There are numerous points of entry into the Bitcoin/cryptocurrency economy. The one we recommend if you are completely new is to buy some Bitcoin and become familiar with how the process works.
Bitcoin payments operate like bank transfers. Each person has his or her own private “account,” which is called a Bitcoin address. A Bitcoin address is 26 to 35 alphanumeric characters beginning with the number 1 or 3. This address represents a destination for a Bitcoin payment. A person possessing an address can receive Bitcoin in any amount from another person anywhere on the planet, even in outer space, in seconds. A person can have multiple addresses that are stored together in an electronic version of a wallet, called a digital wallet. The authors highly recommend using the USA-based company, Coinbase.
Coinbase has been in operation since 2012 and has a fantastic track record in exchanging digital assets like Bitcoin securely and without any major hassles. Located in San Francisco, Coinbase exchanges fiat currencies (i.e., U.S. dollar) in 32 countries and facilitates Bitcoin transactions and storage in 190 countries worldwide. The authors have no financial interest or gain in recommending the company. There are other wallets you could use, simply Google “Bitcoin wallet.”
You can set up your account at Coinbase. Setting up an account with Coinbase is fairly easy. As part of the process of setting up your account and removing deposit and spending limits, you’ll need to complete an identity verification process. The process is no more difficult than opening a bank account here in the USA. Coinbase starts you off with several different wallets. For the purpose of buying your first Bitcoin, you’ll focus on the default Bitcoin wallet. With your address and wallet setup, you are ready to buy Bitcoin.
Using Coinbase or another digital asset exchange, you’ll purchase Bitcoin by using your debit / credit card, or a bank or wire transfer of your fiat currency (i.e., U.S. dollar). Then, Coinbase will convert your fiat currency to Bitcoin for a small fee. Bitcoin is divisible up to 8 decimal places, so you do not have to buy a whole Bitcoin. You can buy small fractional amounts that correspond to your fiat currency budget.
Here is an example of a way to buy Bitcoin on even a very small budget, and how it can appreciate in value quickly. From June through August 2017, we set up an automated buy of Bitcoin through Coinbase every two weeks. On each occasion, we spent $16.67 in U.S. dollars, and each time, it bought a slightly different amount of Bitcoin, due to the cryptocurrency’s volatility. Each purchase included a small fee for Coinbase and ended up at $16.91.
The five purchases totaling $84.55 brought .031869 Bitcoin into our Coinbase Bitcoin wallet. Just a few weeks later on August 21, 2017, that Bitcoin purchased for $84.55 had a value of $124.70, or a 47 percent increase in a short period of time. Please note, this is not a guarantee of asset appreciation. You should study the history of Bitcoin’s value and make your own decision. The primary points of this example are that you can purchase fractions of Bitcoin and experience the same potential for appreciation as individuals who own whole Bitcoins.
Cryptocurrencies are not only for the wealthy. Anyone can get involved, as the example above illustrates. If you decide not to use Coinbase, the steps to buy Bitcoin are different for each exchange. Simply follow the process created by each exchange.
We recommend starting very small with your first purchase or two, maybe as little as $10 to $20, so you can get the feel for things. After you have made your first purchase, you’ll be wondering what to do next. We recommend visiting our “quick start guide.”
And to learn everything you need to know about Bitcoin, including its history, how it is created, and why it has value, you’ll find that in our book, “Bitcoin Decoded“.