How To Buy Bitcoin in 2023: 5 things you need to know
This post will cover five essential things you need to know to buy Bitcoin in 2023. Understand the basics of Bitcoin, how to set up a wallet, find a reputable bitcoin seller, and how to store and secure your Bitcoin. By the end of this post, you will be well on your way to executing your first Bitcoin order.
This blog post will teach you how to buy Bitcoin in 2023. We will cover Bitcoin’s basics and how to buy and safely store it.
1. Before You Buy: Learn Why Bitcoin Is Unique
Before buying bitcoin, cover your basics. Bitcoin is a decentralized digital currency that allows peer-to-peer transactions without needing a central authority. An individual or group using the pseudonym Satoshi Nakamoto created it in 2009. What makes it unique is that computers worldwide are powering it, recording transactions on a public ledger.
Overall, there are a couple of aspects that make Bitcoin unique:
- Bitcoin is decentralized. Bitcoin is a digital currency and enables peer-to-peer transactions without intermediaries such as banks. It’s unique compared to traditional currencies and assets, because no government or institution controls it.
- Bitcoin’s supply is limited. The maximum number of Bitcoin that can ever exist is 21 million, and as of now, around 18.7 million Bitcoins are in circulation. This scarcity is part of the reason why Bitcoin is often compared to gold, as both assets have a finite supply.
- Bitcoin’s price is volatile. The price in euro, dollars or swiss francs can fluctuate significantly quickly. This volatility can be both a blessing and a curse, as it can provide opportunities but also risks if the time horizon is too short.
- Bitcoin is secure. It uses public and private keys to protect transactions and assets. A shared database (aka ‘blockchain’) records transactions publicly, which makes it possible to track the movement of Bitcoin. Still, it protects the identity of the person making the transaction using private keys.
- Bitcoin offers financial freedom. Unlike traditional financial assets, Bitcoin offers privacy and total ownership if managed and used correctly. It allows people to conduct transactions without needing a bank account or government-issued ID.
Learn more about why Bitcoin is unique and different from other assets, including ‘crypto’ in our blog post ‘Bitcoin-Only Is The Signal, Crypto The Noise’.
2. The Easiest Way To Buy Bitcoin: Get The Relai App
Buying bitcoin is different everywhere. Some apps and services don’t offer you the complete package as Relai does. Why is that? By downloading the Relai app, you get a fully-fledged software wallet (more on that in the next step), that allows you to own the bitcoin you buy. It may sound a bit weird and complicated, but this part is essential: Only when you hold your keys to your wallet do you fully control it. We recommend that you learn more about the concept of ‘Not Your Keys, Not Your Bitcoin”.
3. Safety First: How To Store Bitcoin
To buy and hold Bitcoin, you will need a digital wallet. A Bitcoin wallet is a software program where you can store, send, and receive Bitcoin. Several types of wallets are available, including online wallets, software wallets, and hardware wallets.
- Online wallets, also known as hot or web wallets, are the easiest to set up and use. You require a device with an internet connection to use them. However, online wallets have a higher risk of hacking and security breaches.
- Software wallets can be downloaded and installed on your computer. They offer more security than online wallets. Note that your computer must be protected from malware and other security threats. By the way: The Relai app is a software wallet that runs on your smartphone.
- Hardware wallets are physical devices. They look like USB drives and are considered the most secure option for storing Bitcoin. Because they are not connected to the internet, hardware wallets provide an additional layer of security by requiring a pin or passphrase to access the funds.
Once you have chosen a wallet, keeping the private keys or seed phrases in a safe place is essential. These are the keys that allow you to access your Bitcoin, and losing them means losing access to your funds.
We highly recommend that you check out our blog post, ‘7 Security Tips For Bitcoin Investors’ which covers the importance of password managers, 2FA, and other methods to enhance your cyber security.
4. Why You Should Auto-Invest In Bitcoin
Auto-investing in Bitcoin can be a great way to grow your bitcoin holdings over time. It can help mitigate the Bitcoin market’s volatility by buying when the price is low and holding through periods of high volatility. One of the main benefits of auto-investing is that it allows you to add to your investment, regardless of market conditions, consistently.
Another advantage of auto-investing is that it helps you to avoid the emotional and psychological pitfalls of trading. When you set up automatic investments, you are less likely to make impulsive or emotional decisions based on short-term market fluctuations. By taking the emotion out of the process, you can focus on your long-term investment strategy and increase your chances of success.
Auto-investing also allows you to take advantage of dollar-cost averaging, which is a strategy that involves investing a fixed dollar amount at regular intervals. This strategy helps reduce the overall risk of investing by averaging the purchase price over time. By buying a fixed dollar amount of Bitcoin at regular intervals, you can take advantage of any short-term price fluctuations and avoid buying at a high price point.
Lastly, auto-investing can be very convenient; it helps you to set and forget it. It eliminates the need to actively monitor the market and make investment decisions, allowing you to focus on other things in your life. With auto-investing, you can easily set up a recurring investment plan and have peace of mind knowing that your portfolio is growing automatically.
Learn more about cost averaging and its benefits in our blog post, ‘Why Cost Averaging Is The Perfect Strategy For Bitcoin’.
5. Think Ahead And Don’t Forget About Taxes
As with any investment, it’s essential to consider the tax implications of buying and holding Bitcoin. In many countries, Bitcoin and other cryptocurrencies are treated as property for tax purposes. This means that you may be subject to capital gains tax when you sell or trade your Bitcoin.
When you sell or trade your Bitcoin, you’ll need to report any capital gains or losses on your tax return. Depending on your country, you can offset any capital losses against capital gains, which can help reduce your overall tax liability.
It’s also important to note that there may be other tax implications, such as income tax on any mining or staking rewards or sales tax on purchases made using Bitcoin.
Consult with a tax professional or accountant familiar with the tax laws in your country to ensure that you’re complying with all relevant tax regulations. It’s also a good idea to keep detailed records of all your Bitcoin transactions, including purchase and sale dates, amounts, and prices, to make it easier to calculate your capital gains and losses.
In conclusion, buying Bitcoin in 2023 can be a great way to add a novel, unique asset to your investment portfolio. However, it’s essential to understand the basics of Bitcoin and how to buy, store, and secure it properly. Remember always to do your own research and stay up to date with the latest trends and developments regarding your personal cyber security. By following the tips and information provided in this post, you will be well on your way to executing your first Bitcoin order and starting your journey as a Bitcoin investor with Relai.