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How to Buy Bitcoin (BTC) – Forbes Advisor UK

By on July 18, 2022 0

In May 2016, you could buy 1 BTC for around US$500, but at the start of May this year, a single Bitcoin was worth around US$30,000. This is a growth of almost 6000%.

However, there are two sides to the success of every cryptocurrency, and Bitcoin is no different. Along with impressive gains, BTC has also seen devastating declines, especially lately. Bitcoin Has fallen below US$20,000 as recently as June 2022, from soaring highs of nearly US$69,000 at the end of 2021. This represents a decline of 37% in June alone.

Bitcoin therefore remains a highly volatile asset. If you want to buy the coin, many experts recommend investing no more than a small percentage of your net worth in cryptocurrency.

How to buy Bitcoin (BTC) in 4 steps

1. Choose a crypto exchange

To buy Bitcoin (BTC), or any cryptocurrency, you will need a crypto exchange where buyers and sellers meet to exchange dollars for coins.

There are hundreds of exchanges out there, including several Australia-based exchanges, but as a beginner you’ll want to go for one that balances ease of use with low fees and high security.

Be sure to check if your exchange has a Bitcoin wallet built into its platform; otherwise, you’ll have to find one yourself. You can also choose to buy your crypto from a platform like Paypal, although buying crypto this way often means you can’t withdraw your coins and move them to another platform. If you want to keep your crypto in a different wallet, you will need to sell your holdings and then buy them back on a different exchange.

2. Choose a payment option

After choosing an exchange, you need to fund your account before you can start investing in Bitcoin. Depending on the exchange, you can fund your account via wire transfer from a checking or savings account, PayPal, wire transfers, a cryptocurrency wallet, or even a credit or debit card.

If you use your credit card to buy crypto, beware of fees that may add to the cost of the transaction.

Since fees reduce the amount of money you can invest (and therefore also the amount of money you need to grow and accumulate), it generally makes more sense to use wire transfers from an account. banking rather than other methods. Additionally, if you use a credit card to purchase cryptocurrency, it will generally count as a cash advance and be subject to a higher interest rate than what you pay on regular fees. Remember that going into debt to buy volatile investments is extremely risky.

3. Place an order

Once your account is funded, you can place your first order to buy Bitcoin. Depending on the platform you are using, you may be able to buy it with the press of a button, or you may need to enter the Bitcoin (BTC) ticker symbol. You will then need to enter the amount you wish to invest.

Once the transaction is complete, you will own a portion of a bitcoin. This is because it takes a large initial investment to buy a single bitcoin now. If the current Bitcoin price was US$30,000, for example, you would need to invest that much to buy one Bitcoin. If you invested less, say US$1,000, you would get a percentage, in this case 3.33%, of a single Bitcoin.

4. Select a secure storage option

Many crypto exchanges have a built-in Bitcoin wallet, or at least a preferred partner where you can keep your Bitcoin safe. Some people, however, don’t feel comfortable leaving their crypto connected to the internet, where it can be more easily stolen by hackers.

Most major exchanges have private insurance to reimburse clients if this happens, and increasingly they also store the majority of client assets offline in so-called “cold storage”.

If you want ultimate security, you can store your Bitcoin in an online or offline Bitcoin wallet of your choice. But keep in mind that if you move crypto from an exchange, you may have to pay a small withdrawal fee. Additionally, if you use a third-party crypto wallet custodian, you may also not be able to access your coins permanently if you lose the private key that serves as your wallet password.

Sell ​​bitcoins

When you decide you are ready to sell your Bitcoin, you can place a sell order through your exchange, much like you did when you originally bought it. Most exchanges offer multiple order types, so you can decide to sell only when Bitcoin hits a certain price, or you can place an order that goes through immediately.

You can choose to sell all of your Bitcoin holdings or just a specified amount. Once the sale is complete, you can transfer the money to your bank account. Your exchange, however, may have a hold period before you can transfer money to your bank account. This is not concerning; it just takes some time to make sure the transactions are clear.

When you sell your Bitcoin you can make a profit and therefore you can be on the hook for capital gains taxes with the Australian Tax Office (ATO), so be sure to keep track of your profits.

Should You Buy Bitcoin?

When the price of Bitcoin is skyrocketing, investing in the popular cryptocurrency can be tempting. A number of Australian crypto exchanges have insisted that the recent price decline is cyclical and that new investors need to weather the downturn in order to reap the rewards. But while crypto clearly has the potential to be a lucrative investment, you need to be extremely careful.

Even if you decide to go ahead, its volatility has led many experts to recommend against allocating a large percentage of your funds to its purchase.

In other words, treat it like a high-risk venture and consider your own financial situation and what’s best for you before deciding whether or not to invest.

This article is not an endorsement of any particular cryptocurrency, broker, or exchange, nor does it constitute a recommendation of cryptocurrency as an investment class.