Bitcoin is the original cryptocurrency that was developed to be decentralized digital cash. The purpose behind Bitcoin is to eliminate the need for intermediaries such as central banks or banks to facilitate transactions.
Bitcoin uses a peer-to-peer network where purchases are confirmed directly between different users.
Before you buy Bitcoin, you must know the following things:
- To buy Bitcoin, you will need a cryptocurrency exchange account.
- You may need to verify your identity and proof of residence if you use a centralized platform.
- You need a secure connection to the internet.
- You need a Bitcoin-compatible wallet.
- You will need a reliable method of payment to pay for your Bitcoin.
- You do not need to buy 1 BTC to own Bitcoin. Bitcoin is divisible into smaller units known as “Satoshi.”
- You may have to pay transaction fees to purchase Bitcoin.
- You must keep your Private Key and recovery seed phrases safe.
- If you lose your Private Key and/or recovery phrases, your funds will be lost, and you will never be able to retrieve it unless you have a backup.
- Online wallets and exchanges are frequently attacked, and your funds could be stolen if it is kept online.
- The price of Bitcoin is volatile, and it could go up/down very quickly and in great amounts.
- Bitcoin is taxable, and profits made from buying/selling Bitcoin are considered capital gains, which means that you must declare your gains for tax purposes.
- Buying Bitcoin from a cryptocurrency ATM requires that you provide your government-issued Identity Document to verify your information.
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Bitcoin can be bought through various ways, including the following:
- A Bitcoin Exchange, which is a digital marketplace where traders can either buy or sell Bitcoin using other digital currencies of fiat currencies such as US Dollars, Euro, and many more. The cryptocurrency exchange facilitates trade and acts as an intermediary between buyers and sellers.
- A Bitcoin ATM is a kiosk that is connected to the internet that allows buyers/sellers to purchase Bitcoin and some other major cryptocurrencies by depositing cash into the ATM.
In terms of buying methods, Bitcoin can be bought with bank accounts, debit cards, and credit cards. In addition, Bitcoin can be bought from ATMs, through Peer-to-Peer (P2P) Exchanges, and more.
1. Choose a Bitcoin Exchange Platform
A Bitcoin Exchange, also known as a cryptocurrency exchange trading platform, can be defined as a digital marketplace where users can buy and sell different cryptocurrencies, including Bitcoin.
Bitcoin can be bought using fiat currencies or by using alternative coins (Altcoins), which refer to all other coins except bitcoin. A Bitcoin exchange is an online platform that facilitates trade between different users.
Cryptocurrency exchanges are important because they allow users to buy, sell, and trade different cryptocurrencies. The process involved with choosing a Bitcoin Exchange Platform is important, and to choose the right one, users must evaluate the following components of the exchange:
- Technology and updates
- Legal Aspects
- Past Hacks
- Liquidity of the overall Exchange
- User Experience
- Customer Support options
- Education and training
- Payment Methods accepted
- Withdrawal process
The benefits of using a Bitcoin Exchange relate to the following:
- Bitcoin is decentralized that uses a decentralized database that cannot be manipulated.
- Bitcoin can be traded 24 hours a day, 7 days a week, and the market never closes.
- Bitcoin is deflationary and perfect for long-term investment through an exchange.
- Transactions on exchanges cannot be reversed, and payments are processed immediately and in real-time.
- Exchanges offer affiliate programs that allow users to earn extra income.
In terms of common mistakes, users often do the following when they buy Bitcoin from an exchange:
- Users buy Bitcoin just because the price is low. A lot of price does not always mean a bargain. It could indicate that there is a lowered demand because of factors such as news, influences from prominent figures, and others.
- Users often fall for scams that pose as a legitimate exchange. Users must do their research to validate an exchange before they use it.
- Never invest everything into only one asset, such as Bitcoin. The cryptocurrency market is volatile, and prices can rise and fall quickly. Keeping a diversified portfolio can mitigate the risks associated with volatility.
- Users often think that Bitcoin is ‘easy money, but it involves a lot of risks and can take some time to reap the benefits and profits.
- Users also fail to keep their private key and key recovery phrase safe, which results in a loss of all funds.
- Users start buying and trading Bitcoin without learning about it and understanding it first. It is easy to buy Bitcoin, but it is important to know how it works and what can affect the price.
- Users keep their funds in an online wallet, or they keep all their funds with the exchange. Users must keep an offline or hardware wallet where they keep most of their funds. Only small amounts should be kept in online wallets because these are a target for hackers.
Alternative methods for this step include some of the following:
- Meeting people in your area and exchanging cryptocurrencies locally through platforms such as Local Bitcoins.
- Using a Bitcoin ATM
- Buying Bitcoin through a broker, and many more.
In terms of the cryptocurrency exchanges that offer Bitcoin, these are some of the best:
- Binance, and many more.
Choosing a Bitcoin exchange is the best method to obtain Bitcoin at competitive prices. It is also the best option for traders who want to buy low and sell at a higher price, allowing them to make a generous profit.
2. Choose a Payment Option Buying Bitcoin
Once you have chosen a Bitcoin exchange that suits your unique needs and objectives, you can connect your exchange to a payment option.
If the Bitcoin exchange is more centralized, it will require that you provide extensive information on personal details, financial information, employment details, and trading experience.
There is also a “Know Your Customer” KYC process that must be completed where identity documents and proof of residence will be needed to verify your details.
More decentralized exchanges do not all require that a KYC process be completed, but this differs from one exchange to another. The information that will need to be provided will also depend on the region in which you live.
The next step involves connecting a payment option. Most major exchanges allow you to connect your bank account directly. Additionally, you can also use a debit card, credit card, or electronic payment methods such as PayPal.
However, some exchanges only allow you to pay in cryptocurrencies, which means that you will need to find one exchange that allows you to exchange fiat for crypto, such as Tether, and then another that allows you to purchase Bitcoin.
Every payment option can have certain payment processing fees in addition to transaction fees.
The benefit of this step is that it allows users to purchase Bitcoin in several ways. Common mistakes that users make when they get to this step include:
- Not researching the payment processing and transaction fees.
- Not researching how the exchange works and what payment options are provided.
- Falling for scams that pose as legitimate exchanges.
- Placing all funds in an online wallet or a native exchange wallet, both of which are susceptible to cyberattacks.
The second step is important because adding a payment option provides the ability to purchase Bitcoin, either directly using fiat currency or by using altcoins.
Alternative methods for placing an order include:
- Buying Bitcoin from a cryptocurrency ATM
- Buying Bitcoin through a broker
- Trading Bitcoin as a CFD instead of purchasing actual Bitcoin
The payment option that users choose will depend on personal preference. Credit and Debit cards are quick ways to buy Bitcoin, but the KYC process can be time-consuming, and bank account information can be susceptible to theft.
Credit and Debit cards can be used on more secure exchanges that do not keep client funds. The easiest payment option is to convert fiat to crypto and to purchase Bitcoin with cryptocurrency instead because it is faster and much cheaper than other payment options.
3. Follow the Bitcoin Prices and Analyze them.
Before purchasing Bitcoin, you must consult price charts, use fundamental analysis and technical analysis to gauge the price of Bitcoin. By performing a price analysis on Bitcoin, you can make an informed decision about your purchase.
Technical analysis involves using historical market data, including past price trends and trading volume, to obtain a clear picture of the market sentiment and to identify trends in price movement.
This can help you make a calculated forecast regarding when the market could be bearish or bullish. Bearish refers to a downward trend, and bullish refers to an upward trend.
Fundamental analysis involves viewing the larger picture by analyzing the intrinsic value of Bitcoin, what gauges its potential, the current strength of the community, and so on.
The benefit of this step is that you can determine when would be the right time to purchase Bitcoin. Common mistakes that users tend to make when they analyze the markets include:
- Only using one type of analysis, whether it is purely technical or fundamental. While this is not wrong, it only gives one side, and many metrics could be missed.
- Incorrect position sizing and not considering the driving factors behind the price of Bitcoin.
- Not keeping updated with news sources.
- Not using enough resources to decide and end up making uninformed decisions based on a guess.
- Trading at random without doing a thorough analysis.
This step is important to gain insight into why the price of Bitcoin rises or falls, when it can be expected to rise/fall, and when to enter or exit a trade. It helps you mitigate the risks involved with Bitcoin trading and helps maximize returns.
4. Perform a Bitcoin Order
Once you have chosen an exchange, connected a payment option, and carried out thorough price analysis, it is time to place an order.
Major cryptocurrency exchanges offer different types of purchase orders, including the following:
- Limit Orders allow users to set their minimum or maximum price at which they wish to buy or sell Bitcoin. If there is insufficient demand or supply for the order, you will automatically be matched with an existing orde5r instantaneously. The rule for the limit price is that it must be within 15% of the market price, or it will be rejected.
- Market orders refer to an immediate-or-cancel order where you can buy or sell Bitcoin at best possible market price.
- Stop-Loss Limit/Market Order – This is an order that is seen as a risk management tool where you can limit your losses. When you open a position to buy Bitcoin, you set your limit and stop price at which your order will be filled when it reaches a certain price, in addition to closing the order if it falls below a certain price.
- Stop-Loss Market/Limit Order – This order allows you to set your ideal profit level at which the order will close.
- Bracket orders allow you to place three different orders, one to open a position and two orders for take-profit and stop-loss.
The benefit of using orders ensures that you can mitigate the risks involved with price volatility. Common mistakes that are made when using orders include:
- Using leverage incorrectly (if the exchange offers this)
- Incorrect position sizing
- Not using stop-loss or take-profit orders.
- Placing stop-loss and take-profit orders too far from/too close to support and resistance lines, the entry price, or other areas on the chart where they will not be effective.
- Not using education on the basics of Bitcoin trading before entering a live market.
- Not using a demo account to practice trading.
- Not using a solid trading plan or trading strategy.
- Trading without knowledge of trading psychology and not eliminating emotions.
A market order is the best option when you want to buy or sell Bitcoin immediately, avoid missing a profitable opportunity, or cut losses immediately.
Limit orders are the best for passive trading, while both stop-loss and take-profit orders are necessary for every trade.
5. Store Bitcoin Safely
Bitcoin is a digital currency that requires a specific type of software to be stored, namely a digital wallet that is compatible with Bitcoin. This wallet has a private key that acts as a password or PIN and a public key, which is the address or account number.
Each Bitcoin wallet also has a seed phrase that must be safeguarded and used when you forget your private key, allowing you to recover your account.
There are several types of wallets, namely hot and cold wallets, hardware wallets, paper wallets, and so on.
Common mistakes for this step include:
- Only using a hot or online wallet
- Forgetting the private key or not keeping it safe enough.
- Forgetting the seed phrase.
- Keeping too much capital in an online wallet or trusting an exchange to take care of funds.
- Using unverified wallets or wallets from unknown sources.
- Not using enough security features to secure the wallet.
Hardware and offline wallets are the best options overall, while hot and other wallets are best for small transactions and payments.
How to understand which Bitcoin Storage is safer
A Bitcoin wallet is a piece of software where the necessary data is stored to access Bitcoin funds. This data contains a private key, which is like a password, and a wallet address, also known as a public key, which acts as an account number would.
In terms of the types of Bitcoin wallets, users can distinguish between the following:
- Cold Wallets – which are offline wallets that store funds in an application that is not connected to the internet.
- Hot Wallets, which are online applications that require an internet connection.
- Physical wallets are unique pieces of hardware like USB devices that keep crypto funds offline.
- Web wallets are web browser ad-on wallets.
- Desktop wallets – which are applications that allow users to manage their finds on macOS, Microsoft Windows, or Linux.
- Paper wallets which is a piece of paper with a code or QR code on them. To access the assets, the user enters the key or scans the code to access their account.
The best Bitcoin wallets are:
- Ledger Nano X
1. Ledger Nano X
This is the best hardware wallet for Bitcoin and several other cryptocurrencies, and it is compatible with most software wallets.
Ledger Nano X supports a wide range of coins and features Bluetooth low energy connectivity, manual transaction verification, and the best security options.
Electrum is one of the oldest, most trusted cryptocurrency wallets that supports Bitcoin. Electrum has several security features that others do not have, including two-factor authentication, multi-signature support, and more.
Electrum can be integrated with most hardware wallets, and it has customizable transaction fees.
Exodus is the best Bitcoin wallet for desktop computers because of its fast transaction speeds, user-friendliness, and range of features. Exodus supports many other cryptocurrencies, and it has customizable transaction fees.
Apps for charting, staking, and crypto deposits are also offered by the wallet, and it runs on a light client, which means that it does not need to download entire blockchains, which speeds up transactions.
This is the best mobile wallet that can be used to store Bitcoin. The security and transaction options are the main drawing factors of the app. The app is reproducible, which means that the code can be duplicated and compared to the original code.
This identifies any potential issues and ensures that users are safe. Mycelium has customizable transaction fees and several different user accounts.
Coinbase is the best wallet for beginners, and it can connect to the user's bank account. Coinbase also allows for cryptocurrency trading, and the user's private key is not kept on the exchange's servers, ensuring that it is safe during a cyber-attack.
Coinbase is easy to navigate and has a simple layout that makes it easy for beginners to use. There are also optional back-ups to protect keys and robust security features.
What are the ways of buying Bitcoin?
You can purchase Bitcoin in the following ways:
- Debit Cards
- Bank Account
- Credit Card
- P2P Exchanges
Users are offered several different payment methods when it comes to buying/selling Bitcoin. Each payment option is unique towards the needs and objectives of different users, and it also depends on their country of residence.
The best option for beginners is using either a credit/card or a bank account to purchase Bitcoin for the first time. While debit and credit cards can be used around the world, they are not as favourable because of the fees involved.
Bank Accounts can be used around the world, but there may be processing fees as well as conversion fees charged. When using a bank account, users are urged to use a local crypto exchange in their country if they try to eliminate currency conversion fees.
ATMs are based in most major cities across the world, and P2P Exchanges offer services to most users around the world.
1. Buying Bitcoin with Debit Cards
Debit Cards are bank cards that can be used to purchase goods and pay for services. It is also a way to purchase Bitcoin through certain exchanges such as Coinbase, Coinmama, Coingate, and several others that allow for debit card purchases.
Any exchange that accepts credit cards will also accept debit cards as a rule.
The advantages of buying Bitcoin with a debit card are:
- Transactions are instantaneous
- Transactions are secure
The disadvantages of buying Bitcoin with a debit card are:
- Higher processing fees are charged on debit cards than other payment options.
- Debit card information can be obtained when hackers attack a cryptocurrency exchange.
In terms of legal issues, exchanges that accept payment in debit cards will require that users complete a KYC procedure as part of anti-money laundering procedures.
Buying with a debit card is safe if you use a legitimate cryptocurrency exchange that uses SSL technology to encrypt client data and information.
2. Buying Bitcoin with Bank Accounts
To get the cheapest exchange rates, you can easily buy Bitcoin through different bank account transfers on exchanges such as Cex.io, Luno, Kraken, Coinmama, eToro, and many others.
To buy Bitcoin with a bank account, users must register with the exchange or broker and create a trading account. Depending on the broker or exchange, this entails completing a KYC process where the user can be verified.
Once completed, the user can place their Bitcoin order and choose SEPA, SWIFT, or several other bank transfer options.
The advantages of buying Bitcoin with a Bank Account are:
- It is a reliable and secure way to purchase Bitcoin
- The exchange can be assured that there are no chargebacks
- The fees are much lower than with a credit/debit card
The disadvantages of buying Bitcoin with a Bank Account are:
- Transaction processing time is longer than other payment options, between 24 hours up to several days.
- Bank Accounts are not an anonymous way to purchase Bitcoin, and transactions can be traced.
In terms of legal issues, to buy Bitcoin with a Bank Account, users must have a verified trading account with an exchange or a broker where they must complete the KYC process as part of AML policies.
Bank Accounts are one of the safest options to purchase Bitcoin alongside credit or debit cards, given that the user makes use of a legitimate and verified exchange and regulated broker.
The cryptocurrency market is mostly unregulated, which means that traders and investors may not find the support they need if they run into issues with an exchange or a broker.
3. Buying Bitcoin with Credit Cards
The process involved with buying Bitcoin with a credit card is the same as buying Bitcoin through debit cards or bank accounts. The user must surrender their credit card information on the exchange or broker's payment portal and authorize the transaction.
Some exchanges or platforms may require a copy of the front of the credit card to verify that the card is registered to the user. Credit cards are not the best way to purchase Bitcoin for several reasons that are covered under disadvantages.
The advantage of using credit cards to purchase Bitcoin is that transactions are instant.
The disadvantages of using credit cards to purchase Bitcoin relate to:
- Security issues
- Not all exchanges support the use of credit cards for purchases because of the processing fees and the risk of fraud.
- Credit card purchases are extremely expensive.
Legal issues faced with buying Bitcoin through credit cards relate to security issues and the chances that fraud may occur. Credit cards are not the most effective, cheapest, or safest way to purchase Bitcoin.
4. Buying Bitcoin with Paypal
Buying Bitcoin through Paypal is another popular option, and there are two distinct ways to make a purchase:
- Through a verified Paypal account that is connected to an alternative payment option such as a bank account or a debit card.
- By using the balance of the Paypal account to purchase Bitcoin through third parties such as Bitcoin exchanges and brokers.
The advantages of using Paypal to purchase Bitcoin relate to:
- It is one of the safest ways to purchase Bitcoin.
- Transactions are fast and cheaper, depending on the dollar amount of the purchase.
- When purchasing from Paypal, the money is taken off the cryptocurrency spread or the difference between the exchange rate between the US dollar and the coin, or the market price of Bitcoin.
Disadvantages of using Paypal to purchase Bitcoin relate to:
- Users cannot transfer the cryptocurrency outside the Paypal platform. If you buy Bitcoin through Paypal, you can only transact from the Paypal account, and the funds cannot be transferred to a crypto wallet or another wallet.
- Only a few exchanges and brokers offer the use of Paypal for Bitcoin purchases.
In terms of legal issues, when buying Bitcoin with Paypal, the user must register for an account and provide information and valid documentation to verify their identity before they can transact.
5. Buying Bitcoin from ATMs
A Bitcoin ATM is a kiosk where users can purchase Bitcoin and other cryptocurrencies by depositing fiat currency into the machine, which is then transferred to an online wallet.
The advantages of Bitcoin ATMs are:
- Transactions are instant
- Bitcoin ATMs can be found around the world in most major cities
- Bitcoin ATMs are secure
The disadvantages of Bitcoin ATMs relate to:
- ATMs are extremely expensive because there is a purchase fee as well as a conversion fee that is charged.
- Like all other ATMs, there may be some security issues with theft.
6. Buying Bitcoin via P2P Exchange
P2P Exchanges are cryptocurrency exchange trading platforms where users can transact directly, such as LocalBitcoins. On these exchanges, users can advertise that they have cryptocurrency for sale using a predetermined price and payment method.
Users can then browse through different listings and choose the user that they want to interact with. The exchange facilitates some parts of the trade and ensures that both parties are safe and that trading is fair.
Advantages of P2P Exchanges include:
- Users are verified, and there are strict protocols in place to ensure that all users are safe and that transactions are fair.
- Many of these exchanges have ratings, allowing users to gauge potential partners before they transact.
Disadvantages of P2P Exchanges include:
- They do not offer the same anonymity as decentralized exchanges
- There are still malicious entities that exploit vulnerabilities in these exchanges
In terms of legal issues, these P2P Exchanges are not always regulated, and malicious activity is not eliminated. There are strict verification processes involved with many exchanges to ensure a safe, fair, transparent trading environment.
What are the necessities for buying bitcoin?
Before buying Bitcoin, the following is necessary:
- A Bitcoin compatible wallet
- Connection to a Bitcoin exchange or a broker that offers Bitcoin
- Completing registration and passing the security checks, which need identity documentation (Driver's license, passport, government ID, and so on, as well as proof of residence such as a utility bill or credit card statement that is not older than 3 months).
- A valid payment method, either a debit or credit card, Paypal account, bank account, or so on.
Bitcoin can be purchased in countries around the world, with the necessities unchanged. The necessities to buy Bitcoin will change according to the Bitcoin provider's discretion instead of being bound by country.
However, it should be noted that Bitcoin cannot be purchased in these countries:
- North Macedonia and several others.
Is there an age limit for buying Bitcoin?
No, there is no age limit for buying Bitcoin.
However, cryptocurrency providers such as exchanges and brokers require that users be 18 years or older. This can be proven by exchanges that require a valid copy of the user's identity document.
The reason for age restrictions refers to the fact that there are significant risks involved with cryptocurrencies, with many underage users unable to make informed decisions regarding the purchase/sale of Bitcoin, which can lead to significant losses.
What are the best cryptocurrency platforms to buy Bitcoin?
The best cryptocurrency platform where Bitcoin can be bought include:
eToro is a well-regulated broker and social trading platform with over 13 million users worldwide. eToro is well-regulated and offers powerful trading platforms.
eToro offers an innovative CopyTrade feature, and there are over 18 cryptocurrencies that can be bought, sold, and traded. Fees are charged through the spreads, and users have access to a native eToro wallet.
Coinmama is one of the best online Bitcoin exchanges that offer the instant purchase of Bitcoin. Coinmama also makes selling Bitcoin easy, and funds are not kept by the exchange.
The Coinmama interface is user-friendly and ideal for beginner traders and investors.
Binance is one of the largest exchanges in the world that offers over 100 trading pairs. Binance dominates the overall global exchange space according to trading volume.
Binance offers advanced charting capabilities and a wide range of features and tools that can be used in a competitive crypto market.
Bisq is a downloadable application and a P2P exchange that can be accessed by anyone without having to go through a KYC process. Bisq offers several different cryptocurrencies, and the user's funds are not kept on the exchange.
Coinbase is another large cryptocurrency exchange that offers Bitcoin trading. Coinbase offers crypto investing, a robust and powerful trading platform, custodial accounts, and digital wallets where users can keep their Bitcoin funds.
Coinbase is user-friendly, and it can be accessed through multiple devices. Coinbase has an impressive portfolio of coins, with new coins being added frequently.
Do Forex Traders sell Bitcoin?
Yes, forex traders sell Bitcoin.
- Forex Traders buy Bitcoin at a lower price only to sell it once the price peaks, either long-term or within a trading day.
- Forex Traders buy Bitcoin and hold their coins until the value has risen, after which they sell their Bitcoin to make profits.
- Forex Traders use algorithmic trading strategies to buy Bitcoin at the most ideal time and sell it automatically according to certain technical indicators.
What are the Buying Methods for Bitcoin?
Bitcoin can be bought using the following different methods:
- A PayPal Account
- Credit/Debit Cards
- Bank Account
- Bitcoin ATM
- P2P Exchanges
When users trade Bitcoin, there are several different orders that they can use when they buy Bitcoin through exchanges and brokers. These follow certain buying/selling strategies, and they relate to:
- Limit Buying
- Leverage Buying
- Market Orders
- Take Profit Order
1. Stop-Loss for Bitcoin Buying
- A Stop-Loss Limit order requires that the trader provide a stop price and a limit price. The stop price is the market price where the limit order will be executed, while the limit price is the worst price at which the order can be executed.
- A Stop-Loss Market order allows traders to limit their losses because it represents a certain price at which the stop order will execute, and a market order will be submitted.
A stop-loss is considered one of the most effective risk management tools that can be used in both buying/selling. It can easily be used by beginners and professionals.
This order is only risky when users do not know how to use them or where to place them so that they can be effective. They are risky when they are placed too high/low, depending on the position.
2. Limit Buying for Bitcoin
A limit order lets the trader set the minimum and/or maximum price at which they want to buy or sell.
Limit orders are recommended to users to practice control of the worst price at which an order could be matched. Limit orders can be risky if users do not know how or when to use them.
Beginners can use limit orders if they have a fundamental understanding of trading.
3. Leverage Buying for Bitcoin
Certain brokers and exchanges allow users to apply a certain level of leverage to their trade, which allows them to open larger positions. This can increase the potential for gain, but it also increases the risk of loss.
The risk involved with buying Bitcoin using leverage is that the user can clear their entire account because the risks are maximized. If there is no negative balance protection on the account, the user can even go into a significant negative account balance.
Leverage is not recommended for beginners until they have gained a fundamental understanding of how it works, what the risks are, and how these risks can be mitigated.
4. Market Orders
This is an immediate open/close order where traders can buy or sell Bitcoin at the best available price as it is currently.
The risks involved with this order relate to the order not being filled by the provider. Some exchanges and brokers can only fill a certain portion of the order, which means that the rest will be canceled.
Market orders are quick and the best option for beginners to start with. However, beginners are urged to practice their trading strategies using a demo account before they use a market order in the live market.
5. Take-Profit Orders
- Take-Profit Market orders can be used to set a target profit price to close an open position. Once the trigger price is reached, the order is triggered, and a market order is placed to close the position immediately.
- A Take-Profit Limit order performs the same function as the market order, but it provides the trader with the chance to give two separate target prices, namely a trigger and limit price. The limit price is the worst price at which an order can be filled, while the trigger price is the optimal profit level that, once reached, will place a limit order for closure of the position.
What are the alternatives to Bitcoin?
While Bitcoin remains the King of Cryptocurrencies, the following coins are considered viable alternatives:
- Litecoin (LTC)
- Dogecoin (DOGE)
- Binance Coin (BNB)
- Tether (USDT)
- XRP (XRP)
1. Litecoin (LTC)
Litecoin is based on Bitcoin, and it is often considered as the “Silver to Bitcoin's Gold.” Litecoin is an open-source global payment network that is decentralized and uses Scrypt as its consensus method.
Litecoin is like Bitcoin, but it has faster transaction speeds and lower transaction fees. Litecoin can be used as a medium of exchange, and it is being accepted by more merchants today.
2. Dogecoin (DOGE)
Dogecoin was initially developed as a joke, but it gained a significant following and support from prominent individuals such as Elon Musk. Dogecoin is a medium of exchange that can be used across different social platforms, including Reddit and Twitch.
Dogecoin has faster block times and uses the same Scrypt consensus mechanism as Litecoin.
3. Binance Coin (BNB)
Binance Coin is an ERC-20 token that can be used to pay for transaction fees on the Binance exchange. Users who pay their transaction fees using BNB get discounts, and it is one of the most popular coins seeing high levels of popularity because of its globally recognized exchange.
4. Tether (USDT)
Tether is the first stablecoin that was created, and it is pegged in a 1:1 ratio against the United States Dollar, meaning that for every Tether in circulation, there is $1 in reserve.
Tether is used to trade on exchanges and to purchase cryptocurrencies. Tether is known for making transfers of value from fiat to crypto and crypto to fiat easier.
5. XRP (XRP)
XRP was developed by Ripple as a means of payment settlement, a money transfer system, and currency exchange. XRP is a popular cryptocurrency that is seeing worldwide acceptance as a medium of exchange.
Unlike Ethereum and Bitcoin, XRP cannot be mined, and the transaction times are faster, with extremely low transaction fees.
Can Ethereum replace Bitcoin?
Yes, Ethereum can eventually overtake Bitcoin because it is more useful, and it has several technological advances.
Ethereum can become the most bought cryptocurrency as its features and functions continue to increase.
The risks involved with buying either Ethereum or Bitcoin are the same as with any other cryptocurrency. However, each of these coins has its own inherent risks, and the major risks involved with Ethereum and Bitcoin are:
- Regulation is still a problem involved with cryptocurrencies overall. If cryptocurrency becomes regulated, it will make exchanges centralized, and it will require that these exchanges collect information necessary for KYC.
- Technology refers to the risk that there could be vulnerabilities in the code of these projects. As Ethereum moves from a Proof-of-Work (PoW) blockchain to Proof-of-Stake (PoS), it can change how transactions and decentralized applications (DApps) are secured on Ethereum's blockchain because PoS is experimental. In addition, while both operate on PoW, there is always the inherent risk of a 51% attack.
- Competition refers to the fact that there are more than 13,000 other cryptocurrencies/Altcoins, and more are emerging daily. The threat of a new competitor replacing Ethereum and Bitcoin is possible, but not likely because of the size of these projects, widespread adoption, popularity, market capitalization, and trading volume.
How to sell Bitcoin
The process involved with selling Bitcoin is the opposite of purchasing/buying because it involves converting Bitcoin into fiat currency or other cryptocurrencies.
The same processes that are used when purchasing Bitcoin can be used to sell Bitcoin, including Bank Accounts, Credit/Debit Cards, Paypal, and so on.
Bitcoin can be sold through a Bitcoin Exchange, a P2P Exchange, Face-to-Face transactions, Bitcoin ATMs (using a QR code to transfer funds to a wallet or bank account instead of giving physical paper money).
In addition, a consideration when selling Bitcoin is that profits and earnings made from the sale can be subject to capital gains tax, depending on the region where the user lives.
In terms of knowing what the ideal time would be to sell Bitcoin, the following can be considered:
- Selling Bitcoin when a personal profit target or target price has been reached.
- Selling Bitcoin according to technical indicators that signal the perfect time to exit – especially before the price starts decreasing.
- Selling Bitcoin according to indications from stock chart patterns. This relates to price volatility that forms repetitive patterns indicated by trend lines. When a change in trend, or a reversal pattern, is sensed, the user can exit their trade and sell their Bitcoin before the break-out occurs and the price reverses.
- Selling Bitcoin according to harmonic patterns by using Fibonacci ratios and geometric price patterns. These can also be used to forecast future price movements in Bitcoin, providing the user with their next best entry price.
- Selling Bitcoin according to price history, especially since the crypto inherently remains in a downtrend or an uptrend for certain months of the year. This is not a guaranteed selling indicator, but it can provide the user with an idea of the best time to exit before the price of Bitcoin drops sharply.
- Selling Bitcoin based on fundamental information, especially when influential people such as Elon Musk no longer back it.