What is Bitcoin for Dummies: A Guide For Beginners

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Is there a Bitcoin rally in sight? Here's what you should know about Bitcoin.

Predicting a bear market bottom is like catching a falling knife. Even so, traders often attempt to predict one based on how the price behaved relative to critical indicators during previous bear runs. The assumption here is that history will repeat itself.

One such rare signal has emerged, suggesting bitcoin’s decline may be flattening and now is the best time to add exposure to the cryptocurrency.

In reality, cryptocurrency has been gaining traction for years, especially as more Millennials are drawn to the appealing concept of decentralized, digital currency.

Getting Started

If you want a simple and easy-to-follow bitcoin for dummies explanation, how you can get bitcoins and how it bitcoins can help you, without floundering into technical details, this bitcoin for dummies guide is for you.

10 years ago if someone told you about digital money, you would look at them so confused. Imagine a new currency where you can only use it online, store it online and it was completely intangible.

Well 10 years ago it was in the process of becoming a thing and in 2008 it made its debut. The first digital currency is Bitcoin. This bitcoin for dummies guide will explain how the system works and how you can make your first bitcoin investment. It will also direct you to resources that will help you store and use your first pieces of digital currency.

Bitcoin for Dummies: What is Bitcoin?

bitcoin for dummies

Bitcoin is a cryptocurrency that is open source and created for peer-to-peer money transfers. Imagine Paypal or Venmo without a central authority. No one to tell you what to pay, how to buy, when to buy with no worries of a huge fee.

Now imagine all your transactions becoming open to the public eye through pseudonymity. Bitcoin was created to combat the financial crisis that happened as the banks had too much power.

Satoshi Nakamoto, the creator of Bitcoin created it to give the people the power over their money. No need for banks to hold your money. You hold your money in your own wallet.

Your wallet can consist of a paper wallet with just your Bitcoin hash address, a mobile/computer wallet or a cryptocurrency hardware wallet.

Benefits of Bitcoin

  • Quick: One major advantage of cryptocurrencies, in general, is that they are quick. If you buy something, the seller will get their coins pretty quickly. If you purchase with a Visa, they need to wait for the transaction to be accepted, then settle then go to your bank account in 3 days.
  • Cheaper Transactions: Paypal and payment processors generally charge 3-4% of the fees and charge that from the seller. In this case, the buyer is paying the fees but it amounts to fractions of a percent.
  • Paperless: Going into the age of digital, paperless is becoming bigger as more people are liking it. Digital currencies do not need a reason to be with paper as everything is done on your phone or computer.
  • Irreversible Transactions: Some people think irreversible transactions is a bad thing but there are ways to go around it. For sellers, it is a great idea because people cannot make unnecessary chargebacks as we see it being done on sites like eBay and Amazon. To make sure you’re not sending it to the wrong address, always send a minimal amount to the hash address to make sure it is correct.
  • Appreciating Asset: With the way things are going, it seems like Bitcoin can’t keep going up forever. To be frank, not everything will go up forever. However, the difference between fiat and Bitcoin is that the government keeps printing more money while Bitcoin has a set amount that there will ever be which is 21 million total coins.

Now that you know the benefits of bitcoin, you may be wondering how to get started with using this digital currency. First and foremost, you need a Bitcoin wallet. As you can guess, this is also tangible and is either on your computer or phone. You can also have a hardware wallet. The wallet will have the ability to store, send or receive your cryptocurrencies. When you have found one that you like, go ahead and pick an exchange to buy your Bitcoins.

The next step is to get started with a crypto exchange so that you can buy and sell cryptocurrencies like bitcoins.

The Best Cryptocurrency Exchanges

There are many different exchanges available, so it is important to do your research to find one that is reputable and offers the best rates. Once you have found an exchange, you will need to create an account and deposit funds into it so that you can begin trading. Here are the best crypto exchanges we found:

 
Our #1 Pick
4.7
4.6
Pros:
  • App Store: 4.7 · ‎1,641,739 reviews
Pros:
  • App Store: 4.6 · ‎15,689 reviews
Fees: 1.49%
Fees: 0.5% (lowest)
4.7
Pros:
  • App Store: 4.7 · ‎1,641,739 reviews
Fees: 1.49%
Our #1 Pick
4.6
Pros:
  • App Store: 4.6 · ‎15,689 reviews
Fees: 0.5% (lowest)

1. TradeStation – Best for Trading Across Multiple Asset Classes

tradestation

TradeStation Crypto allows you to buy, sell, and earn cryptocurrencies like Bitcoin, but you can quickly move between all trading platforms.

Buy, sell, and trade cryptocurrencies all in a single hassle-free crypto trading platform, packed with the tools and technology crypto traders need.

  • Buy, sell and hold BCH, BTC, ETH, LTC, and USDC
  • One-click order entry
  • Easily keep track of your interest income
  • Quickly analyze prices
  • Customize your trading interface
  • Instantly see your unrealized profits

You can also trade equities, options, and futures with TradeStation Securities.

Details
  • Fees: TradeStation Crypto offers innovative pricing that is not tied to volume. Instead, rates are based on your account balance. TradeStation charges a competitive 0.5% per trade for accounts with balances of $100,000 or less, and even less for higher volume crypto traders.
  • Pro: Offers real-time market data, no minimum deposit required, and you can deposit and withdraw at any time for free.
  • Con: For accounts that don’t maintain an average end-of-month equity balance of $2,000 or execute at least five trades during the 12-month period following the anniversary of when the account was first funded, TradeStation charges an annual inactivity fee of $50.
Summary
  • User Interface: Easy to navigate and fully customizable
  • Fees: Low
  • Reputation: Trusted
Our Pick
TradeStation Crypto
4.7

TradeStation is the top crypto destination to easily buy, sell, invest, trade, and earn cryptocurrencies. Open an account on an easy to use crypto trading platform.

Open Account

2. Coinbase – Best for Earning Free Crypto

coinbase

Coinbase has emerged as one of the high-profile names in the Bitcoin world placing itself on the top as a one-stop solution for Bitcoins. Coinbase is a San Francisco based digital asset exchange that lets you turn your fiat currency into cryptocurrency.

It is the main entry point into the cryptocurrency space for most people. Coinbase also has a crypto wallet where you can pay for stuff and store NFTs.

It’s currently the quickest and easiest way to buy Bitcoins in the US. You can also earn free crypto through its Crypto Learn program.

New Coinbase accounts can get $5 in free Bitcoin for joining and can get $10 in Bitcoin for each person they refer to Coinbase.

Details
  • Fees: Coinbase charges 3.99% fees for credit/debit card purchases but you can get your coins instantly. 1.49% if you buy from your bank account.
  • Pro: “Instant Buy” option available with credit card or debit card
  • Con: Purchases made with bank transfer can take up to 5 days to complete
Summary
  • User Interface: Easy to Navigate
  • Fees: Average
  • Reputation: Trusted

If you wanted to create a Coinbase account you can create a Coinbase account by clicking this link.

Coinbase
4.7

Coinbase offers over 25 cryptos to trade, invest, or stake in. If you want to diversify your income sources through cryptocurrencies, Coinbase is an ideal platform to buy, sell, or even build your crypto portfolio.

Open Account Coinbase Alternatives

Related: Coinbase vs eToro: Cryptocurrency Trading Comparison

3. SoFi Invest – Best for Ease of Use

sofi invest crypto

SoFi Invest is a free consumer investing service that offers stocks, ETFs, and robo advising, with no commissions or management fees.

With SoFi Invest, you can trade crypto 24/7, unlike the regular market. This means weekends, holidays, middle of the night—no time is off limits.

Just like Coinbase, you can trade Bitcoin, Ethereum, Dogecoin, Cardano, and 17 more coins—24/7 all with no fees. Plus, more new coins are on the way.

Worried about your money getting hacked? You don’t have to be. SoFi invest is a secure platform that ensures your holdings are protected against fraud and theft. Your holdings are FDIC-insured as well.

Details
  • Fees: SoFi will charge a markup of up to 1.25% on crypto transactions.
  • Pro: If you have the SoFi app, you can buy crypto alongside the stocks, fractional shares, and ETFs that you’re already trading.
  • Con: Can’t transfer crypto holdings to an external wallet.
Summary
  • User Interface: Easy to navigate and fully customizable
  • Fees: Fair
  • Reputation: Trusted
Our Pick
SoFi Invest
5.0
  • Become an investor— without commission fees
  • Make your first trade or your next trade with active investing
  • Learn the market as you do-it-yourself buying hot IPOs or cryptocurrencies
Open Account

4. Kraken – Best for Security

kraken

As one of the largest and oldest Bitcoin exchanges in the world, Kraken is consistently named one of the best places to buy and sell crypto online, thanks to its excellent service, low fees, versatile funding options, and rigorous security standards — but this is only part of the story. They’ve been at the forefront of the blockchain revolution since 2011.

Details
  • Fees: The fee per transaction for buying Bitcoin is 0.9%.
  • Pro: Lightning-fast engine allowing 1,500,000 transactions per second gives users a great trading advantage.
  • Con: No credit/debit card deposits.
Summary
  • User Interface: Sleek design, a good overview of the trading market with lots of customizations.
  • Fees: Low
  • Reputation: Trusted

If you are trying to take your crypto investments to the next level, you can get started with Kraken here.

Kraken
4.5

New to Bitcoin and cryptocurrencies? No problem. Crypto may seem confusing, but Kraken can help. Sign up today and buy 50+ cryptocurrencies in minutes. Get started with as little as $10.

Open Account Best Places to Buy Bitcoin

5. Robinhood – Best for No Cost

robinhood crypto

Robinhood is a great option for those who want to buy Bitcoin but want to avoid paying any fees. Robinhood is an investing app that allows you to buy and sell Bitcoin with no commissions is one of the top crypto exchanges.

If you’re already familiar with how to buy and sell stocks, then buying Bitcoin on Robinhood will be super easy. In addition to buying Bitcoin (BTC) — you can buy Bitcoin Cash (BCH), Bitcoin SV (BSV), Dogecoin (DOGE), Ethereum (ETH), Ethereum Classic (ETC), and Litecoin (LTC).

Overall, using Robinhood to buy Bitcoin is smart, easy, and straightforward. Plus, you’ll even give you a free stock worth up to $225 for joining. Then you can sell that stock and buy free Bitcoin with it.

Details
  • Fees: Free
  • Pro: Easy to use and you can buy or sell bitcoin without commissions.
  • Con: Limited supported currencies and no crypto wallets.
Summary
  • User Interface: Easy to navigate and fully customizable
  • Fees: Low
  • Reputation: Trusted
Robinhood
4.5

Robinhood has commission-free investing for stocks, options, ETFs, crypto, and tools to help shape your financial future. Sign up and get your first stock worth up to $225, free.

Open Account Robinhood Review

Other Ways to Get Bitcoin

Crypto Credit Cards

As cryptocurrency continues to go mainstream and the economy is incorporating crypto into daily spending and transactions — many people are now learning about easy ways to spend crypto.

This has brought about an upsurge in the number of available crypto credit cards, which offer cash back on spending and purchases, coupled with trading benefits and access to a variety of services at a discount.

If you are new to the crypto space and seeking to invest and earn passively while going about your daily business then these are the best cards to consider:

Best overall crypto credit card
An alternative crypto rewards card
Best overall crypto credit card
An alternative crypto rewards card

Crypto Savings Accounts

Why bother putting money in a traditional savings account? At a .75% interest rate, you might as well hide it under the mattress even with recent interest rate hikes. But a crypto savings account? You could earn a nice chunk of change fairly quickly. 

Of course, rates will vary, but it’s not unusual for crypto savings accounts to generate high yields between 4% to 8%. And they can go much higher. It’s your best chance to increase the overall return on your investment portfolio. 

But, before you go all-in with your BTC and ETH, you’ll want to have the information you need to make a good decision. It’s your hard-earned cash, after all. No one knows for sure what the demand will be next month, or tomorrow for that matter. And there are some inherent risks. 

Not just any old cryptocurrency account will do. We know you’ll want to be selective. That’s why we’ve rounded up the best of the best crypto exchanges. Here are our top three recommendations:

The Final Word

TradeStation Crypto is one of the easiest crypto exchanges to start with. You simply create an account and put your bank account or credit card information in. Once you do that, you can head over and purchase.

Our Pick
TradeStation Crypto
4.7

TradeStation is the top crypto destination to easily buy, sell, invest, trade, and earn cryptocurrencies. Open an account on an easy to use crypto trading platform.

Open Account

In the beginning, there will be a limit on how much you can buy which is a good security measure. When you purchase and get them all into your account, go ahead and send it to a wallet of your choice. Having a wallet makes you the bank of your own coins. bitcoin for dummies

I hope you liked my simple and easy-to-follow bitcoin for dummies guide. Now the real question is, will you invest in bitcoin?

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4.0
Promotion: free stock worth up to $225
Promotion: $20 sign up bonus
Promotion: $10 sign up bonus
Best for commission-free trades
4.5
Promotion: free stock worth up to $225
Best for automatic investing
5.0
Promotion: $20 sign up bonus
Best micro-investing app
4.0
Promotion: $10 sign up bonus

About the author

Brian Meiggs
Brian Meiggs
Brian Meiggs is a personal finance expert, and the founder of My Millennial Guide, a personal finance site helping you put more money in your pocket. He helps millennials follow the smart money in order to increase their earning potential and start building wealth for the future. He regularly writes about side hustles, investing, and general personal finance topics aimed to help anyone earn more, pay off debt, and reach financial freedom. He has been quoted as a top personal finance blogger in major publications including Yahoo! Finance, NASDAQ, Discover, MSN Money and more.

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genaconti.com

This is the perfect website for anybody who hopes to understand this topic.

You know a whole lot its almost hard to argue with you (not that I really will
need to?HaHa). You certainly put a fresh spin on a topic which
has been written about for ages. Wonderful stuff, just wonderful!

Mariam
Mariam

Have you heard that Bitcoin will be sold on Robinhood next month? Would you recommend using them?

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