Common Questions to Ask Before Purchasing Bitcoin in 2024

February 18, 2024 By Nancy William No Comments 5 minutes

Do you want to buy Bitcoin but need clarification on the move? Here are vital questions to ask before purchasing Bitcoin in 2024.

Common Questions Before Purchasing Bitcoin

Currently, the world has many cryptocurrencies. While some, like Ethereum, are decentralized like Bitcoin, they have yet to beat the pioneer cryptocurrency in popularity, value, and market capitalization. Others, like the digital Yuan and Shiba INU, which you can buy at the Immediate Definity 360, are centralized, meaning the government controls them. Therefore, Bitcoin remains a prominent cryptocurrency that many people want to own.

Bitcoin is undoubtedly the ruler of the crypto world. Bitcoin, or BTC for short, kickstarted the whole crypto phase in 2009 with Satoshi Nakamoto’s revolutionary paper on P2P currency solutions. If you’re thinking of buying Bitcoin, there are a few questions that you need to ask yourself.

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Why Should You Buy Bitcoin?

You must have a clear reason for buying Bitcoin. Avoid investing based on opinions and popularity because when the market sentiment turns red, you will lose your investment to fear. If you have a clear reason and goals, you won’t be fazed by the trivialities.

For example, some people buy Bitcoin as a hedge against inflation. Others buy Bitcoin for its long-term value; the best example is the pioneers who mined and bought the currency in 2009, 10, and 11. Do your research and find out whether cryptocurrency has a future and if that future aligns with your goals.

How Much Bitcoin Should You Buy?

While there’s no definite answer to this question, a good rule of thumb is to invest only an amount you can afford to lose. Bitcoin is a speculative asset whose price can go up or down anytime. Therefore, only invest an amount that won’t hurt your finances if the price plummets.

Furthermore, different platforms and swaps allow you to buy Bitcoin in small quantities. You can even buy BTC for $20. For extra safety, never invest all of your money into one purchase. Buy small quantities over some time to DCA (Dollar Cost Average).

How Do You Buy Bitcoin?

Cryptocurrency exchanges are the most common way to purchase Bitcoin. However, you can also find people ready to sell their Bitcoin to you directly. The choice of purchasing method depends on different factors such as ease of use and security.

Crypto exchanges are the best places to purchase Bitcoin because they ensure safety and anonymity. With moderators and dispute solvers, you can make your purchases more safely without risking your funds. Use FastestVPN to mask your IP for extra security while you purchase Bitcoin.

How Will You Store Your Bitcoin?

Since Bitcoin isn’t a physical currency, you can’t store it in your wallet. Instead, you need a digital or hardware wallet to store your Bitcoin. These wallets allow you to keep your cryptocurrency safe from hackers. They also give you control over private keys, which are essential for accessing your Bitcoin.

You can store it in a free hot wallet like Metamask, Trust Wallet, or on different exchanges. You can also use a cold wallet like Ledger. Cold wallets are much safer than hot wallets, but they also cost money to purchase.

What Are the Risks of Buying Bitcoin?

As with any investment, there are risks in buying Bitcoin. For instance, its price is highly volatile and could drop anytime. It usually has market cycles, during which prices increase or decrease spontaneously. For example, the recent crash of 2020 wiped out numerous accounts.

There’s also the risk of hacks and scams. With countless impersonation scams and frauds, you have to ensure the security of your funds. That’s why it’s essential only to buy Bitcoin from a reputable exchange and to store it in a secure wallet.

Do I Pay Taxes When Buying Bitcoin?

This question’s answer depends on your country’s tax laws. You may have to pay taxes in some countries when you buy Bitcoin. For example, in the US, Bitcoin is deemed as an asset. You must pay taxes on your Bitcoin when you cash it out, i.e., convert it into fiat currency.

Different countries have different laws. Therefore, it’s advisable to research your country’s tax laws before buying Bitcoin.

Should I Use a Bitcoin Broker or Exchange?

If you’re new to cryptocurrency, consider using a broker. These platforms allow you to buy and sell Bitcoin without fearing the technical aspects of cryptocurrency trading. However, they often charge higher fees than exchanges.

On the other hand, crypto exchanges give you more control over your trading. They also allow you to trade altcoins in addition to Bitcoin. However, crypto exchanges are often more complex to use than brokers.

The Bottom Line

You have several factors to consider before buying Bitcoin. Please determine whether the cryptocurrency is a good investment and how much you should buy. Also, choose a purchasing method and store your Bitcoin in a safe wallet. Finally, remember to research your country’s tax laws. Answering these crypto questions will help you decide whether to invest in this cryptocurrency in 2024.