With the latest run up in price for bitcoin, I’ve had a surge of people asking how to get started. I’ve been involved in the bitcoin space for several years now, but if I was starting today, this is how I would do it.
Everyone in the bitcoin space has different opinions on it — what it is, what it’s worth, and where it’s going. There are equally differing opinions about how to get started with it. There are so many different apps, services, and even hardware accessories that can help you buy, sell, trade, transact, and manage your bitcoin, and it’s not easy to navigate which ones you should use.
Understand the basics
The first thing I’d encourage a prospective bitcoin buyer to do is: read up. At the very least, understand the basics of blockchain — the technology that underpins bitcoin — and why this invention (or discovery, some would argue) is important. Then, start asking yourself what — if anything — makes bitcoin in particular special.
Know what you own, and know why you own it.Peter Lynch
I think it’s best that you keep things simple at first. Understand what blockchain and bitcoin are, then start playing around with it — there’s very little to lose and you can buy tiny amounts!
If you know nothing at all and only have a minute and 30 seconds, watch this brief high-level overview from the founder of Coinbase. If you have a half an hour, this talk by Andreas Antonopoulos is a great intro. If you prefer lengthy words, this summary from Swan Bitcoin’s Yan Pritzker is a great writeup.
After you familiarize yourself with the basics, I’d recommend you just go ahead and buy a little bitcoin. There are lots of ways to do this… including the following (this is not an exhaustive list):
- Popular user-friendly apps like Cash App
- Various websites that serve as one-stop crypto shops
- Major cryptocurrency exchanges like Coinbase or Kraken
- Dedicated bitcoin-only savings platforms
With what I know today, here’s what I would recommend most first-timers do:
- Download Cash App if you don’t already have it
- Tap the Stocks/bitcoin tab
- Tap Bitcoin
- Tap “Buy” to grab a small amount of bitcoin
That’s it! Really! You just purchased your first bitcoin. It’s (probably) not a whole 1.0 bitcoin, but that doesn’t matter. Bitcoin can be divided into 100 millionth parts called Satoshis, and you own some of that 1.0 bitcoin. And there are only 21 million Bitcoin that will ever exist. You’ve staked your claim on the world’s scarcest asset, no matter how small.
If you want to go with a slightly more involved option, I’d set up an account with Swan Bitcoin or Coinbase for different reasons. Swan is tailored specifically to those who have arrived at the conclusion that bitcoin is the only project compelling enough to be worth consistently buying into at this point, while Coinbase is more of a free-for-all. Either way, they offer more extensive tools than Cash App.
All of these services let you immediately set up a dollar-cost average buying strategy so you can automatically purchase Bitcoin on a predetermined schedule. If you’re ready to do that already, Cash App and Swan Bitcoin are the best places to do it with the lowest fees.
If for whatever reason you already have an account with Coinbase.com, there’s nothing “wrong” with their service. Gemini, Crypto.com, Binance US, and most other popular destinations are totally legitimate, too, they just have varying fees, user experience, and sign up friction that’s best to avoid if this is your first go-round in my opinion.
(Hint: Robinhood and PayPal let you buy a Bitcoin-backed stake in bitcoin, not bitcoin itself… watch out for that! You may not care now, but as you get deep down the rabbit hole, you’re going to want to own your bitcoin — trust me.)
Experiment with transactions and using a wallet
After you’ve purchased your first bitcoin, the next thing I’d do is just play around with it. If you bought your bitcoin through an app that actually allows you to purchase true bitcoin, then you can pretty easily send it to a personal wallet.
- Download a Bitcoin wallet. There are many great options, but I like Blue Wallet. It’s free, secure, and it only supports Bitcoin. I don’t recommend new bitcoin users dabble in other cryptocurrencies, but if you can’t resist, I like Exodus.
- Open up the app and follow the basic instructions.
- Copy the address for your new Bitcoin wallet.
- Open up Cash App, tap on the button to send Bitcoin, verify your account if needed, and paste in your Blue Wallet address.
- Send your Bitcoin off to yourself!
What you just did might seem simple — it’s not much functionally different from sending someone money on Cash App or Venmo. But what makes this transaction vastly different is that it didn’t require any trusted third party — a bank or an app — to send the money. You controlled the money in one place and you sent it directly to yourself, controlled by you in another place.
With it being a trustless system control by its users, there comes some risk. Unlike the cash in your bank account (up to a certain amount), your bitcoin isn’t protected by the government if it gets stolen. Treat your bitcoin like it is precious physical gold. Keeping small amounts on exchanges like Coinbase or in apps like Cash App is perfectly safe (or about as safe as you can get), but it’s always worthwhile to start experimenting with keeping your own Bitcoin in your own wallet like we just did with Blue Wallet.
As the old adage goes, “not your keys, not your bitcoin.” What that means is: You shouldn’t trust anyone else to hold your bitcoin for you. If you do, it’s really their bitcoin that they owe you. Not yours.
If you already own a substantial amount of Bitcoin (this is relative depending on what is substantial to you), you should really consider securing your bitcoin with a hardware wallet. This hardware wallet serves a tool that gives you access to your Bitcoin while keeping your private keys — the digital code that lets you and only you access and send your Bitcoin — as far away from the World Wide Web as possible. With a software wallet, your keys are always on your device. With a hardware wallet, they’re only potentially exposed to the internet as often as you physically connect your hardware wallet to an internet-connected computer.
If you want to toy with security and hardware wallets with your smaller amount of bitcoin, check out Trezor. If you really want to get serious about bitcoin security, check out ColdCard and something called multi-sig — that stands for multi-signature and allows you to keep your Bitcoin safe by requiring at least 2 of 3 separate entities you set up to approve access.
Intrigued yet? Spend some more time learning more about Bitcoin and understand how it works. There are lots of great videos that go deeper on the technicals, like this one:
But beyond how it works, take some time to understand why it’s not just a useful means of transacting value, but also a great store of value — in other words, a great tool to preserve your wealth amidst macroeconomic uncertainty. You may have been attracted to bitcoin in the first place because someone told you it makes a great “investment” and could be one way to earn quick cash. Learn why that could be but more importantly learn why bitcoin could be going up in value over the long term regardless of how it’s priced in US dollars.
To do these things, I recommend the following resources: