sell cryptocurrencies. There are hundreds of different exchanges with tiny variations that separate it from the others.
Once you’ve made an account and verified your identity, you can enter the amount of bitcoin you want to purchase. You’ll then need to pull funds directly from your bank account or another payment method to buy bitcoin. When the transaction is complete, you’ll see your bitcoin in your crypto wallet.
- Bitcoin ATM
A bitcoin ATM allows you to buy bitcoin with cash. It connects to the bitcoin blockchain to send crypto directly to your digital wallet. To use a bitcoin ATM, you’ll scan your crypto wallet’s QR code on the machine. The ATM will display a screen asking you to enter the amount of bitcoin you want to buy. You can then insert cash into the machine. The ATM will confirm your purchase, and your crypto wallet will reflect your bitcoin balance.
- Coinme at Coinstar
While using crypto exchanges, brokerages, or crypto ATMs can be convenient, it’s important to pick the best service for your needs. Coinme powers thousands of Coinstar kiosks where you can exchange cash for bitcoin. The steps are simple, and the process is quick: Just take cash to the kiosk nearest you and choose bitcoin on the screen.
Once you’ve confirmed your purchase, your Coinstar kiosk will print an important receipt that contains key information for your digital wallet. Enter your receipt’s redemption code into your Coinme account. You’ll then see your bitcoin amount posted in your wallet.
- Coinme at MoneyGram
Your easiest opportunity to buy bitcoin might be just around the corner. Coinme partners with MoneyGram to bring you another way to buy bitcoin with cash. You can use the Coinme app to find a participating MoneyGram location near you. Once you’re there, you can verify your identity and make your bitcoin transactions in just minutes. Once your purchase is complete, you’ll see your balance appear in your crypto wallet.
Four bitcoin buying considerations
Perhaps you’re itching to head to a Coinme location and make your first bitcoin purchase. That’s great! Before you do, here are a few tips to help you make the most of your bitcoin journey.
- Consider more than just bitcoin. You might be tempted to stick with what you know. However, owning more than cryptocurrency can help you weather crypto’s inherent volatility. While one coin’s value might dip, another’s might be on the rise. Diversifying your crypto wallet also opens the door to the perks of other tokens. To learn about other cryptocurrencies, visit the Coinme blog.
- Don’t let the hype control you. While bitcoin’s demand can drive its price fluctuations, you should be careful not to fall into hype trends. That’s because some people might withdraw their holding amid temporary sways in the market, affecting your crypto’s value.
- Keep security a priority. You can never be too careful when storing your bitcoin. If you’re using a cold wallet, record a backup of your private key to store somewhere separate from your wallet. With Coinme, security is built into the process. Accessing your newly purchased tokens requires you to enter a code printed only on your receipt and verify your identity in the app. This way, only you can access your bitcoin.
- Check your account. While you can take a “set it and forget it” approach to bitcoin, you might want to periodically check your crypto wallet. Staying up to date on price activity can help you determine the next steps in your holding strategy. You can also keep an eye on your bitcoin balance and ensure all your coins are exactly where they should be.
Buying bitcoin can be a profitable and worthwhile decision. Bitcoin’s highly secure network and increasing growth potential keep it a major point of discussion around the world and an opportunity for financial advancements.
Plus, with Coinme, you can learn all about bitcoin and bring your knowledge (and cash) to our locations when you’re ready to buy. We’re all about making crypto accessible, and now, you don’t have to go far to learn more about buying bitcoin.
