What to know before you buy Bitcoin
Why you need a Bitcoin wallet or crypto exchange
- Paper wallets: A paper wallet stores your passwords on paper, or some other physical medium. Then it’s up to you to store this in a safe place. This method is harder for someone to steal your access information, however, it can easily be lost or misplaced.
- Hardware wallets: This wallet uses a physical device to store your password keys, usually a thumb drive. You can easily carry it around with you or keep it on your person at all times, but like a paper wallet, it can get misplaced or lost.
- Online wallets: Also referred to as hot wallets, these wallets are online or app-based and store your password information digitally so you can send, receive, and use your cryptocurrency. A hot wallet relies on the internet to function, versus a cold wallet that does not need the internet.
Where to buy Bitcoin
What can I do once I purchase Bitcoin?
- Hold or store it: You can either hold your Bitcoin in the account where you purchased it from, or a more secure method is to store it in your digital wallet. If you are holding it, it's because it's an investment, much like buying into the stock exchange.
- Sell it: If you think you want to sell Bitcoin, you should confirm if the account where you purchased it from also allows you to sell it.
- Convert it: Some accounts, such as Coinbase, allow you to convert a portion of your Bitcoin to another form of crypto.
- Transfer it: Bitcoin can be transferred to someone else virtually.
- Spend it: There are several places now accepting Bitcoin, which means you can spend it the way you would with paper currency. You can buy gift cards, travel, and many other items through retailers accepting Bitcoin.
- Donate it: There are online charities that allow you to donate your BTC.
Pros and cons if you choose to purchase Bitcoin
- Potential to make money
- May help you diversify your portfolio
- Transactions are immediate
- Transactions are anonymous
- Potential to lose money
- No regulatory oversight of your purchase
- Risk of cyberhacking your Bitcoin
- No refund once a transaction has occurred
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