THE SMART WAY TO BUY BITCOIN AND OTHER CRYPTOCURRENCIES
Disclaimer: Good Day, Readers. WealthBuildingPowers blog is a financial literacy/competency blog and does not provide specific investment recommendations.
Before buying a cryptocurrency, you MUST build your knowledge/competency and understand what you are buying. Otherwise, you are gambling.
Cryptocurrency is a HIGH-RISK investment. DO YOUR RESEARCH!
My ranking of investment risk from MONEY IN THE BANK to KISS IT ALL GOODBYE
- U.S. Treasury Bills and Bonds
- Real Estate
- State Bonds (select solvent states)
- Corporate bonds of companies with solid financials
- S&P 500 ETF and other stocks ETF’s
- Individual Stocks
- Precious Metals: Gold, Silver, etc
- Investing in small businesses
- Cryptocurrencies
- Gambling Online or Casinos
- Penny Stocks
- Lottery Tickets
- Loaning Money to Family! {Raise your right hand if you have been burned!}
BITCOIN IS BECOMING {MAY ALREADY BE} MAINSTREAM
Bitcoin is the first coin and the largest in value, with a single coin costing ~$59,147.00 as of May 8, 2021. The likelihood if Bitcoin crashes, it will not go to zero but could quickly lose 50% or more of value
The finance industry is taking the larger cryptocurrencies seriously. Fidelity Investments has over $4.9 TRILLION assets under management and added a Head of Digital Assets.
Most major investment houses are adding large Digital Assets teams.
“I think we’ve reached a tipping point. I think you’ve had the accumulated experience of now roughly 12 years of the Bitcoin blockchain being operative since the genesis block in early 2009. And the pandemic, quite frankly, was a catalyst for institutional adoption, and specifically Bitcoin and the narrative, or use-case, around digital gold…… Bitcoin adoption has hit a tipping point, and investors don’t want to sit on the sidelines…” Fidelity’s Head of Digital Assets, Tom Jessop.
There are thousands of crypto assets to choose from. While most people start with one of the more significant coins — such as Bitcoin, Ethereum, Bitcoin Cash, or Ripple — it is possible to purchase HIGH RISK and speculative coins with extraordinarily weird names. Some sound like Elon Musk named them! {Catch his May 8, 2021 Saturday Night Live Performance on YouTube}
FIRST STEP – CHOOSING AN EXCHANGE
Your first step involves choosing an exchange or trading platform that supports the deposit and withdrawal of your money. Regulated crypto exchanges operate under similar rules to a stockbroker and have high standards for documentation.
When reviewing an exchange check:
- If the Exchange is licensed and regulated.
- What deposit and withdrawal methods they support.
- Fees and trading commissions.
- Their crypto assets price of the coin(s) you want to buy. Some exchanges have slightly lower prices.
There are hundreds of exchanges. DO YOUR RESEARCH! Here are a few better known Exchanges
Other companies you can purchase cryptocurrency include:
- Robinhood
- Interactive Brokers
- Charles Schwab
- TradeStation
DIFFERENT PAYMENT METHODS TO FUND YOUR ACCOUNT
There are four main methods of depositing your money into a crypto exchange:
- Bank transfers {Easiest in my opinion}
- Wire transfers
- Third-party payment processors
- Credit/debit cards {Until recently, it was impossible to buy cryptocurrencies with a credit card, debit card, or third-party payment processor like PayPal because it could reverse those transactions. Since a blockchain transfer cannot be reversed, it would have been possible to STEAL by paying, receive the crypto, transfer it off the Exchange, and then reverse the payment.}
A FEW DAYS TO OPEN YOUR ACCOUNT
It often takes several days to fully open and verify an account with an exchange because of the regulator’s documentation requirements. Once your account is open, it is possible to fund it quickly — via one of the above methods. You can also transfer crypto from one Exchange to another.
Some exchanges allow credit and debit cards such as Visa, Mastercard, American Express, etc. You will pay significant fees when using credit and debit cards. In addition to the exchange fees (three percent or more), you will also pay the credit card fees charged to the Exchange. You may pay a total of seven or more percent fee.
Once verification of your account is made and you made a deposit, you can buy any of the crypto assets they offer. The range of cryptocurrencies available differs substantially from Exchange to Exchange, but all offer the top coins like Bitcoin, Ethereum, Ripple, and Bitcoin Cash, etc.
A popular and high-risk coin, Dogecoin is available through RobinHood, Binance Exchange, etc. Just google any cryptocurrency to find exchanges or companies that sell it.
MAKING YOUR FIRST BUY
To complete your first purchase, you need to select the coin you wish to buy on the Exchange from the THOUSANDS of coins in existence. Similar to purchasing a stock rf ETF, know what you are buying. DO YOUR RESEARCH!
You can purchase at the current market price or wait and set a lower price you want to buy. Similar to buying stocks.
STORING YOUR CRYPTOCURRENCY
Exchanges allow you to store your digital currency directly with them, which is probably the most convenient storage method for those new to crypto. Incidents have occurred when exchanges have been hacked or lost their customers’ coins! Be aware of the risks of keeping coins on an Exchange and review the Exchange’s policies in case of theft.
If your goal is to learn how to invest in cryptocurrencies, using an Exchange is the easiest option.
WALLETS
if you plan to buy cryptocurrency in large amounts or plan to use it to purchase goods and services online, you may want to hold the coins yourself. To do this, you will require some type of online or hardware wallet.
Wallets come in two forms — hot and cold.
- Hot wallets are software that stays connected to the internet, storing your coins online in a digital wallet or a mobile wallet. It is more convenient to transact via a hot wallet but more susceptible to being attacked. Online wallets are more user-friendly for beginners.
- Cold Wallets uses hardware wallets {Because experienced investors utilize wallets, I will not further explain wallets today.}
CONCLUSION – THE SMART WAY TO BUY BITCOIN AND OTHER CRYPTOCURRENCIES
Some have asked if I own cryptocurrencies. I have ~0.10% of my portfolio invested in cryptocurrencies. I own a small enough amount if I lose, I will not have to buy a carrot cake to cheer myself up, and more importantly, my wife will not BEAT ME!
If you desire to invest in Cryptocurrencies, BUILD YOUR KNOWLEDGE/COMPETENCY FIRST! DO YOUR RESEARCH!
I suggest you spend no more than you spend gambling (casinos, gaming apps, lottery tickets, etc.) or loaning to family! The money you can afford to lose and sleep at night.
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https://wealthbuildingpowers.com/2019/11/05/bill-gates-says-this-is-the-most-important-thing-hes-learned-from-warren-buffett-hint-it-has-nothing-to-do-with-moneytwo-billionaires-linked-by-one-common-denominator/
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ABOUT ME
I am a proud nerd (as my beautiful wife and daughter have told me) investment and finance blogger with an N.C. State, Chemical Engineering, University Rutgers, MBA and Harvard University, Advanced Management education.
I left a corporate career because I desired to make a difference as a speaker and writer. I was blessed to be coached and mentored by strong women and men in my family and professional life. It is my time to serve and give back.
DISCLAIMER
I started my first business at ~13 years of age (a small but brilliantly created plant nursery). I am a successful investor in stocks, options, real estate, and happy to share my finance and investment lessons. I am NOT a licensed financial advisor. Please do not construe my suggestions on this blog as recommendations for your situation.As an investor, you must establish your risk/loss tolerance. Investment in any asset involves risk, including complete loss.
Please seek your licensed CPA or fiduciary financial advisors for individual financial advice.
I write this weekly blog to make an impact by reaching an audience and demonstrating the need for financial literacy. I will help you get there.
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