You may be interested in adding Bitcoin to your portfolio for various reasons, including hedging against inflation and enhancing diversification. Even if you’re more conservative, you can’t ignore the overall positive impact that Bitcoin can have on your collection of financial investments. It’s the best-performing asset as far as absolute and risk-adjusted returns are concerned. When investing, carefully consider your income, financial goals, and risk tolerance; a strategy you might want to consider is dollar-cost averaging (steady drip investing).
Buying Bitcoin doesn’t necessarily involve dealing with an exchange. In some places, ATM machines are installed to streamline transactions, the cash being exchanged at the Bitcoin price today. A Bitcoin ATM is much like a traditional ATM, the only difference being that it allows you to withdraw cryptocurrency. These ATMs are found in locations where you’d normally find normal ATMs, such as shopping centers, bus and railway stations, restaurants, etc. Here’s what you should know if you ever consider using a Bitcoin ATM.
A Bitcoin ATM Works By Connecting to An Exchange
A Bitcoin ATM is an internet-connected kiosk where you can buy and sometimes sell cryptocurrency. There are ATMs that accept Bitcoin debit cards, enabling you to convert your cryptocurrency to cash to be able to buy things, which can be useful if you’re traveling abroad. A Bitcoin ATM looks just like a traditional one; it’s just that it’s connected to a Bitcoin exchange, so you’ll need to have an account with the existing operator. Wallet creation is a crucial part of using a Bitcoin ATM. Fraudsters often take advantage of the decentralized nature of Bitcoin ATMs, so it pays to be careful.
Depending on where you live, there may be numerous Bitcoin ATMs in your area. There are several online websites and tools you can use to find one near you. When you use a Bitcoin ATM, the self-service outlet gives you cryptocurrency in exchange for your cash; it may require you to complete a KYC process before allowing the purchase. The exchange rate of Bitcoin will depend on the market rate at the time of the transaction. After having set up your wallet and located your address for inbound transactions, specify the amount you want to purchase. It’s recommended to scan the QR code on your phone instead of typing it manually to avoid making mistakes.
Before You Finalize a Transaction, Look at The Fees You’ll Be Charged
Just so you know, Bitcoin ATM operators charge fees that are fixed in nature. Some machines can charge up to 20% for each transaction, so Bitcoin ATMs are expensive. A portion of this money goes to the ATM operator, but a considerable amount is used to counterbalance Bitcoin network’s fees. If the network is busy, the fees can escalate because everyone competes for the fastest transaction settlement times. Equally, there are more stringent limits on purchases as opposed to a cryptocurrency exchange. Simply put, there are lower maximums for the amount you want to buy at a time.
Suppose the Bitcoin ATM doesn’t charge high transaction fees to add transactions to the blockchain to validate them. In that case, you’re offered a worse buy price compared to the current exchange rate, so it’s not the most cost-effective option to buy cryptocurrency. If you want to purchase more Bitcoin in one transaction, you’ll likely have to go through KYC verification. You can buy cryptocurrencies other than Bitcoin, such as Ethereum and Litecoin, with cash or a debit card, but research the ATM before using it.
If You Want to Buy Bitcoin, An ATM Might Not Be the Best Option
A Bitcoin ATM offers a convenient way to acquire cryptocurrency, helping you maintain privacy and avoid the slow bank transfer and verification process. Nevertheless, it’s important to take into account the exchange rate and fees before proceeding. It’s best to purchase Bitcoin through an exchange, which requires you to share minimal personal information. You can perform transactions from anywhere as long as you have an internet connection, but using an exchange can be confusing if you’re a newbie.
If you don’t already have a crypto exchange in mind, check out the top picks. Depending on the platform you’re using, you might be able to buy Bitcoin by typing a button and inputting the amount you want to invest. Create an account, verify your identity, link a payment method, and place an order. Bitcoin’s price can be volatile, so if you can’t afford an entire one, buy a fraction because it’s divisible into smaller units. To use cryptocurrency, you don’t need extensive technical knowledge.
Bitcoin ATM fees can be higher than those on online exchanges. Despite the fact that they offer privacy benefits, crypto exchanges implement more robust security measures to protect users’ funds. If you want to ensure complete control of your Bitcoin, withdraw your cryptocurrency from the exchange; you don’t have to ask permission to use what’s yours. Once you have some Bitcoin in your account, get yourself a wallet so you can send cryptocurrency from the exchange to your wallet.
The Bottom Line
The choice between a Bitcoin ATM and a crypto exchange boils down to your personal preferences and needs, so determine what option best aligns with your goals. Once you’ve acquired cryptocurrency, it’s up to you what you do with it. Bitcoin was released as a peer-to-peer payment method, but its use cases are growing by the day on account of its increasing value and competition. You can make a profit from buying and selling cryptocurrency, so you can invest in Bitcoin to diversify your portfolio.
One of the most important aspects of buying Bitcoin is storing it safely. Become familiar with the intricacies of cybersecurity, such as storing your cryptocurrency in a cold wallet and using a hot wallet for smaller transactions. If your account is hacked or phished, you may lose access to your funds. As far as the seed phrase is concerned, it’s not a good idea to keep it in a device connected to the internet because it can be reached by threat actors.