This post breaks down Bitcoin – what it is and how can you buy some. Also, a side note – this post was written by my husband, Michael, aka the one who loves reading the Financial Times.
First, what is it? Bitcoin is a global currency based on blockchain technology. A blockchain is a virtually unhackable digital ledger that records transactions and amounts. The Bitcoin currency uses this technology as a foundation for a system of money that is tied neither to a central government nor an underlying precious metal like gold.
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The price of Bitcoin went up wildly in 2017 to nearly $20,000 before dropping. Now, the most valuable and highest visibility cryptocurrency is back in the news. Some investors think the price will rise again, driving the price back up from lows in recent years.
It’s important to note we’re not financial experts. And the price of things like currencies can fluctuate wildly. We are not making any financial recommendations, but as digital natives we wanted to buy a little Bitcoin to see how it works.
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Here’s how to buy Bitcoin:
There are many different cryptocurrencies, but we looked into Bitcoin as it is the most valuable and the best known.
Step 1: Creating a digital “wallet”
The first step to buying a cryptocurrency like Bitcoin is signing up for a digital “wallet.” This is the equivalent of your online bank account. Once you’re setup, you can buy and sell different currencies depending on which service you use. In our case, we used Coinbase as they are a reputable company within the sector and have been established for a while. They allow one to buy and sell many cryptocurrencies like Bitcoin, Etherium, XRP, etc.
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Step 2: Transferring money into your digital wallet
You can transfer money into your new online account in three different ways. You either have the option of directly linking an existing bank account, transfering money using a debit card or making a wire transfer into your new account. Each method has its advantages and disadvantages, but you may need to pay a fee for making a wire transfer or be limited in how much you can buy through a debit card.
Step 3: Buying Bitcoin
Once you have transferred some currency into your account (we used U.S. dollars), you can then buy and sell Bitcoins. Even though a single Bitcoin is currently worth several thousand dollars, you are able to buy fractions of a Bitcoin.
That’s it! That’s how to buy Bitcoin and own a piece of digital money.