How to Buy Bitcoin Online Safely

Invest with low fees today in the highest ROI financial asset of the last decade. Buying Bitcoin online has outperformed the S&P 500, commodities, and all other popular investment opportunities.

Bitcoin is the world’s first and most popular cryptocurrency, rising in value from just a few cents in 2010 to as high as $69,000 just over a decade later, that all-time high being hit in Nov 2021.

People buy Bitcoin for various reasons. It’s seen as a hedge against inflation, a store of value – like ‘digital gold’ – and a medium of exchange. Many expect it to set new highs following the 2024 Bitcoin halving, and as of 2023, the Bitcoin price is trading at a discount.

If you’re new to Bitcoin, you’ll want to learn how it works and the best places to buy Bitcoin safely. Many platforms vary in services, trading features, fees, and deposit methods. In this how-to guide, we walk you through how to buy Bitcoin online and review the best crypto exchanges.

Where to Buy Bitcoin Online Safely

Looking for a more comprehensive walkthrough of how to buy Bitcoin online? If so, the section below will show you precisely what you need to do to get your hands on Bitcoin safely and cost-effectively. We use Coinbase in this example but all the exchanges and brokers listed below are recommended.

Step 1: Open an Account

A Coinbase account can be opened quickly via a desktop computer or mobile device. Head to the website or download the mobile app to get started, then fill in the required details, and verify your email address and phone number.

Coinbase also requires users to fill in a brief questionnaire and link a payment method.

Step 2: Upload ID

As a centralized exchange, Coinbase requires users to upload certain Know Your Customer (KYC) documents due to compliance issues. This will include a photo ID.

Step 3: Make a Deposit

Once an account has been set up, it will be possible to fund the Coinbase wallet with fiat crypto – deposits can be made with a debit/credit card, bank or wire transfer, PayPal, and Apple/Google Pay.

Step 4: Buy Bitcoin

With funds in your Coinbase account, select the ‘Trade’ button on the home dashboard and search for Bitcoin or BTC. Then select the ‘Buy’ button and input the amount of funds to spend before completing the transaction.

Visit Coinbase

Where to Buy Bitcoin

The Bitcoin market has matured quite a lot. Due to its popularity, there are now several options where you can buy Bitcoin. It is in sharp contrast with what was applicable some years back. Everyone provides easy access to digital assets, from crypto-facing exchanges and brokerages to those that serve other asset classes.

However, the problem with this variety is that finding the best place to buy Bitcoin is a bit challenging. In this guide, we’ve vetted the platforms and provided a condensed section on their features, fees, and what makes each unique.

To save you from researching dozens of different platforms, below, you will find the best places to buy Bitcoin.

1. Coinbase – Largest Crypto Exchange in the United States

Coinbase is one of the biggest crypto exchanges available and our overall best crypto exchange to buy Bitcoin and other tokens. The exchange offers several benefits, including a straightforward interface and many customer trading pairs.

Headquartered in Wilmington, Delaware, Coinbase is usually the go-to option for crypto newbies in the United States. Trading is also accessible here, with Coinbase’s interface tailored for beginners. If you’re an experienced trader, you can use the Coinbase Pro variant.

Coinbase is also one of the biggest crypto companies. Asides from its exchange service, it provides trading through its Coinbase Pro platform. Users also enjoy a payment platform for businesses, custody services, and its coin – COIN.

Visit Coinbase

2. Kraken – Popular Exchange since 2011

Kraken is a prevalent cryptocurrency exchange founded in 2011 and headquartered in San Francisco. It has been around for quite a while and has offices worldwide. With over 8 million active users, Kraken can be considered one of those exchanges with a strong pull in the industry. At the time of writing, Kraken is the third largest cryptocurrency exchange in terms of volume traded.

It supports over 120 popular cryptocurrencies and has constantly seen an increase in the number of promising projects listed. Three major stablecoins – USDC, DAI, and USDT are supported on the platform, along with seven fiat currencies. These include USD, CAD, EUR, AUD, GBP, CHF, and JPY. Regulated by FinCEN, Kraken ensures good security regarding holding assets across both versions of the exchange- Kraken and Kraken Pro.

A downside to the exchange is that not using Kraken Pro forces users to pay more fees to participate in advanced trading products like derivatives or futures. Kraken also offers staking services for several assets.

Visit Kraken

3. OKX – Buy Bitcoin via DEX or CEX

Launched in 2017, OKX is a Seychelles – based cryptocurrency exchange that offers both DEX and CEX that investors can use to buy Bitcoin. OKX DEX is a DEX aggregator that leverages X Routing to find the best liquidity pools with low slippage and network fees, allowing veterans to swap crypto assets for Bitcoin easily without providing any details.

However, most of the platforms’ features are present in OKX CEX. OKX CEX supports over 350 cryptocurrencies and features utilities like general trading, spot trading, derivatives, and margin trading. The platform also has tools such as Copy Trading and Trading Bots. The former allows users to tap into the trading signals of more successful traders, and the latter will enable investors to automate their trading process.

Regarding fees, OKX follows a maker/taker fee model. The charges start at 0.080%/0.1% but can be reduced, provided users have enough OKB tokens in their trading account.

Another reason users prefer OKX to buy Bitcoin is because of OKX Risk Shield. The OKX Risk Shield is an asset-risk reserve where certain portions of a user’s assets are stored. It protects users’ funds from any undue security risks.

Visit OKX

4. Bybit – Buy Bitcoin via a User-Friendly Crypto Trading Platform

Bybit is a cryptocurrency exchange that arrived in 2018 and quickly gained traction in 2022 and early 2023 to become among the world’s top 10 cryptocurrency exchanges. Currently positioned at #6, Bybit maintains a regular trading volume of around $600 million.

The platform is among the best places to buy Bitcoin because of its many utilities. For one, it allows users to buy Bitcoin or other assets with just one click. And in addition to P2P Trading, Bybit offers spot trading and margin trading facilities.

This cryptocurrency exchange also doubles as an educational platform, offering a learning program that allows users to discover altcoins, learn about DeFi or start trading. And like OKX, it also features Copy Trading and trading bots.

Bybit has a standard fee structure with a maker/taker fee model. The trading fee varies on the type of trade an investor is engaged in. Another determinant factor is whether a user is a VIP or a non-VIP.

Bybit also has an audited proof of reserve, with a 1:1 reserve on all user’s assets on the platform. Users can view their audit data or the Bybit reserve ratio.

Visit Bybit

5. Huobi – Trusted Name to Buy Bitcoin

On Huobi (now HTX), you can buy Bitcoin and own the underlying asset – spot trading – or trade the Bitcoin price action using virtual contracts – derivatives trading, to earn more BTC or more USDT with a long or short position. It offers up to 200x leverage, more than most Bitcoin trading platforms.

The Bitcoin exchange also has a free grid trading bot that users can set to automate their trades without needing to monitor the Bitcoin markets 24/7. It displays its backtested ROI for the last week.

Huobi, also called Huobi Global, was founded in 2013, in the very early days of Bitcoin, becoming a household name and trusted as one of the best places to buy Bitcoin.

Huobi users haven’t experienced any hacking or data leak issues. 

The exchange offered its assistance to other smaller Bitcoin exchanges that were hacked in the past, such as Bitmart in December 2021, to improve their security protocols.

Bitcoin can’t be staked, but Huobi offers crypto staking on several other coins and tokens for a high annual yield.

Visit Huobi

6. Crypto.com – Crypto Debit Card & App

Crypto.com is a relatively new cryptocurrency exchange and mobile app with a metal VISA prepaid card that users can store Bitcoin on and make everyday purchases with Bitcoin and earn up to 8% cashback.

Users can also earn up to 14.5% interest on their stablecoin crypto holdings – for holding Bitcoin, the Crypto.com interest rate is up to 8.5%. Currently, USA investors can access the app, VISA card, and wallet but not the website exchange platform, although they may be accepted.

Crypto.com has listed over 250 cryptocurrencies and supports DeFi farming, staking, and Bitcoin loans. It has its own attached non-fungible token marketplace where you can create, showcase, sell, and buy NFTs; some cheap NFTs on the site start from just $10 or, in auctions, from $1.

Founded in 2016, Crypto.com is relatively new to the crypto markets and sponsors the UFC, several sports teams, and F1 and has Matt Damon in its commercials. Its slogan is ‘Fortune favors the brave.’ Over 10 million users are on the platform.

Visit Crypto.com

7. Uphold – Easy Web & App Trading

Trusted by 7 million users across 184 countries, the Uphold exchange platform, app, and debit card are a fast and convenient way to buy Bitcoin.

Alongside their website, they also have an app on Google Play and the App Store for Android and iOS users.

Uphold charges a spread of 0.85% when buying Bitcoin and 1% when selling.

Some other popular assets you can invest in with Uphold include Apple stock, Amazon, AT&T, Tesla, Gold, Silver, Platinum, Palladium, and more. Their motto is ‘anything to anything’ trading.

They also open investing to anyone through fractional stock trading – you can invest as little as $1 in companies like Google, unlike some online stockbrokers where you are required to put up a large amount of capital to get started.

Visit Uphold

8. Binance – Top-Rated Crypto Exchange to Buy Bitcoin

Binance is the largest crypto exchange in the world by daily trading volume. The exchange is famous worldwide, with over $50 billion daily trading volumes. For users, Binance offers quite a lot. You can enjoy excellent liquidity since assets see significant trading activity, and the exchange provides access to several cryptocurrencies, including Bitcoin and Ether.

Trading commissions on Binance start from about 0.1 percent, and the platform’s KYC process is relatively straightforward. Binance also offers leveraged trading and access to crypto futures, allowing traders to buy cryptos bigger than their wallet balances.

You can also buy Bitcoin with fiat currency on Binance. The cheapest option on the table is to complete a bank transfer, albeit, depending on where you live, this might take a couple of days for the funds to arrive. If you want to benefit from a super-fast deposit, consider using your debit or credit card.

Visit Binance

9. Libertex – Industry-Leader Broker for Stocks and CFDs

Based in Cyprus, Libertex has been available since 1997. The platform is known for its zero spreads pricing structure, which is unique in the CFD trading scene. It offers two web trading platforms for traders. Libertex offers the MT4 and the Libertex Web Trader.

Libertex is a bit limited in its service offering. The trading platform covers about 213 markets. It includes stocks, forex, cryptocurrencies like Bitcoin, and more. You get to trade and purchase over 50 cryptocurrencies on Libertex. Advanced traders will also enjoy access to margin trading with leverage as high as 1:30.

Libertex provides flexibility and a seamless trading interface with a mobile app and desktop trading interface. Available deposit channels include Skrill, Neteller, credit and debit cards, bank transfers, Multibanco, Sofort, Trustly, and more.

Visit Libertex

What is Bitcoin?

For crypto newbies looking to buy Bitcoin online, you must learn what the asset is and how it works.

So, what is Bitcoin?

• The easiest way to describe Bitcoin is that it is a digital currency that allows you to send and receive value digitally.
• As a digital currency, Bitcoin exists in virtual form – unlike traditional money.
• The underlying technology that backs Bitcoin is called the ‘Blockchain’ – which allows transactions to occur decentralized.
• It means that no single party or authority has control over Bitcoin.

When sending Bitcoin to another person, the transaction is completed on a wallet-to-wallet basis. It typically takes 10 minutes to process – irrespective of where the sender and receiver are based.

Bitcoin was introduced in 2009 by Satoshi Nakamoto – a pseudonym for someone – or a group of people – who remains unknown today. Nakamoto had published a message on a cryptography-related mailing list, titling it “Bitcoin P2P e-cash paper.” The message was a link to a whitepaper titled “Bitcoin: A Peer-to-Peer Electronic Cash System.”

Nakamoto shared the concept of Bitcoin as a digital, decentralized currency system in his papers. As a decentralized asset, no single individual or company would control Bitcoin. Instead, it will run on a public ledger of transactions known as a blockchain. Anyone can store the blockchain on the computer, facilitating sending from one person to another without an intermediary.

In January 2009, Bitcoin’s blockchain launched. The asset’s first block- the genesis block – was mined, and the first Bitcoin transaction took place a week after the block’s mining. At this point, Bitcoin was worthless. Miners who solve complex equations on the Bitcoin blockchain to gain more tokens – would trade it for fun.

However, on May 22, 2010, a Florida native negotiated to pay 10,000 BTC for two Papa John’s pizzas. Both pizzas were worth $25 at the time, putting the value of Bitcoin at about 4 BTC for a penny.

In Bitcoin’s early days, transactions took place on internet forums. The asset maintained an arbitrary value, with most people negotiating about Bitcoin. 2011 came, and miners and coders started looking to build their iterations of the Bitcoin network.

Blockchains like Litecoin and Ethereum came to life, attracting more people. With a broader base of applications and more users, Bitcoin’s perceived value started to rise. 

There was also a surge in the use of Bitcoin as a currency – especially as some companies began using BTC as a payment option. When Bitcoin became available on major exchanges, trading and making transactions became much more accessible. These exchanges allowed Bitcoin to be priced against currencies like the dollar, and Tether (USDT).

The first version of the Bitcoin Lightning Network was implemented in March 2018 to improve scalability.

Why Buy Bitcoin? Bitcoin Analysis

People buy Bitcoin for many reasons. Some believe it is for the technology. Others buy it for speculative reasons. If you’re unsure whether Bitcoin suits your portfolio, we list some key reasons you might decide to invest today.

Yield Potential

Keeping money in the bank isn’t as lucrative these days anymore. When you put your money in the bank, you’d be lucky to earn 1 percent interest. Consider the inflation rate, and you’ll find that this rate is just too low. Most people prevent this wealth erosion with stocks, which have been shown to provide much higher returns.

Bitcoin still has a much higher return rate over time. In its early days, Bitcoin had no value – in fact, the asset was worth just $1 in 2011. But fast forward to 2023, and Bitcoin is now worth over $25,000. This growth is phenomenal.

It’s easy to think that you’ve missed the Bitcoin boom – and, in truth, you might not see these astronomical returns anytime soon. But, when you consider the returns that Bitcoin has delivered and compare it with any other financial asset – or leaving your money in the bank – you will find it too high.

Bitcoin’s Solid Economics

Satoshi Nakamoto understood that Bitcoin would become incredibly valuable once it caught on. So. the creator put a structure in place to preserve its value. Bitcoin currently has a hard cap of 21 million – meaning that no more is available for life once 21 million tokens have been mined.

Anyone with a knowledge of economics knows that scarcity gives an asset the most value. Think of assets like gold and other precious metals. Their scarcity increases their value because more people want them over time. The same thing happens with Bitcoin. The asset can hold and maintain its value thanks to its finite supply. Bitcoin is also not controlled by any government or central authority, so its supply can’t be manipulated.

Invest Small Amounts

There is often a misconception that you need to purchase an entire Bitcoin to enter this marketplace. At five figures per coin – this may be be out of reach for some investors. However, as a digital currency, it makes sense that Bitcoin can be fractioned into smaller units. A single Bitcoin can be split into 8 decimal points.

You will, however, need to ensure that you are using a cryptocurrency broker that permits small investments – most crypto exchanges and brokers allow users to purchase a minimum of $10 of BTC and other crypto tokens.

24/7 Marketplace 

When you invest in Bitcoin – you are purchasing an asset class that benefits from significant levels of liquidity. For example, over the past 24 hours, more than $68 billion worth of Bitcoin has changed hands.

It is crucial, as it means that your investment is never locked up. Instead, you can sell your Bitcoin back to cash 24 hours per day, 7 days per week.

Ways of Buying Bitcoin

If you want to grow your Bitcoin portfolio, you should know there are different ways to get that done. Some of the most popular payment options available for you include the following:

Buy Bitcoin with Bank Transfer

Linking your bank account to a cryptocurrency exchange allows for straightforward, convenient, and often instant deposits and withdrawals with lower fees than when using a debit or credit card.

Buy Bitcoin With PayPal

PayPal is the most popular payment processor in the world. The service has hundreds of millions of customers and even started accepting crypto last year. Currently, PayPal customers can buy Bitcoin directly from the service. Read more on how to Buy Bitcoin with PayPal as a payment option on an exchange.

Buy Bitcoin With a Credit Card

If you plan to buy Bitcoin with a credit card, the first step is to ensure your broker accepts credit card payments. It is crucial because some exchanges refuse credit card payments. It can be due to restrictions on your location or other reasons.

In addition, some credit card issuers might define your Bitcoin purchase as a “cash advance.” You will need to pay a cash-advanced fee to complete the transaction. This fee usually ranges between 3 and 5 percent of the total transaction. You should speak with your credit card issuer if this describes your situation.

Buy Bitcoin With Debit Card

The debit card option is probably the most common method for purchasing Bitcoin. It is easy, quick, and cheap. If you want to buy Bitcoin with a debit card, the most crucial consideration is the processing fee. Bitcoin exchanges have different payment processors and, as such, charge different fees. Some exchanges can set as high as 4 percent on debit card purchases, while others could be lower. 

Buy Bitcoin with eCheck

Read our guide on how to buy Bitcoin with eCheck on sites such as Paxful.

Use A Bitcoin ATM

Bitcoin Automated Teller Machines (ATMs) have become quite popular over the past few years. Like their traditional counterparts, specialist cryptocurrency ATMs allow you to make crypto purchases via a machine interface. Data from Coin ATM Radar shows that there are currently 22,130 crypto ATMs worldwide.

Most of these machines support Bitcoin. Regarding Bitcoin ATMs, the primary difference is that the fees tend to be very large. The transaction fees can sometimes be between 10 and 20 percent of the total purchase.

You can follow this process to purchase Bitcoin with a crypto ATM:

• Find the nearest ATM to you
• Enter the amount of Bitcoin for purchase. It is usually expressed in the form of your local currency
• The ATM will show a preview of the Bitcoin to be purchased for that amount.
• Submit your cash to the Bitcoin ATM
• Input your wallet address or use a QR code to receive the Bitcoins
• Print out your receipt and complete the transaction

The main drawback of Bitcoin ATMs is that the fees are often astronomical. It can average 10-20% of the transaction amount in some locations.

What to Remember Before Buying Bitcoin

Are you considering buying Bitcoin? Consider a few things as you foray into the crypto market.

1. Bitcoin is Volatile

You may have heard that Bitcoin is a highly volatile asset and that its price can change unexpectedly, causing sudden pumps and drops in the whole crypto market. This is because Bitcoin operates through a decentralized blockchain platform where there is not a single authority that can make any decisions about Bitcoin. No one can issue new Bitcoins, nor can they burn them. Hence, the only thing that has an influence on the BTC price is the demand and supply forces. 

It means that the price of this cryptocurrency highly depends on the buying and selling pressure – when more people start buying BTC, prices increase and vice versa. Anything can happen that can lead to more people buying or selling BTC and result in a drastic price change in less than a day. A perfect example of this came in December 2017, when Bitcoin’s price was just a few points off $20,000. The following month, the asset lost 83 percent of its value, trading at around $3,000. 

In May 2021, Bitcoin’s price also fell from $64,000 to $30,000, and similarly, between November 2021 and January 2022, it crashed from $69,000 (Bitcoin’s all-time high) to $33,000. Market news and events are likely to have the highest impact on these sudden price changes. If bad news comes from regulators or the government, it will likely affect Bitcoin’s price over time. 

One of these recent news related to Bitcoin was that Grayscale has won a lawsuit against the US SEC, which rejected their application of launching spot Bitcoin ETF. As the Court’s decision became clear about this case BTC price BTC price increased to $28,000 at the end of August while it was trading at $25,000 for the second half of the month. 

Most people who criticize Bitcoin talk a lot about its volatility. Hence, it’s important to keep in mind that the price of cryptocurrency can experience extreme highs and lows, and you can never predict what events will happen to cause this. 

2. Public Transactions

No payment method in the world is as transparent as Bitcoin. Thanks to its blockchain, all Bitcoin transactions are public and traceable. So, whenever you buy and sell Bitcoin, the information immediately goes into the blockchain, and everyone can see it.

3. Addresses are Anonymous

While transactions are available for everyone to see, it’s challenging to identify who owns what. Bitcoin transactions are executed using wallet addresses–numbers and letters. Anyone snooping around needs your wallet address to check your transaction history and account balance.

Choosing the Right Bitcoin Broker

Choosing the right broker or exchange is crucial to buy Bitcoin online. But this is easier said than done. With so many options available, it might be more challenging to choose. We’ve highlighted some details you should consider before choosing one:

• Fees

It is recommended that you choose a broker with reasonable fees. When trading Bitcoin, the fees can add up pretty fast. Depending on the option you settle for, you might have to pay for deposits, trading, withdrawal, and sometimes, for converting your Bitcoin to another coin. Settling for an online broker with affordable fees can save you hundreds of dollars in fees.

• Safety

Most people store their Bitcoin on the platform where it’s purchased. It isn’t the safest option, but you can reduce the likelihood of theft by ensuring you only deal with media with robust security protocols.

• Support

If you have problems, you should be able to reach out to the exchange and get a response as quickly as possible. No one anticipates that any issues will arise, but a vital customer support service will come in handy now and then.

• Payment Methods

How can you deposit funds and request a withdrawal? What are the channels available? The best platforms usually support bank transfers and debit cards. You can also look out for payment processors like Square and PayPal.

• Volume and Liquidity

A broker service must have the right volume and liquidity levels. You want to ensure that the service gets the proper transaction volumes and that you can withdraw your funds whenever you like.

Bitcoin Price

Bitcoin has gone through its fair share of crests and troughs since the beginning of its launch. The first bullish cycle happened in 2012-2013 when Bitcoin was almost close to hitting $1000, followed by its first halving event. The second halving took place in 2016, which led to BTC hitting $10,000 in 2017 and setting a new all-time high of $17,000. 

But the most significant bullish movement came for this crypto in late 2021, pushing its price to its historical all-time high of $68k. However, the level couldn’t be maintained as 2022 brought some significant events that created a bearish scenario for this crypto. Luna Crash and the FTX exchange crash had the most disastrous effect not only on Bitcoin but the whole crypto market. 

1. LUNA Crash – May 2022 LUNA’s crash upended people’s belief in the asset and pushed the price of Bitcoin close to $30k. LUNA crash led much of people’s belief in crypto to be vaporized, encouraging aggressive sell-offs by institutions and individuals alike.
2. FTX Crash – The third and the most prominent adverse event to the crypto market was the FTX Crash. SBF, long thought to be the messiah of the cryptocurrency market due to his “effective altruism,” turned out to be just another scammer that evaporated $8 billion to be evaporated from the cryptocurrency market.

Other events affecting Bitcoin’s price include factors like environmental concerns related to Bitcoin mining, raising regulations over cryptocurrencies in many countries, SEC’s lawsuit against XRP, and other minor events. Some of these events created panic among investors and led to massive sell-offs. Hence, by the end of 2022, Bitcoin was trading at just above $15k.

But Bitcoin is a speculative asset, and that was just a short bearish period for the cryptocurrency. Things have started to change since the beginning of 2023, and bulls came in full force to support Bitcoin. BTC got back its price of $20,000 shortly, and by the end of January, it was already traded at above $23,000. The bullish direction continued for the next few months until BTC eventually raised above $30k in April. 

After going back to $25,000 for a short period, BTC prices again started to increase. In mid-July, Bitcoin hit its all-time high for the year reaching $31,000. This was probably associated with the US Federal court decision about the SEC vs. XRP lawsuit, which crypto enthusiasts considered a victory for the crypto world. 

Another peak took place at the end of August, with Bitcoin reaching almost $28k. This remarkable surge­ is attributed to the latest institutional interest in the cryptocurrency market, with such financial giants like BlackRock and Fide­lity having submitted applications for spot Bitcoin ETFs. 

Another event that may have had its influence is the SEC’s rejection of the Gravescales application for BTC ETFs, which was recognized as wrong by the US Court. But the price of Bitcoin dropped again to $25,000 in early September, which was the lowest price for the cryptocurrency in the last two months, which many analysts attribute to the rumors about SpaceX selling it holding of Bitcoin. 

Bitcoin Price Prediction

Technical indicators for Bitcoin were quite positive a few months ago, as the cryptocurrency has shown an upward trend since the beginning of the year. In mid-July, Bitcoin increased to $31K when its price almost doubled compared to its price at the end of 2022. The Fear and Greed index for BTC was over 55, indicating Greed. Meanwhile, crypto enthusiasts believed that the coin could break a resistance level of $30,000. 

However, BTC did not manage to do that and set a new low for the last two months, dropping to $25,000 in the last few days. The Fear and Greed index is 40 for Bitcoin, which indicates Fear meaning that investors are more inclined to sell their holdings rather than hold them. Most of the technical indicators are bearish, meaning that the cryptocurrency could take a downtrend in the upcoming months. 

Considering all of these indicators, many analysts predict that Bitcoin will experience price drops by the end of 2023. Its price can drop below $20,000 again, with the possibility of dropping as low as $15,000. Still, we must consider that these predictions are based only on technical analyses, and no one can precisely say what would happen in the crypto sector. Any unpredicted event can change the direction of the market. 

Investing in Bitcoin vs. Trading Bitcoin

Investors have different strategies that determine their actions in the crypto market. Some prefer to buy Bitcoin for the long term. Others want to trade BTC. When should you pick one over the other? We examine the difference between investing and trading in Bitcoin.

Investing in Bitcoin

Investing is the path chosen by most crypto holders – especially the newbies. The strategy is simple – purchase Bitcoin from a broker, keep the asset in a wallet, and wait for the price to rise. Once it gets to a level you’re comfortable with, you sell. Most crypto investors look to put their money into the asset and leave it for the long run – at least a year. The strategy makes sense – long-term holding has proven very profitable if you consider how Bitcoin started in 2009 and where it is today.

Investing is also convenient for many people who don’t want to endure the stress of monitoring prices daily. They simply keep their coins in a secure wallet and “forget about it.” Daily market swings don’t strictly concern them since they’re in it for the long haul.

Trading Bitcoin

Trading is the other side of the coin. It involves entering positions with the asset and cashing out based on price swings.

Bitcoin trading aims to make money when the price swings in your favor. So, you could enter today and buy 1 BTC for $30,000. If its value increases to $32,000 hours after and you sell off, you’ve gained $2,000. If Bitcoin’s value drops below $30,000 again – remember that the asset is volatile – you could enter a position and hope for another price gain.

Regarding trading, you make decisions based on your asset price analysis. So, you could decide to open a long position on the asset today and short it tomorrow. Trading usually occurs over a few days or weeks. However, there are also swing traders and day traders who hold positions for much shorter time frames.

You could also engage in leverage trading – trading with more money than you have. Exchanges and brokers usually provide leverage to their professional customers, allowing them to maximize their chances of making a profit.

Which is Better?

Like most things crypto-related, it’s never clear-cut. People have different reasons for holding cryptocurrencies; there’s no one-size-fits-all answer. To help you make a decision, here are some factors to consider:

• Time Frame

How long do you plan to hold your crypto? If you’ve got the long game in mind, you could invest and not bother yourself about price swings. Cryptocurrencies – especially Bitcoin – have provided steadily increasing returns to investors for the past few years. So, you can rest assured that your money is safe.

• Reason for Holding Bitcoin

Like it or not, some people see crypto as a “get rich quick” scheme. They hear of assets jumping by over 100 percent in less than a month and want to try such. It’s understandable – every asset class in the world has such people.

You might be better off trading if you’re such a person. Watch for price swings and jump on the train till it flatlines. You might get lucky to witness such bullish momentum.

• Consistent Effort

Effective trading requires a lot of research and attention to price charts. It’s easy to jump from one hot cryptocurrency to the other, but the truth is that these types of holders eventually pick losers and see their wealth erode.

While no one is discouraging you from choosing hot assets and maximizing your gains, you must ensure that your decisions are based on facts and research. Also, always keep an eye on price charts and make sure not to get swept during a market downturn.

If you’re too busy and have no time to research and check prices, you might be better off investing in Bitcoin. Just leave your coins in a wallet and let the forces of demand and supply decide your fate.

Buying Bitcoin as a CFD Product

Like many other financial assets, Bitcoin is also available as a contract for difference (CFD). A CFD is simply an agreement between a buyer and a seller showing that the buyer must pay the seller the difference between the current value of an asset and its value when the contract expires. The value of a CFD doesn’t consider the asset’s underlying value – simply the difference between entry and exit prices.

Taxation on Bitcoin Earnings

There have been several attempts to impose taxes on crypto earnings, but the U.S. Internal Revenue Service (IRS) has yet to develop a stable regulatory regime. The IRS defined cryptocurrency as “property” in 2014, meaning they qualify for capital gains tax treatments.

However, there are also some instances where crypto activity is treated as income – and, as such, is subject to income taxes.

Taxable events that qualify for capital gains tax in the United States include:

• Selling your crypto for fiat currency
• Purchasing goods and services using crypto
• Trading one cryptocurrency for another – via an exchange or through peer-to-peer channels

Events that qualify for income tax are:

• Receiving crypto from an airdrop
• Interest earnings through lending on decentralized finance (DeFi) platforms
• Block rewards got from crypto mining
• Crypto accepted as payment for work
• Cryptocurrencies earned through staking and liquidity pools

Note that you can use losses gained from trading to offset some of your capital gains. You can also deduct up to $3,000 from your income tax, depending on how long you’ve held the assets.

Calculating Your Capital Gains Tax

In the United States, your capital gains tax for crypto activities will depend on how long you’ve held your assets and your income tax brackets. This classification will help you determine the following:

Short-term Capital Gains

If you made gains or losses from crypto held less than a year ago, your capital gains tax is treated at the same rate as your tax bracket. This list provides information on tax brackets for 2023. Note that you can use losses to offset taxable income by up to $3,000. You can also carry losses forward into the following year.

Long-term Capital Gains

If you hold crypto for over a year, gains or losses from activities will incur 0%, 15%, or 20% in taxes based on your income. You can find a classification of income in this list.

The Importance of Responsible Bitcoin Investment

From its humble beginnings in 2009 till date, Bitcoin has delivered over 48,22,525%. BTC has also produced an average annualized return of 230%–ten times more than the second-ranked asset class (Nasdaq 100 index). Little wonder why everyone wants to jump into Bitcoin and become rich overnight. 

However, investing in Bitcoin comes with risk. You must take precautions when investing in Bitcoin. To ensure that you’re doing the right thing, keep the following in mind:

• Consistent Research

This point can’t possibly be stressed enough. When investing in Bitcoin, remember to do as much research as you possibly can. You can get signals from some dedicated social media channels, read the news, and listen to experts having analyses for Bitcoin. You can also get expert analyses from review sites such as ours. Inside Bitcoins has experts who regularly analyze Bitcoin and other altcoins.

• Hedge your Bets

It’s essential to have a limit when investing. If Bitcoin’s price drops by a certain percentage, cut your losses and take your money out. You’ll lose money, but you’d at least be wiser. Many people make the mistake of keeping their money and waiting out the storm. However, this should only be done with the money you can lose.

Would You Try Bitcoin Mining?

Many people who want to earn Bitcoin tend to buy or trade it. However, there’s a third option – mining. Bitcoin mining is a process where you perform complex mathematical processes and verify transactions on the blockchain. You validate and confirm transactions, and add them to the Bitcoin blockchain, thus contributing your part to the Bitcoin ecosystem.

Transactions that are verified on Bitcoin’s blockchain are grouped into blocks. When a block is verified, the trades are added to the blockchain, and the miners get Bitcoins as a reward. While mining seems easy, it’s quite the opposite. The Bitcoin blockchain is so congested that miners now must use specialized tools. In Bitcoin’s early days, mining was possible with your personal computer.

Now, the competition in the blockchain has made that PC mining essentially obsolete. You must use an Application-Specific Integrated Circuit (ASIC) to make money through mining. Sadly, ASICs are pretty expensive. Some ASICs could cost as high as $5,000.

You will also need to consider electricity costs as mining is a highly energy-dependent endeavor – except you live where renewable energy is abundant if government subsidies exist.

Even with all this, you might not make any money from mining. Blocks are mined on a first-come-first-serve basis, so it will likely take a while before you can earn. All in all, much work will have to go into mining before you can make enough money to justify your costs. If you want to earn Bitcoin, you’re better off just trading – it is less expensive, and you can start with as much money as you have.

Minimizing Your Risk With Crypto Investment

Two of the most important points we’ve raised are these:

• Bitcoin is very profitable
• Bitcoin is very risky

When you put money into Bitcoin, you must find a way to minimize your risk as much as possible. To wit, consider the following tips to reduce your risks with Bitcoin investing:

1. Do Your Own Research

A famous acronym in crypto lingo is Do Your Research (DYOR). Before investing, always do the work and be as confident as possible in your position.

Learn as much as possible and get your information from trusted sources. Remember that review sites can show some of the best analyses and get good information from experts online and via social media.

2. Beware of Fraudulent Schemes

Crypto is largely unregulated, which means that many individuals and companies are on the prowl looking for who to swindle. Before committing funds to a platform, know its security levels. It is another benefit you can get from review sites. We will also recommend that you only do business with regulated brokers or exchanges that are actively pursuing regulation.

3. Only Invest Funds You Can Lose

Every investment carries a risk – especially Bitcoin. To be on the safe side, it is recommended that you invest only funds that you can lose.

Don’t lie to yourself or take a loan because you want to make a Bitcoin investment. Only invest when you have enough capital, and you should be ready to lose that capital if things go wrong.

One of the best things about Bitcoin is that you can start investing and trading with as little money as you have – especially if you’re a newbie. Grow from there, both financially and in your trading skills. Soon enough, you’ll be raking in the big bucks.

4. Track Your Results

Whether investing or trading, you must know how your portfolio holds up. It is especially true if you’re a trader. You must know the market’s outlook and how it could affect your position. Bitcoin’s volatile nature makes it difficult to track its price.

However, several apps make it easy to keep an eye on the asset and monitor your portfolio’s performance. Once you make a habit of checking your account, you reduce the risk of suffering significant losses.

5. Resist FOMO

It can be challenging to handle the pressure of crypto trading – especially if you’re new. But, never enter a position or invest just because others are doing the same thing. That’s the Fear of Missing Out (FOMO).

Remember to take your time and do your research. If people are FOMO-ing into a trade, the worst that can happen is that they miss out on an earning opportunity. Your money will at least be safe. Don’t invest unless you’re confident and prepared, no matter the temptation’s strength.

Best Bitcoin Wallet

As we have explained through this guide, if you want to invest in Bitcoin, you must think about where you will store your digital funds. There are hundreds of Bitcoin wallets in the markets, some of which can be accessed via a mobile app or desktop software, such as Best Wallet or MetaMask.

It’s even possible to store your Bitcoin on a hardware device, like Trezor or Ledger, with the BTC held offline and impossible to access via a hack – however, the physical devices often come with a relatively large price tag.

Read our article on the best crypto wallets to safely store tokens.

Bitcoin Against Other Top Cryptocurrencies

Bitcoin isn’t the only cryptocurrency available. Here’s how it compares against some other options:

Bitcoin vs. Dogecoin

Dogecoin was one of the best-performing cryptocurrencies of 2021. The meme coin was created in 2014 as a parody of cryptocurrencies, but it somehow caught on and is now the world’s sixth most valuable digital asset. Dogecoin’s value comes in large part from its community. Celebrity endorsements have also helped the asset, with the likes of Snoop Dogg, Jason Derulo, and Elon Musk regularly promoting it on social media.

Bitcoin vs. Ethereum

Ethereum is the second most valuable cryptocurrency. It also presents a remarkable investment opportunity, especially with its value rising significantly in recent years.

Most of Ethereum’s value comes from its use as a token on the Ethereum blockchain – for paying transaction fees, etc. However, its status as Bitcoin’s most significant competitor means it has a sizable community and significant functionality benefits.

Bitcoin vs. Litecoin

Litecoin and Bitcoin are quite popular. The former launched as a “lite version of Bitcoin,” with its creators touting it for its transaction speed and ability to produce more coins per time.

As of 2023, Litecoin is currently the 20th highest market capitalization cryptocurrency. It is a popular option for some investors, seen as a ‘blue chip’ crypto, and is available on all the top exchanges and brokerage platforms.

Bitcoin vs. Libra

Libra was a planned crypto project from the Facebook-backed Libra Association. When it was announced, the Libra Association explained that the asset’s value would be backed by a basket of some of the world’s most popular fiat currencies. Several regulatory pushbacks since then have delayed the launch, and Libra has gone through a rebranding in terms of name and structure. It’s now called “Diem,” the organization planned to roll out Diem as a stablecoin in 2021. As of 2023, it is yet to be released.

Where Does Bitcoin Go From Here?

With the current market situation, you could be skeptical about investing in Bitcoin. Its price and that of every major cryptocurrency crashed far below the 2022 open in mid-January 2023. BTC is currently traded at 63% lower compared to its all-time high. Additionally, it is predicted that BTC will enter another bearish cycle for the Q4 of 2023. 

However, this doesn’t necessarily mean Bitcoin is dead. Bitcoin has repeatedly shown that it can always come back, so investors continue to have that confidence – especially those who invested for the long term. Bitcoin’s price might take a while to bounce back, but it eventually happens. It’s only a measure of how long you can wait. Another factor that might push bitcoin prices higher is the recent Bitcoin Blackrock approval.

Many believed Bitcoin was dead when its price crashed from almost $20,000 to $3,000 in 2018. But it came back and in 2021 hit its highest all-time high bringing more than 100% YTD return for investors at the beginning of that year. One event that can significantly affect Bitcoin’s price is its halving which is expected in April 2024. Bitcoin price history shows that while BTC price drops close to the halving date, it recovers, setting a new all-time high in the following months. 

Bitcoin News – Latest Updates in December 2023

• Biggest Trends to Watch in Cryptocurrency in 2023
• Connections Between Robinhood, FTX and Biden Officials Revealed
• Gemini’s Winklevoss Twins and Grayscale’s Barry Silbert – Dispute Continues
• What’s Ahead in 2023 for Bitcoin Alternatives ETH & XRP

The Bitcoin price opened September 2023 at $25,940, based on the Binance BTC / USDT monthly chart. 2023 has seen a substantial recovery for the Bitcoin price compared to the 2022 bear market.

Currently, 2023 holders are up 70%, as Bitcoin opened 2023 at $16,541. Many investors are confident the next crypto bull run could be underway and pick up more steam in the March 2024 Bitcoin halving run-up.

Best Place to Buy Bitcoin

Bitcoin has again shown the global investment world that it is here to stay in the long run. With the digital currency increasing in value by over 1,000% in the past 12 months alone – it’s clear why so many people are now looking to buy Bitcoin and hold for future gains. Read thirty quotes from wealthy Bitcoin investors here – including Elon Musk, Mark Cuban, and the Winklevoss twins.

If you are ready to take the cryptocurrency plunge and wish to buy Bitcoin right now, we recommend Coinbase as the top choice, although all the exchanges reviewed in this article are reputable.

You should also remember the following:

• Do your research before investing in and trading Bitcoin.
• When trading or investing, do so with only registered brokers and exchanges.
• You should also check out review sites and online experts for opinions about Bitcoin.
• Resist FOMO; only invest what you can afford to lose.

If you’re interested in lower market cap Bitcoin alternatives, see our list of the best new cryptocurrency assets.

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