In the last few weeks, many changes have occurred globally.
From pending U.S. elections to regulatory changes and the adoption of digital currencies, Bitcoin has only benefited.
Within a few days, the worth of BTC shot up, currently valued at $93,327.24.
This explosive growth has only caught the eyes of new investors wanting to begin their crypto journey.
Join us as we guide all beginners through the ins and outs of digital investing and help you answer “How much Bitcoin should I buy as a beginner?”
Understanding the Background of Bitcoin
Before we begin, it’s important to know the basics of crypto.
It’s been a volatile digital investment since its start, with a lot of unpredictability.
But, interestingly enough, it’s also been one of the most rewarding investments, with returns outweighing any other in comparison.
This guide is here to help you start your Bitcoin journey. From understanding how much to invest to learning about Bitcoin paper trading and market volatility, we are here to help.
Bitcoin was launched in 2009 by Satoshi Nakamoto. The first recorded price of BTC was in October 2009 on the NewLibertyStandard exchange, where 1 Bitcoin (BTC) was valued at approximately $0.00076.
Bitcoin Basics
For someone who has never read about or understood cryptocurrency, attempting to educate yourself can be overwhelming.
What Is Bitcoin?
Bitcoin is a type of digital currency, called cryptocurrency. It allows people to send money over the Internet without relying on a traditional banking system. Think of it as digital cash.
What makes it so different from fiat money, is that it is not issued by any government (like the U.S. dollar or Euro), but rather functions on a decentralized network.
Decentralization means that no one controls it. Rather, transactions are verified by a network of computers.
The core idea of crypto is that it’s free from censorship, and any central authority.
How Bitcoin Works
Bitcoin uses a technology called a blockchain, which is basically a public ledger of all Bitcoin transactions, ever.
This ledger lives on a network of computers (called nodes) that work together to validate and secure each transaction.
To uncover Bitcoins, there is a process called mining.
There are only 19,879,400 BTC created. There will never be any more.
Miners uncover Bitcoin by solving complicated math equations. Once these equations are solved, the Bitcoin gets added to a new block on the blockchain.
When you decide to buy BTC, the transaction is broadcast onto the network, verified by miners, and then recorded on the blockchain.
This chain of events is done on purpose to verify the authenticity of transactions and make them secure.
Did You Know?
Bitcoin is a divisible asset.
You don’t have to buy a whole Bitcoin; you can own a tiny fraction of one up to 8 decimal places.
This fractional ownership makes Bitcoin accessible to beginners who either don’t have large sums of money or who don’t want to invest for the first time with such a high value.
Practice Your Bitcoin Buying, Selling, and Trading Skills
Before making any commitment, you can use a Bitcoin paper trading platform to practice your skills without actually investing a cent.
Sites like ProRealTime are great tools for beginners to practice their skills and become familiar with the world of Bitcoin before committing to any real investment.
Review live market trends and play around with your investment strategy to see what makes you comfortable and confident.
How Much Bitcoin Should I Buy as a Beginner?
Deciding how much Bitcoin to buy as a beginner can feel scary. With prices rising, it’s a great investment to make, but many even think it might be too late.
It’s never too late!
Here are some important crypto investing strategies to help you get started without feeling overwhelmed.
1️⃣Start Small
It’s best to start with a manageable amount. Common first investments can be $10, $100, or $500.
Using this strategy allows you to get comfortable with how Bitcoin works. As you gain confidence in using exchanges and learn about crypto safety and hardware wallets, you can gradually increase your investing amount and frequency.
2️⃣Only Invest What You’re Willing to Lose
Bitcoin is known for its volatility. Prices can soar one day and drop the next.
For example, In 2017, Bitcoin’s price jumped from $1,000 to almost $20,000 within the year. But, by December 2018, its price dropped dramatically to just over $3,000! Today, it is worth over $90,000.
With these wild swings, you can see just how vital it is to only invest what you can afford to lose.
If you have a long-term HODL strategy, then this point may not apply, but if you are an emotional investor and are scared of price drops, do not put in more than you are willing to lose.
Factors to Consider Before Investing in Bitcoin
☑️Assess Your Financial Goals
- Define your investment objectives.
- Are you looking for short-term gains or long-term growth?
☑️Manage Your Risk
- Determine your risk tolerance.
☑️Understand Bitcoin’s Long-Term Potential
- Review Bitcoin’s historical performance.
How to Make Your First Bitcoin Purchase
Once you feel ready and confident to buy Bitcoin, there are a few steps to take before owning any crypto.
Choosing a Trusted Exchange
Picking the right platform to buy Bitcoin is crucial. You must consider, security, exchange fees, platform reputation, and user experience.
Some solid exchanges include Coinbase and Binance, however many hardware wallets, including Material Bitcoin, will allow you to buy Bitcoin directly from them, making the process much easier and beginner-friendly.
Setting Up a Secure Wallet
Once you’ve chosen an exchange, getting and transferring a secure crypto wallet is your top priority.
Exchange Wallets vs. Self-Custodial Wallets
Exchange Wallets: Convenient for quick trades, but your Bitcoin is stored on the exchange.
This means you are constantly exposed to cyber attacks as your private keys remain on the internet and in the exchange’s custody.
Self-Custodial Wallets: You have full control over your private keys. There are two types of self-custody wallets available.
➡️Hardware Wallets: Physical devices that store your Bitcoin offline, making them highly secure against online threats.
➡️Software Wallets: Apps or programs that store your Bitcoin on your computer or smartphone. They are less secure as your private keys and information are consistently connected to these devices.
Steps to Buy Your First Bitcoin Safely
| Step | Action | Details |
|---|---|---|
| 1 | Sign Up on a Trusted Exchange |
|
| 2 | Verify Your Identity & Secure Your Account |
|
| 3 | Deposit Funds |
|
| 4 | Make Your Purchase |
|
| 5 | Transfer Bitcoin to Your Personal Wallet |
|
The Best Crypto Wallets
When you buy Bitcoin, you need a safe place to store it. That’s why knowing which are the best hardware wallets is important.
Software Wallets
These are online hot wallets connected to the internet. They’re super convenient, however, because they’re always online, hot wallets are more vulnerable to hacking and cyber-attacks.
Hardware Wallets
They are physical devices that store your Bitcoin offline. These wallet types come in two forms, electronic and non-electronic, and they are much more secure than hot wallets because your private keys are stored offline.
Non-electronic hardware wallets, like Material Bitcoin, are considered cold storage, which is an elevated version of a technical device that sometimes needs to connect to a computer or smartphone.
They’re perfect for holding larger amounts of Bitcoin.
Cold Storage takes security to the next level. By using cold storage wallets, you ensure that your Bitcoin stays safe, even if your computer or smartphone is compromised.
Avoiding Common Mistakes
It’s important to protect your investment, so be aware of common mistakes and scams.
Stay away from phishing sites, which are fake websites that mimic legitimate exchanges or wallet providers to steal your login credentials.
Be aware of fake giveaways or schemes, like when a professional crypto “guru” promises free Bitcoin as a reward for something or guarantees high returns in exchange for your private keys.
Emotional investing is another big mistake that many beginners make.
Don’t allow fear or greed to cloud your judgment, especially during Bitcoin price volatility. These moments can be triggering, but you need to keep your investment objectives in check.
Finally, don’t ignore security and privacy practices.
Always store your Bitcoin on a reputable cold storage wallet for the highest protection.
And never share your private keys with anyone, ever!
Bitcoin 101 Wrap-Up
Starting your Bitcoin journey doesn’t have to be scary.
As a beginner, starting small with amounts like $10, or $100 allows you to learn the ropes without taking on too much risk.
Remember, only invest what you’re comfortable losing, and focus on building your knowledge over time.
This will build your confidence and set you on the right path to adding Bitcoin to your portfolio.
Most importantly, use a cold crypto wallet to store your Bitcoin.
FAQs
How much Bitcoin should I buy as a beginner?
- Start with a small amount based on your financial situation. This allows you to learn without risking too much.
Can I really start with $10?
- Yes! Thanks to Bitcoin being divisible up to 8 decimal places, you can own a tiny fraction of a Bitcoin with just $10. Moreover, this makes it a great way to get started and gradually build your investing confidence.
How much should I invest if I want to see returns?
- Any amount can potentially yield returns. However, remember that higher investments come with greater risks.
How do I keep my Bitcoin safe?
- Use a cold storage wallet like Material Bitcoin to store your Bitcoin offline. This minimizes the risk of hacking.
Do I need to pay taxes on Bitcoin?
- Yes, in many countries, Bitcoin transactions are taxable. Therefore, it’s important to keep detailed records of your purchases and sales for tax purposes. Additionally, maintaining organized documentation will help you comply with regulations and avoid potential penalties.
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