In this article we provide all the essential information that you absolutely need to know in order to start investing in Bitcoin.
We initially present the cryptocurrency and explain what it is used for, and then move on to the exchange platforms where it is possible to buy and sell it.
It is important to remember that investing in Bitcoin, or in the crypto market in general, is a very risky activity and not everyone should consider exposing themselves financially in this sector, especially if their financial situation and lifestyle do not allow it.
Let’s see everything in detail below.
What is Bitcoin and what is it used for?
Bitcoin is a cryptocurrency, which is a digital cryptographic currency that operates on blockchain, born from an invention by Satoshi Nakamoto, an anonymous user (or group of individuals) who in 2008 published the whitepaper of the project on an online forum.
Several experts in computer science and finance embraced Satoshi’s idea and began developing the Bitcoin protocol, officially launching it in January 2009.
From that moment on, the Bitcoin standard became increasingly popular worldwide, and the cryptocurrency gained more and more value as new buyers emerged.
Starting from a very low exchange rate in which 1309 BTC could be purchased for every dollar, today things have slightly changed: at the time of writing this article, each BTC has a value of 66,600 dollars.
Its price has grown so much since 2009 that it has been elected as the best performing asset in 8 of the last 11 years.
Anyway, the speculative component of Bitcoin is not the most interesting part of the cryptocurrency. Many of you may be wondering what Bitcoin is really for and why there are so many people willing to spend tens of thousands of dollars to buy a virtual, intangible object whose value can fluctuate greatly from one moment to the next.
Bitcoin before being an investment option, represents something extremely rare: it is the first scarce digital asset that is spendable but cannot be duplicated ever existed in the history of humanity.
When we think of a file that lives in any online archive, we are talking about an asset that can be duplicated, sent multiple times (and not spent), whose value will always be very low precisely because it can be copied infinitely.
Bitcoin instead is a scarce asset: there will be a maximum of 21 million (currently there are 19.69 million) and it cannot be spent twice in different transactions.
Bitcoin represents an alternative currency to traditional fiat currencies, capable of storing value and being spent in P2P for goods and services, without the need for an intermediary such as a bank.
Bitcoin is the digital essence of freedom, expressed in all its splendor, in which financial independence takes on an exclusive connotation compared to the classic conceptions where free means being rich.
By using Bitcoin, regardless of whether we are rich or not, we are free to exchange value with any other person in the world who accepts our same standard, without any central entity needing to have any supervision over the transaction itself.
If you are approaching Bitcoin to get rich quickly, it’s better to forget about it.
If instead you are approaching Bitcoin to discover a revolutionary technology that could change the fate of global finance, and you want to protect your savings in the long term, you are in the right place.
How to start investing in Bitcoin? Choose the ideal platform
To start investing in Bitcoin, the first step is to choose the exchange where we will make the purchase of the cryptocurrency.
If you are a beginner, it is essential to choose a simple and easy-to-use platform, with a user-friendly interface and possibly registered in the Italian financial operators register (OAM) if you want to operate with a regulated broker.
Among the exchanges that fall into this category we find Bitget, Binance, Gemini, Coinbase, Trading212, Trade Republic and Young Platform.
Bitget represents the right compromise if you are approaching your first investments in Bitcoin and crypto, and you want to take advantage of an economical service with competitive transaction fees, various initiatives, and exclusive features at the same time.
To register, simply go to the official website through this link and create a new account with email and password. To better protect the Bitcoin funds we will be purchasing, it is recommended to activate 2FA verification for access (Google Authenticator).
At this point, you will need to recharge your account by depositing crypto from other platforms if you already own cryptocurrencies or by depositing euros.
You can deposit via bank transfer or credit/debit card (0 commission). SEPA transfers take on average 2 working days while purchases with a card are instant.
With the amount in euros successfully deposited in the account to complete the purchase in Bitcoin, you will need to go to the “markets” section, select the “BTC/EUR” option in the search bar, select “trade“, then “buy“, set the order with the type “market” and the amount we want to exchange and finally click on “buy BTC“
Alternatively, you can simplify everything by going back to the deposits section and clicking on “fiat conversion“: here we can convert our euros to Bitcoin with a higher commission fee with a simple click.
Once the purchase is finalized, you will have finally bought your first Bitcoins and you will have been “baptized” in this digital world.
Remember that if Bitcoin means freedom, as we said in the previous paragraph, it is not only used on centralized exchanges like the ones we mentioned earlier: in fact, there are also private digital wallets, technically defined as non-custodial, and markets where you can exchange your cryptocurrencies in a P2P manner.
The transition to this type of platforms requires a study of this fascinating but at the same time complex sector, and understanding the key concepts that underlie this digital revolution.
Non-custodial operability, in fact, while on one hand can guarantee pseudo-anonymity and complete autonomy in managing our cryptographic finances, on the other hand it is extremely dangerous and harmful to use without the necessary previous knowledge.
We do not speak excessively difficult to understand but still require a minimal study on the foundations of finance and on how cryptocurrencies and blockchain work.
All the risks of investing in cryptocurrencies
Before starting to invest in Bitcoin, it is essential to be aware of the risks you are facing.
Bitcoin is a very volatile currency, whose value changes very quickly even just a few days apart, so it is necessary to understand that if the money I am investing could be needed soon, maybe it is better to avoid exposing myself to crypto.
Never invest what you are not willing to lose and what you need to cover daily expenses (rent, bills, various installments, etc.): a famous “rule” in the world of finance more or less shared by any experienced investor.
Once I have established how much capital I can dedicate to investments in general (each financial situation is unique), I will need to understand what type of asset allocation to choose based on my risk exposure.
Without going into too much detail, the goal is to find an ideal breakdown between 4 macro-categories: bonds, liquidity (savings accounts, current accounts, cash), stocks, and crypto.
The first two identify a trend of investment with low risk and a focus on capital preservation, while the second two are decidedly riskier but offer potentially much higher returns.
Without prejudice to the fact that the examples reported here are not to be taken as financial advice, let’s see 3 different scenarios:
- EXPOSURE TO HIGH RISK: 90% stocks, 10% crypto
- EXPOSURE TO AVERAGE RISK: 50% stocks, 35% bonds, 10% cash, 5% crypto
- LOW RISK EXPOSURE: 80% bonds, 10% liquidity, 10% stocks
The concept of asset allocation is further taken up within the crypto sector, where it is necessary to choose the most suitable type of portfolio for our goals and our exposure to risk (already medium-high if investing in this sector).
The challenge is to balance the amount of Bitcoin in the wallet along with Ethereum, and other altcoins (we do not consider stablecoins as liquidity to avoid complicating things too much).
We report as just done above, an example for illustrative purposes of 4 asset allocations in the crypto sector:
- DEGEN: 50% eth, 50% altcoin
- HIGH RISK: 50% btc, 25% eth, 25% altcoin
- MEDIUM RISK: 70% btc, 20% eth, 10% altcoin.
- LOW RISK: 80% btc, 17% eth, 3% altcoin. OR 100% BTC
Finally, we remind you that if you are thinking of investing in Bitcoin, in addition to the risks of market volatility and the potential impact of price fluctuations on our wealth, it is important to understand that you are operating in an unregulated market.
Bitcoin, unlike bonds and deposits that are guaranteed (up to 100k in the current account) by the State, is not guaranteed by any financial entity.
If for any reason you were to be hacked, no one will give us back our investment. Before taking a step into this dangerous but at the same time fascinating world, it is advisable to thoroughly study the functioning of this sector and understand how to avoid all the dangers involved.