How to invest in Bitcoin and other Cryptocurrencies: Complete and Comprehensive Guide

A detailed guide on how you can easily invest into almost any cryptocurrency

Bitcoin is a digital currency which can be transferred to anyone in the world with very low fees and no limits on who or where you can send Bitcoins too.

Unlike cash money which can be produced an unlimited amount of times, there can only be 21 Million Bitcoins in existence. Due to it’s rarity and high demand, Bitcoin has increased in price from only a few cents in 2009 to over $10,000 now. Luckily you do not have to buy a full Bitcoin if you plan on getting one, you can even buy $100/£100/ €100 worth.

If you are interested in buying or investing into Bitcoin, this guide will show you how you can buy Bitcoin as well as other cryptocurrencies including Ethereum, Bitcoin Cash, Ripple, Dash and Stellar Lumens.

You will see Bitcoin Cash mentioned a few times in this post, if you want to buy Bitcoin then choose “Bitcoin” when buying buying from an exchange, “Bitcoin” and “Bitcoin Cash” are two different cryptocurrencies.

The barrier for entry into cryptocurrency investing has been lowered over the years, this guide looks at the many ways in which you can invest into cryptocurrencies.

CEX

CEX is a great exchange to quickly and easily buy Bitcoin as well as Ethereum, Bitcoin Cash, Bitcoin Gold, Ripple, Dash, Zcash and Stellar Lumens.

This exchange supports every country around the world,account set up is also fast and simple.

Like the other exchanges it has a built in wallet but you also have the option of sending the Bitcoins to your own personal wallet straight after purchase, using this option can save you money on transfer fees since the Bitcoins are sent to your personal wallet straight away.

Payment methods include wire transfer, online bank transfers and credit/debit card payments.

A few things to note:

Basic accounts can buy up to $1,000/£1,000 worth of cryptocurrency per day, and up to $3,000/£3,000 per month.

Verified accounts can buy and sell an unlimited amount of any cryptocurrency offered on CEX.

Basic accounts can only use debit/credit cards to buy cryptocurrency, if you want to use a bank transfer to deposit funds into CEX you will have to verify your account first but the verification process is fast and simple.

CEX supports all countries around the world and is a personal favourite of mine.

You can use CEX to buy Bitcoin here: Buy Bitcoin at CEX

BitPanda

Note: This exchange only allows investors in European countries to BUY cryptocurrency for now, this may change in the future.

However investors from any country in the world can SELL crypto on this exchange.

BitPanda is currently Europe’s most popular Bitcoin exchange and it allows you to purchase Bitcoin as well as Bitcoin Cash, Ethereum, Ripple, Litecoin, IOTA, EOS, Komodo and Dash instantly using various methods including bank transfers, wire transfers, credit/debit card payments, Neteller and Skrill.

Processing time takes roughly 20 seconds and verification only takes a few minutes and allows you to:

Deposit €49,990 Euros/ £44,874.17 GBP a day via Bank Transfer

Withdraw €500,000 Euros/ £448,750.68 GBP a day via Bank Transfer

Trading limits are unlimited which means you can buy and sell as much cryptocurrency as you like.

When you purchase any cryptocurrency it is then stored in one od BitPanda’s built in wallets (they have a Bitcoin wallet for Bitcoin, a Litecoin wallet for Litecoin, a Ripple wallet for Ripple, Euro wallet for Euros etc.)

You can easily send your coins to another wallet which I recommend if you plan to store your coins long term, I will list my wallet recommendations towards the end of this guide.

A few things to note:

All European countries are supported by BitPanda and as far as I know only countries based in Europe can use BitPanda to buy cryptocurrencies for now.

If you want to sell cryptocurrency however, you can do so from any country in the world.

BitPanda supports the following fiat currencies:

• Euros ( €)
• British Pound (£)
• Swiss Franc (CHF)
• US Dollar ($)

BitPanda currently supports the largest number of cryptocurrencies for a fiat based exchange with 14 cryptocurrencies on offer:

• Bitcoin
• Bitcoin Cash
• Ethereum
• Ripple
• Litecoin
• IOTA
• Pantos
• Stellar Lumens
• Komodo
• EOS
• Dash
• OmiseGo
• Augur
• 0x

Plus more are constantly being added to their selection.

I have found BitPanda to be very fast and reliable and this is currently one of the best options for investors living in anywhere in Europe.

New coins are always being added to this exchange and it is a personal favourite alongside CEX.

You can use BitPanda to buy Bitcoin here: Buy Bitcoin from BitPanda

Coinmama

It is very easy to purchase Bitcoins and other cryptocurrencies with Coinmama, you can buy cryptocurrencies using a credit or debit card within minutes. Like CEX this exchange supports all countries worldwide.

Coinmama offers Bitcoin, Ethereum, Bitcoin Cash, Litecoin, Cardano, Qtum and Ethereum Classic, which is a lot of cryptocurrencies for a cash based exchange.

You will need a Bitcoin wallet address before you buy Bitcoins from Coinmama but there is a built in option to generate a free software wallet using a separate Bitcoin wallet provider.

Accounts verified with a passport can buy $10,000 (£7,836) worth of cryptocurrency, accounts verified with 2 forms of ID can buy $50,000 (£39,197) worth of cryptocurrency and accounts with Level 3 verification and above have no limits.

Coinmama has additional payment methods including bank transfers and wire transfers but the only one I saw was Credit/Debit Card payments, other payment methods might depend on the country you live in.

Coinmama supports all countries around the world

You can use Coinmama to buy Bitcoin here: Buy Bitcoin at Coinmama

Coinbase

One of the most well-known sites for buying Bitcoin, Coinbase also allows you to buy Ethereum, Ethereum Classic, Bitcoin Cash and Litecoin using bank transfers, wire transfers and credit/debit card payments.

Like BitPanda and other exchanges listed here, each currency will be stored inside it’s own Coinbase generated wallet and you will be able to both buy and sell those currencies within the Coinbase website.

Coinbase supports the UK, USA, Canada, Australia, Singapore and parts of Europe.

You can use Coinbase to buy Bitcoin here: Buy Bitcoin at Coinbase

LocalBitcoins

LocalBitcoins is a fast and easy way to buy and sell Bitcoins, it works by letting users buy and sell Bitcoins to each other, this is also known as peer-to-peer (P2P) or over-the-counter (OTC) buying and selling. The process is safe since LocalBitcoins uses escrow protection to prevent fraud and protect both buyers and sellers.

LocalBitcoins also has a built-in reputation system to help users filter out unreliable customers and Bitcoin prices are constantly kept up to date.

To buy Bitcoins you simply choose a seller and press “BUY”, some sellers will require you to verify your identity before you can purchase Bitcoins from them.

LocalBitcoins has a wide selection of payment methods including SEPA, Bank Transfers, Credit/Debit Cards and PayPal, other methods include Western Union (not recommended due to its high risk) and many country specific payment methods.

LocalBitcoins supports all countries around the world.

You can use LocalBitcoins to buy Bitcoin here: Buy Bitcoin at LocalBitcoins

Where to store your Bitcoins

How a Bitcoin Wallet works

Once you own Bitcoins (or any other cryptocurrecy) you then need to store them in a personal wallet where you control the private keys or wallet seed, storing coins on an exchange long term is not recommended because exchanges can potentially be hacked or taken down by authorities.

Bitcoin wallets are usually comprised of three elements:

Example of a recovery passphrase whilst setting up a Ledger Bitcoin wallet

• The Wallet Seed/Recovery Phrase: Also known as a mnemonic passphrase, this is a backup phrase that is used to recover your Bitcoin wallet if it is ever lost. You should always keep a backup of your wallet seed or recovery phrase on a piece of paper or you can even use a physical backup tool.

• The Public Address: This is where you send Bitcoins to, it is a string of alpha-numeric characters that represents a possible destination for a bitcoin transfer.

• The Private Key: In a cryptocurrency wallet, the private key is a secret number that lets a user spend Bitcoins. Every Bitcoin wallet contains one or more private keys, which are saved in the wallet file. All Bitcoin addresses generated from a wallet are related to its private key, it is recommended to keep a backup of your private key if the wallet does not provide you with a wallet seed or recovery phrase, along with your recovery phrase you should not reveal your private key to anyone.

Software Wallets

You can store your Bitcoins in a software wallet which is simply a software program or application that lets you store, receive and send Bitcoins.

If you are looking for fast and simple wallet I recommend getting Copay or GreenAddress, they allow you to import your wallet into another device, for example if you create your wallet using a PC you can download the smartphone app and import your wallet into the smartphone application.

You can get the Copay Bitcoin wallet from here: Copay Bitcoin Wallet

You can get the GreenAddresss Bitcoin wallet from here: GreenAddress Bitcoin Wallet

Leaving your Bitcoins on exchanges is another option but it is always better to keep them in your own personal wallet.

Cold Storage

Example of a Bitcoin paper wallet

Cold storage is simply storing your Bitcoins offline, it can be done by using a paper wallet or a hardware wallet.

A paper wallet is simply a document that contains your wallet seed, public address and private address, paper wallets are best used for long term storage and each wallet should only be spent once, you should also keep a backup of your paper wallet stored in a separate place or scanned and saved on an external hard drive or offline PC.

Potential Drawbacks of a Paper Wallet

• One drawback about paper wallets is that they need to be imported into a software or hardware wallet if you want to spend or transfer funds out of it.

• Since they are made from paper, they are very vulnerable to damage from water, fire and wear and tear.

• You can send Bitcoins to a paper wallet an unlimited amount of times but it is recommended to create a new paper wallet after sending Bitcoins from it for security purposes.

When creating paper wallets it is best to stick to official paper wallet generators for the specific coin, for Bitcoin I recommend bitaddress.org due to its mouse movement based random number generator.

Hardware Wallets

A hardware wallet (or a physical Bitcoin wallet) is a special type of Bitcoin wallet which stores the user’s private keys in an offline environment using a secure and encrypted hardware device.

Hardware wallets have major advantages over software and paper wallets:

• Multiple cryptocurrencies can be stored on one wallet so managing multiple cryptocurrencies is easier.

• You can send Bitcoins from a hardware wallet an unlimited amount of timess, paper wallets can only be spent or sent from once for security reasons.

• Hardware wallets are immune to computer viruses or malware that attempt to discover a users private keys, this is due to their built-in encryption procedures that make the private keys unrecognisable to any unauthorised parties.

• Hardware wallets can be used to to receive and send cryptocurrencies at any time, as opposed to a paper wallet which must be imported to a software or hardware wallet if you want to transfer your Bitcoins out of it.

My recommendations:

Ledger Nano S

The Ledger Nano S is currently the most popular hardware wallet, along with the Ledger Blue it supports the largest amount of cryptocurrencies and is routinely adding new coins.

Check it out here: Ledger Nano S

Ledger Blue

The Ledger Blue is Ledgers latest physical wallet that also supports hundreds of cryptocurrencies and it includes a large, color touchscreen.

Your wallets private keys are stored securely offline using BIP 16, BIP 32, BIP 39 and BIP 44 encryption.

Check it out here: Ledger Blue

I hope you found this guide helpful, feel free to follow me on Medium and Twitter for more posts, tips and news.