Buying your first Bitcoin? Here’s what you need to know

Cryptocurrency and Bitcoin are all the rage right now. It seems like everyone’s getting into it. Should you? Here’s what you need to know.

What is Bitcoin (BTC)?

Bitcoin (BTC), often described as a cryptocurrency, was created as an electronic payment system to allow two parties to transact directly with each other. It’s a virtual currency available for people to buy, sell, and exchange directly, without a traditional intermediary like a bank.

It’s based on cryptographic proof instead of trust. The original Bitcoin was created back in January 2009 by someone going by the alias Satoshi Nakamoto.

As the earliest virtual currency and the world’s largest cryptocurrency by market capitalisation, bitcoin has inspired a host of other cryptocurrencies in its wake.

How does it work? How is it safe?

Each Bitcoin is essentially a computer file stored in a digital wallet, on a computer or smartphone. You can send and receive Bitcoins from your digital wallet and every single Bitcoin transaction exists on a blockchain (a public ledger accessible to everyone). This ledger makes transactions hard to reverse and difficult to fake.

Considerations before buying Bitcoin in Singapore

Knowledge is power, and in this sense, having the best information possible on Bitcoin in Singapore would go a long way in kickstarting your Bitcoin journey.

Here are a few key considerations:

Local regulations

Ensure that the cryptocurrency exchange you choose conforms with the Monetary Authority of Singapore’s (MAS) guidelines, as well as any restrictions on the trading of Bitcoin locally.

And yes, Bitcoin is completely legal in Singapore, as is the trading of many other cryptocurrencies, and the operation of crypto exchanges and services. In fact, Singapore and market regulator MAS take a more open approach to cryptocurrency compared with many other countries.

Broker trading fees

Different exchanges offer different fees, which can come in many forms, some with commission-free or low-fees trading. It is important to look beyond the front page to make sure you are getting the best possible value.

Exchange

Start your Bitcoin journey with a cryptocurrency exchange platform that is easy to use and intuitive. That’ll help you go much further in trading with confidence.

Eventually, you can progress to another level of trading with more features such as research and insight reports when you’re ready.

Can I buy less than 1 Bitcoin?

Bitcoin can be purchased fractionally, this means that you can buy half a Bitcoin, one-quarter of a Bitcoin, or even one-hundredth of a Bitcoin. A Bitcoin can be divided up to eight decimal points (0.00000001 Bitcoin).

Top 5 risks of investing in cryptocurrency

As with all forms of investing, there are always risks involved. Here are the top 5 factors to consider before jumping into the world of cryptocurrency.

1. Prepare for volatility

Unexpected changes in market sentiment can lead to sharp and sudden moves in price. It is not uncommon for the value of cryptocurrencies to quickly drop by hundreds, if not thousands of dollars.

2. It’s unregulated

As a decentralised currency, cryptocurrencies are currently unregulated by both governments and central banks. They were developed to be free from government oversight or influence and are instead monitored by peer-to-peer internet protocol.

3. They’re more susceptible to error and hacking

As a digital currency outside of the traditional construct of banking, cryptocurrencies are susceptible to technical glitches, human error or hacking.

4. How secure the storage is matters

To protect these small, but highly valuable assets, custodians must identify and mitigate the risk exposure associated with storage and transportation of the private keys. Those risks include the size of the devices, identity management, access control, physical and operational risks, and the potential for violence and unrest in the area.

5. Human error and forgetfulness 

Given the intangible nature of the asset class, human error is one big point of failure for crypto. Something as small as forgetting your own password can spell disaster, because if unretrieved, this can amount to a total loss of your crypto fortune.

Buying your first Bitcoin

There are several things that every aspiring Bitcoin investor needs: a cryptocurrency exchange account, personal identification, a method of payment and a secure connection to the Internet.

1. Pick an Exchange

Signing up for a cryptocurrency exchange will allow you to buy, sell, and hold cryptocurrency. The best cryptocurrency exchanges are secure, cost-effective, quick to set up, easy to use, and accept a variety of funding sources.

Some options to look at are Binance, Coinbase and Gemini.

2. Open an account and connect to a payment option

Once you have chosen an exchange, you now need to gather your personal documents. The process is largely the same as setting up a typical brokerage account. With your account, you can access, manage, and spend your funds anytime.

3. Fund your account and place an order

Once you have chosen an exchange and connected a payment option you can now buy Bitcoin and other cryptocurrencies. Getting an account on an exchange is really all you need to do to be able to buy Bitcoin or other cryptocurrencies.

4. Get your safe storage

Bitcoin and cryptocurrency wallets are a place to store digital assets more securely. Those interested in the safest storage should consider using a hardware wallet for all of their long-term Bitcoin and cryptocurrency storage as users can lose bitcoin and other cryptocurrency tokens as a result of theft, computer failure, loss of access keys, and more.

Conclusion

The technicalities and what goes on behind the network of blockchain might not be easy to grasp for a start, but it will all get better with time.

Understanding the world of cryptocurrency is particularly important, given that Singapore is solidifying its reputation as one the world’s key cryptocurrency and blockchain destinations, which could pave the way for cryptocurrency to be adopted as part of an alternate digital currency in the future.

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