What is the first thing that comes to your mind when you think of cryptocurrencies? I bet it’s bitcoin.
Among the more than 19,000 cryptocurrencies in the ether, Bitcoin is the first and most popular cryptocurrency. Despite recent price drops, at just under $36,000 per coin, it is still the largest cryptocurrency by market cap, at $683.6 billion as of May 6. Despite declining market values, Bitcoin remains the most reliable cryptocurrency that offers stability and security.
What is bitcoin?
In its simplest definition, Bitcoin is a virtual digital currency that operates on a peer-to-peer network that has no central authority; There is no oversight from banks or government entities such as the Federal Reserve of the European Central Bank. Instead of a regulated bank, a decentralized ledger system known as a blockchain records all Bitcoin transactions, and copies of this ledger are kept on computer servers in the studded Bitcoin blockchain network around the world. Originally intended as an alternative payment system for goods and services – that is, until high transaction fees made it too expensive – it turned into a store of value for many users, just like precious metals. Some equate it with digital gold.
The creator of Bitcoin is allegedly a computer programmer named Satoshi Nakamoto, whose true identity has not yet been revealed. Nobody really knows who he or she is or if Nakamoto is the name given to the group of programmers who invented Bitcoin.
Satoshi Nakamoto’s nine-page white paper, outlining the concept of Bitcoin, was published on October 31, 2008. Just two months later, on January 3, 2009, Bitcoin was launched. Since then, it has been a rollercoaster ride, especially for those who invested in its early days for fractions of a penny and have since become millionaires. In 2010, the price of one bitcoin was nine cents. A year later, it was up to $30 and by 2017, it had jumped to $20,000 for a single coin. On November 10, 2021, Bitcoin reached its highest price yet at $68,991, according to CoinDesk.com. Since then, the price has fallen sporadically – losing nearly half of its value – as a result of investor fears about rising inflation and the COVID-19 pandemic, among other market factors.
Today, one bitcoin is at just under $36,000.
How do you buy bitcoin?
Fortunately, you do not have to buy all of Bitcoin to participate in the event, but you can instead buy a small portion of the coin. For example, you can buy as little as $5 of Bitcoin per week and increase your holdings over time.
Many of you would like to learn how to buy Bitcoin and keep it in a hot wallet. In this post, I will show you how to buy Bitcoin, or $BTC, using the Cash App which is the easiest way to buy Bitcoin.
I use it whenever I need to make a quick purchase of BTC in USD. Bitcoin is the only cash app that supports it, but once you own your Bitcoin, you can keep it or exchange it for any other cryptocurrency available. All major exchanges support converting from $BTC to another currency because $BTC is the gold standard for cryptocurrencies. Once you sign up for the Cash app on iOS or Android, you can easily buy Bitcoin. The Cash app is also a hot wallet so you can buy and hold your crypto assets online without transferring them, and buy and sell them as you see fit.
First, click on the Bitcoin icon at the bottom right.
Click “Buy” to choose the amount of Bitcoin you want to buy.
In this example, I am buying Bitcoin for $25.
Click “Next” to continue and confirm the purchase amount.
Click confirm, congratulations, you have successfully purchased your first bitcoin.
Click Done and you can now see that you have a balance of $24.44.
How do you sell bitcoin?
Now that you own Bitcoin, you have the following options: buy, sell, or transfer.
Since the Cash app provides you with a hot wallet, you can simply store your bitcoins online safely. You can view your Bitcoin address below by clicking on View Bitcoin Address. This will show you your BTC dollar address and QR code if you want to receive $BTC from someone else.
If you want to sell, just click on Sell, choose the amount and it will appear as cash in your Cash App account. The Cash app will also store all of your purchases and sales for tax purposes. You can download the account statements monthly or wait for the year-end statement.
If you are like me and want to store your Bitcoin in a more secure way like a cold wallet, you can click on the share icon and send $BTC to a cold wallet. In this example, I will send it to the Arculus Cold Wallet.
Tap on the transfer icon and choose the amount of Bitcoin you want to send.
Click Submit and enter the $BTC deposit address of your cold wallet.
You have successfully transferred your Bitcoin to Cold Storage.
Let’s now look at the taxes for this deal. I keep track of my transaction using the Koinly tax software.
As you can see above, I tracked my initial deposit or Bitcoin purchase all the way to depositing it into my Arculus cold wallet.
Koinly does a great job of monitoring my tax accounts and submitting the appropriate tax documents at the end of the year.
Now that you’ve bought Bitcoin, let me know what you think of it. Share your thoughts about Bitcoin in the comments box below or if you have questions about buying other digital currencies.
Glossary of terms:
- cold wallet – Hardware wallet or offline wallet is offline and requires physical confirmation on the device to send money.
- hot wallet – A virtual wallet connected to the Internet at all times.
The information provided by Crypto Coach and ZDNet is not intended to be individual investment advice and is not tailored to your personal financial situation. It does not constitute legal, accounting or tax advice, nor a recommendation to buy, sell or hold any investment. We encourage you to discuss investment options with your financial advisor before making any investments.