So, you've started seeing Bitcoin and cryptocurrency in general being discussed on the news, during Zoom calls, on YouTube streams, and pretty much everywhere else? Or like me, did you hear about Bitcoin back when it traded at $10 but had no idea where to even start? And you put it off, and put it off, and put it off some more... and you still haven't gotten your feet wet. Well, let me help.
Crypto is an intimidating business for the average noob, and a quick search can take you down a rabbit hole of blockchains, exchange hacks, gas fees and a million other things you just don't have enough browser tabs for. Looking back at how I got started quite recently, there are a few main things you ought to think about.
The first and potentially most important question that needs answering is, where can you buy it? Simply Googling 'where can I buy bitcoin' might list off a smorgasbord of options, but there are several considerations before you start separating the wheat from the chaff, starting with this one:
Am I allowed to use this service from the country I live in?
As the question might imply, it's very possible that various services may not be available in your area. A quick visit to the website of said service should render the answer, often within the FAQ's. Some top exchanges like BINANCE have two versions, Binance US for the, uh, USA, and Binance.com for everyone else. Now that we've established which services you're able to use, let's move on to the next important question.
How do I want to pay for my Bitcoin?
Elementary, one might think, but steady on there! Your mileage with a service will vary significantly based on your chosen payment method. If you want to use a bank transfer you should be in luck, a vast majority of the top dogs in this area will happily gobble up the likes of SEPA, SWIFT and whatever else. Whereas if you want to use PayPal or something similar, your options will be far more limited.
Some services like the very well regarded BlockFi (visit this link to get up to $250 in Bitcoin when you open a BlockFi account and make a deposit) might only take wire transfers, while the likes of PAXFUL will deal with PayPal. Note that some exchanges like BitMart have some types of payments processed via other services, which can cause a verification headache...
Do I want to stay anonymous?
One thing to bear in mind is that Bitcoin addresses can be viewed publicly (the addresses themselves and their transactions, not the owner's details themselves), and the whole point of Bitcoin isn't to shuttle dosh around secretly. It's infinitely more transparent than cash! I'm not going to be able to help you stay anonymous, and if you want to, you might want to stop reading here. For the average noob, all you need to know is that registering and getting verified with a cryptocurrency exchange is about the same amount of work as, or even a bit less than an online bank or stock trading account. Most services will need to go through a small Know-Your-Customer exercise which'll involve some ID, perhaps a selfie, and a wait of hopefully not too long until you're verified and have access to all you need on said service or exchange. I've been verified the next day on some, but had to wait a couple of weeks on others.
How much is this going to cost?
The price of Bitcoin isn't what's important here. The first thing to check on is how much it costs to actually make a transaction, or what sort of fee is levied on you. There may be two sides to this, firstly the fee levied by the exchange on a transaction, and on top of that, potential fees applied to your payment method of choice. Bank transfers tend to be pretty safe, and are often subject to no fee, while credit or debit cards could get taken for 2% or more. Again, check on this! Currency conversion may be another cost factor to look out for, in some circumstances.
Thing is, you shouldn't just discount a service because of a potentially high purchase fee or credit card fee. Some exchanges will allow you to purchase with low or even no fees, but if you want to take it out to an external wallet, boom. 0.0005 BTC may not seem like much, but that's $22 at the time of writing, not terribly worth it if you're just trying to shift $100 worth of coin.
So, try and figure out which of these four types of possible fees apply and compare accordingly: Fee on your payment method, fee for the transaction itself, fee for currency conversion if applicable, and withdrawal fee when you want to take your coin off the exchange.
Oh, &%§$! Where am I going to put it?
That's right. Before taking the plunge, you're going to want to think about where you want to store it! I might do another post on how to store your cryptos, but you essentially have the choice of keeping it either online or offline. The latter is naturally safer, of course, but some services offer a lot of interesting (and passive income earning, see link to BlockFi above) options if you keep them online. Still, if you're extremely paranoid, nothing wrong with storing it safely.
THIS IS IMPORTANT! Up until right now, you might have been looking at a service like Robinhood and thinking that they've been checking all the boxes. Not true! Remember what I said about taking your shiny new Bitcoin out into an external wallet, or moving it to BlockFi, or even storing it in your safe via a paper wallet? Guess what! As of the time of writing, YOU CAN'T TAKE YOUR BITCOIN OUT OF ROBINHOOD. More Prince John than Earl of Locksley, them. A popular catchphrase going around to describe this is 'not your private key, not your bitcoin'. That means, what you're actually buying on Robinhood is some sort of derivative of Bitcoin, not actual Bitcoin... and when noobs like us do stupid things like dabble in derivatives, we get eaten up. Keep it simple, make sure that you are able to move or withdraw your Bitcoin from wherever you buy it even though you're happy to hold it online with them for now. You never know, right?
Ok, I've decided on an exchange, payment method and where to store my coin. Now what?
Go ahead and create an account, that's what. But take it slow! The first thing you should do is head into your account settings, and set up two factor authentication (2FA). That way even if someone gets through your password, they'll also need to have your phone in hand to log in.
Now, if you've got some sort of external wallet set up, write the private key or mnemonic phrase down. Pen and paper, sir, no screenshots or emails or saving it on the cloud. WRITE IT DOWN and, for good measure, write it down on another sheet of paper. Now a third time. Put them each in a different ziplock bag, and proceed to store them safely. One in the sock drawer, one in a fireproof box or at your mum's, and if you're more whale than sardine, one in a safe deposit box somewhere.
Worthwhile idea to do the same for your authenticator security code as well, just in case you lose your phone. Treat those like your wallet private keys. Trust me, you don't want to be that guy who has a billion dollars of crypto sitting in a wallet or account somewhere but can't access it.
Do you?
If this post has helped you in your research or helped you save time as you consider diving into the crypto world, I consider my mission accomplished. If you think you know someone who might benefit from this sort of food for thought, please feel free to pass it on!
