How to Invest in Bitcoin For the First Time

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How to Invest in Bitcoin For the First Time

Probably by now, you are familiar with terms Bitcoin, Blockchain and Exchange Platform. The potential they offer has piqued your curiosity and now you want in on the action. Fortunately, this guide should assist you in learning how to invest in Bitcoin for the first time.

How Does Trading Work?

If you have ever seen films about stock broking, then you are not a million miles away from how to trade bitcoin. The key difference is that you are investing specifically in cryptocurrencies rather than stocks. Essentially, how to make money with bitcoin boils down to making the right choice at the right time. The objective is to buy low and sell high. There are two main ways to do this.

You can monitor graph trends (as illustrated above) and predict visually where the fluctuation will go, then base decisions on this. Alternatively, you can keep your ear to the ground and evaluate industry news to make sure you know the latest goings on and then predict which crypto will do what based on that.

The first option takes a certain kind of mathematical mind to be successful at and can take a long time to master. While the latter option can be mastered by anyone, simply by staying up to date.

How To Invest in Bitcoin for the First Time

The first step in how to make money with Bitcoin is to get yourself set-up at an exchange platform. Which can be completed quickly in just three steps:

  • Find a top cryptocurrency exchange
  • Add Personal Details
  • Upload KYC Documents  

Now all you need is to have your credit card handy. This is because trading Bitcoin starts with trading your fiat (government regulated currency) for Bitcoin. However, this is no different to any other online transaction and you simply fill in the amount you desire to deposit and then click confirm.

Each exchange platform is slightly different, but how to invest in bitcoin is the same essential formula. Here’s a screenshot from Exmo.

You can use this exchange to invest in Bitcoin with Euro, USD, RUB or PLN. If you have GBP or AUD check out Indacoin exchange.

Investing in Bitcoin through exmo exchange

Bitcoin Futures

Buying Bitcoin directly on an exchange is just one of the ways to invest in the cryptocurrency. The growth in interest from investors has led to the creation of several cryptocurrency derivatives. Bitcoin Futures are one such example and have proven to be very popular since they were first offered in 2017.

Whether trading cryptocurrencies, commodities, or precious metals, serial traders look for opportunities to profit from a change in an asset’s price without having to own the asset itself. Imagine that you buy an amount of gold with the intention of selling it for a margin. Until the sale is complete you would have to ensure that the gold is securely stored, and this often results in additional costs and complications.

Futures offer traders an alternative which does not require you to own an underlying asset, such as gold or Bitcoin. Bitcoin Futures function in the same way as commodity or stock futures, allowing investors to speculate on an asset but only exchanging cash and contracts.

Bitcoin CFDs

A Contract for Difference (CFD) is another example of a financial instrument which allows you to invest in an asset without owning it directly. In such a transaction, the contract’s buyer and seller agree to pay, in cash or cryptocurrency, the difference in pricing should an asset, such as Bitcoin, rise or fall.

Normally, a buyer expects that the coin’s price will increase, whereas the seller believes it will decrease over a period of time. This means that when trading cryptocurrency CFDs you can profit both when an asset’s value increases as well as when it decreases.

Bitcoin CFDs are popular since they are increasingly traded across traditional cryptocurrency exchanges. Leading this change is eToro, the global trading platform which offers a comprehensive list of tradeable assets and derivatives. When investing in Bitcoin CFDs with eToro you avail yourself of no commission fees and low spreads. Orders are processed seamlessly and optional automatic limits let you minimise risk exposure. In addition, the platform provides you with leverage to be able to open larger positions with limited capital.

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It is important to understand that trading Bitcoin CFDs is considered to be a high-risk investment, especially due to the use of leverage. In the same way in which leverage can magnify your profits its use can also result in significant losses. You must ensure that you understand the risks of trading cryptocurrency CFDs on any platform before doing so.

Considerations Before You Invest in Bitcoin at an Exchange

Before you deposit, you will be told the exchange rate your deposit is worth. An example can be seen in the above image. This amount can vary from one exchange to another, depending on their commission rate. Most exchange platforms will charge around 2-4% of the transaction, which can make quite the difference. However, it is also sometimes reflective of their level of service, so bear this in mind too.

To learn more in detail about the deifferent services offered by the different exchanges, including their fees, limits, deposit options and support, visit our exchange platforms reviews page.

Another criterion to consider is the currency options. Different exchange platforms offer different direct fiat exchanges. Exmo, for example, has a long list of different currencies, while Binance currently does not support purchasing crypto with traditional currency.

Binance Buy With Credit Card Invest Option Unavailable

To start trading on Binance, you first need to invest in Bitcoin through EXMO or the Indacoin Exchange, and then withdraw your Bitcoin from Indacoin/Exmo wallet to your Bitcoin Binance wallet address.

Take all these things before you make your first transaction into consideration, as a lot of novice investors fail to do so and as a result fall foul of rookie mistakes.

Once this is all done and dusted, you will be all set with a Bitcoin balance, which you can sit on and watch fluctuate as per the market. The next step for you now is to learn how to sell Bitcoin and how to trade Bitcoin for other cryptos, as this is where things really get interesting.

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