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3 Simple Steps to Get Started With Bitcoin

3 Simple Steps to Get Started With Bitcoin

Explainers Cryptocurrencies

12 May 2020

If you’re thinking about getting into Bitcoin, then it’s good to get a sense of how to go about it in a safe, potentially profitable manner.

If you’re still investigating what Bitcoin actually is, we recommend you study some of our older posts which explain the basics around blockchain technology, and what makes Bitcoin so interesting. But if we had to make it as simple as possible, just think of it like this:

Since the early 2000s, the commercial Internet has really taken off, and if we look at how we use the Internet to interact with one another, store and share information, exchange goods and services, and make payments, then we could say Bitcoin is a form of digital native Internet money.

This may not seem like such a big deal. You could say that it’s also possible to use your credit card, or PayPal, or just make a simple bank transfer. However, all these methods essentially rely on regular money, managed by banks and large corporations, and as you know, everyday fiat money is inflationary - meaning that over time, it loses value.

When Bitcoin was first launched, it was truly revolutionary - and it still is. Bitcoin is generated and maintained on the blockchain. Each Bitcoin is unique, and because its scarce we can expect its value to appreciate over time as more people get familiar with it and want to own the asset.

So how do you get started? Let’s break it down to just a few simple steps.

Step 1: Learn more

First, make sure that you learn more about Bitcoin and the crypto industry at large. That way, you’ll be able to get a better idea of the type of future you’re investing in. This is especially useful if you intend to HODL (hold on to the asset for a long time, perhaps not selling until at least a few years later.

To assist you in your journey, we run AAX Trends, where you can learn more about the different types of cryptocurrencies, how to valuate various crypto assets, how to keep your assets safe, what blockchain technology is as well as aout the various protocols, how Bitcoin relates to the wider economy, the industry at large, but also how to become a better trader.

Step 2: Buy Bitcoin

Buying Bitcoin is becoming increasingly easy - you can use Bitcoin ATMs, a credit card, exchange Bitcoin for cash, or use our specialized OTC service.

Let’s have a quick look:

Step 3: Choose a strategy

There are tons of trading and investment strategies, and you can learn more about them on our dedicated 'Crypto Trading Dojo'.

But in a nutshell, here are three possible approaches:

a) HODL HODL HODL: Once you've obtained your Bitcoin, you can withdraw your Bitcoin into an external wallet, or simply leave it in your AAX Account. This approach assumes that Bitcoin will continue to appreciate in value over time, and one day, you'll simply cash out your profits.

The downside to this is that you will not be able to respond quickly to big market movements (especially once you've stored your Bitcoin in an external wallet). Also, it cannot be assumed that Bitcoin will continue to rise - what is clear, however, is that the price of Bitcoin fluctuates. It is not uncommon to see a 30% increase or drop happen in the span of just a few hours.

b) Become a day or swing trader: Another approach is to actively trade Bitcoin, basically to increase your Bitcoin holdings. On AAX, you can trade Bitcoin against a number of other cryptocurrencies like Ethereum, or against USDT.

If you're not too interested in other cryptocurrencies, but simply want to focus on Bitcoin, you can also choose to exchange all your Bitcoin for USDT (a USD-pegged stablecoin) and then proceed to buy Bitcoin when the prices have gone down, and sell them when the prices have reached a high point.

Warning: Don't be driven by panic! Instead, simply set your goals. You can set a limit order, so that once the price hits, say $9,000, you sell your Bitcoin, and then place another limit order, say, at the $8,000 mark, so that once the price has dropped, you can buy back into Bitcoin cheaper.

This approach can be very effective, and we encourage you to learn more about technical analysis if this seems like your style. Technical analysis can help you determine where you want to place your buy and sell orders.

c) Ride the waves with futures: Trading futures is probably one of the most exciting ways to engage crypto, other than participating in the occasional spot rallies. What's interesting about futures trading is that you can make a profit when the price goes up, but also if it goes down.

All you need to do is choose 'long' (buy) or 'short' (sell). If you go long, and the price goes up, you can make a profit, and if you go short, and the price goes down, you also make a profit. It's just about choosing the right direction.

Another interesting feature is that with futures, you can trade with leverage. This means, that you can enter the market with a bigger position. On AAX, you can trade with up to 100x leverage.

Let's say, if you want to trade 1 Bitcoin, but you only have 0.1 BTC, then you can choose to trade Bitcoin with 10x leverage. The profits are yours. 10x leverage means that a 1% price increase, means a 10% profit. When you trade with 100x leverage, it means that a 1% price increase equals to doubling your input (100% profit).

Of course, there is a risk. If the price goes the other way, and drops by 100%, you lose the money you've put into the trade. If you're trading with 10x leverage, then a 10% drop will equal to a 100% for you. In other words, higher leverage means you can get much better returns, but the risk is also higher.

Learn more about this from our Beginner's Futures Guide.

Are you ready to put your skills to the test?

AAX is the world’s first digital asset exchange to be powered by LSEG Technology. Offering OTC, spot, and futures, it provides a highly secure, deeply liquid and ultra-low latency trading environment; and a meeting point between crypto and global finance.

Open an account with AAX, or download the app, and experience the next generation crypto exchange.

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