When it comes to Bitcoin, it can be difficult to understand how to actually purchase it, especially at lower or higher quantities. This guide will explain the process to you, and how you can utilise different markets for your personal needs.
Understanding How Bitcoin Works
It will help you massively if you understand how Bitcoin works. Essentially, it is an example of a cryptocurrency, that is secured through the cryptograph. This is known as the process of enciphering and deciphering of digital messages.
It is done via the blockchain. Which contains the history of any digital assets that are unique and unchangeable. Think of it as a ledger that contains transactions across the digital world. In the blockchain, you will find three important elements. They are blocks, nodes and miners.
Blocks contain the data of Bitcoin, and are made up individual blocks. When a block is big enough, it will start to generate something known as a block header hash, which is essentially a number that is added to a block. These blocks are mined on in order to gather the data, much like a miner digging for gold in a mountain.
That’s where miners come in, they create new blocks through maths processes. There are a billion potential combinations for the numbers within a block that is needed in order to unlock, which is why they use software to do the hard work for them. When the block is mined, the miner will be rewarded financially. It’s a complicated process, where nodes compete against each other with maths equations.
Nodes refer to any and all electronic device that maintain copies of the blockchain, in order to keep the network functioning at the best it can. Each node will have its own copy, and the network will have to approve blocks that are mined, for the blockchain to be updated.
When it comes to Bitcoin, and crypto in general, it’s not managed or controlled by any particular central authority, meaning bank or government. For those who manage to complete the mining process, they will be able to add their own block. In some more rarer cases, some coins can be pre-mined before being uploaded onto the blockchain.
The crypto market is estimated to be worth billions, with it getting ever closer to the trillion mark, as such, there are rigorous security put into place, through wallets, in order to keep users safe. A wallet can be online or offline, and most commonly it used via a third-party.
Places To Buy Bitcoin
There are a number of ways to purchase Bitcoin and other cryptos, such as through a peer-to-peer marketplace, or a more traditional site, that helps to host anonymous sales.
Traditional sites offer their users more anonymity and privacy when it comes to trading, and is one of the most common ways of trading. This is where you will most likely find most first-time traders in the crypto world, as it is easy to get access and fairly self-explanatory.
With the peer-to-peer marketplaces, there is a more personal feel to the whole thing. This means that users trade directly with each other, rather than an anonymous source or a middleperson seller.
There are a number of advantages of using a peer-to-peer exchange website compared to a standard marketplace. Firstly, when you engage in trading with someone for Bitcoin, you’ll be able to see the details and reviews of the seller or buyer, allowing you to find a trusted source. This is also useful if you’re looking to sell to someone in your area, to get around location regulations and other various laws and fees.
Using an established and reputable peer-to-peer marketplace can offer you high amounts of privacy as well as low fees, but they will all vary from each other, so do your research.
You can use sites that are designed to inform users of different markets, exchange sites and coins such as the Traders Of Crypto. They can inform you of the best place to buy Bitcoin, by listing advantages of certain sites, as well as general guides to get you started.
Why Buying Bitcoin On PayPal Is Not The Greatest Idea
As we touched upon, you can actually purchase Bitcoin through PayPal directly, but they do have some issues you should be aware of. They don’t yet fully support the integration of Bitcoin and other cryptocurrencies, but has acknowledged the need to get on board. This means you can make a free account and purchase crypto assets.
But what you’re not able to do, is trade freely with this cryptocurrency. That means you will not be able to send Bitcoin to friends or family, or use your Bitcoin wallet to pay for goods and services at retailers that would in general allow it.
What’s important to remember, is that cryptocurrencies such as Bitcoin were introduced after the global economic crisis of 2008. As banks were losing public trust, people turned to a decentralised system through crypto. To many at the time, this was seen as a threat towards their way of finance banking. Especially for PayPal, who relied on being the middle man between transactions.
They are finally more on board with it, but many users have been using PayPal as a means of buying and trading Bitcoin on third-party marketplace sites. PayPal has promised to allow trading in the future, but nothing concrete just yet.
What To Consider Before You Buy
Even if you now know more about what goes on in the crypto world, it is still worth your time thinking about certain factors before you buy. You should firstly think about why you’re looking to engage in Bitcoin investments. Is it for you to diversify your investment portfolio, or are you only doing it because it’s currently trending? There are many reasons to get involved, and you should ensure you have a basic idea of what you’re looking for in regards to crypto.
The market is incredibly volatile, and is changing values constantly. You should consider starting with a smaller investment to get you started, to help you visualise how much money you can gain or lose based on fluctuating values. From there, you will be able to increase as you gain more confidence in understanding the market.
The amount you’re willing to put up to stake is also important. You have to weigh up the risk versus reward, to find the balance that works with you. Importantly, you need to be ready to lose money, as it’s very possible. The stability of Bitcoin in recent years has been interesting to say the least, check its recent history before investing to ensure its stable enough for your investment.
You should also consider what you plan to use your Bitcoin for. Will you be looking to sell it when it brings a profit, or will you hold onto it over a few years? There are some individuals who plan to hold as much crypto as they can, in the home that it becomes a mainstream currency one day, setting them up to be rich.
As was touched upon earlier, certain retailers, such as Tesla or Microsoft, will accept Bitcoin as a means of payment right now. So, if you can get Bitcoin on the cheap, then you could end up with some bargains with your purchases.