Bitcoin for Dummies: A Beginners Guide to Your First Bitcoin Investment

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What the heck is happening with Bitcoin's insane record run? How can you get in on the action?

Cryptocurrency has been dominating headlines in recent months, with Bitcoin topping $28K for the 1st time, accompanied by seemingly thousands of articles proclaiming it to be a financial revolution or nothing more than a short-lived fad.

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.


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Bitcoin for Dummies: What is Bitcoin?

best bitcoin exchanges

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 of 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

  • 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. 

How to Buy Bitcoin

cryptocurrency 101

Coinbase: The biggest and most well-known exchange is Coinbase. Started and lead by Brian Armstrong, Coinbase has over 56 million customers served in over 32 countries. Coinbase supports 25 cryptocurrencies recently which are Bitcoin, Ethereum, and Litecoin. It is for the best to keep it at a minimum because these 3 coins have the best future value.

At a glanceGo
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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.

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NoFiat App: NoFiat is an app to increase mass adoption in cryptocurrencies. Many people are holding their Bitcoins, scared to spend it. In order for more people to get into it and have vendors accept it, people need to spend it. NoFiat is a directory with a list of vendors that accept cryptocurrencies. However, it has an interesting aspect to it where you can price out the different prices that exchanges are selling or buying Bitcoins at. Exchanges work off fees and price arbitrage so every exchange will have different prices. Using this app can help you find where you can buy Bitcoin at the lowest price.

LocalBitcoins: Another great way to purchase your Bitcoins is through a website, LocalBitcoins. You can find someone close to you who is willing to sell their coins. Contact them and you can negotiate price. It is the best way to purchase it in person.

Related: The Best Bitcoin Exchanges In the United States

Steps to Purchasing Bitcoin

Image source: bitemycoin.com

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 from.

Coinbase is the easiest 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. 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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About the author

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 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.

2 COMMENTS

  1. 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!

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