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Major financial institutes are viewing Bitcoin as a new asset class.
Major financial institutes are viewing Bitcoin as a new asset class. Pexels

Although Bitcoin is still deemed as a volatile investment; brokerages, payment service providers like PayPal; and major conglomerates including Goldman Sachs consider Bitcoin as a new asset class. There are several reasons why this decentralized system has become a choice of investment for millions of people across the globe.

Why are So Many People Investing in Bitcoin?

For starters, Bitcoin isn't controlled by banks or governments and has a public ledger based on a secure blockchain for lightning-fast global transfers. These transfers are easily done with an Internet connection and offer complete transparency, thus winning the trust of banks, fintech companies, and people across the globe.

The decentralized system means that the blockchain system works like a transparent bank ledger. Basically, anyone on the network can view the public address of a user during a transaction, though the details of the sender and the receiver remain anonymous. Without the need for a banking institution, investors can send and receive Bitcoin to anyone from anywhere around the world without any middlemen or the associated fees involved with them.

Since only 21 million Bitcoins can exist, it also offers a hedge against inflation. While beginner investors can buy and sell Bitcoins through brokerages that offer stock trading platforms and financial payments companies like PayPal, we recommend creating a cryptocurrency exchange account with identification documents, a personal wallet outside the exchange account, and a reliable Internet connection to get started.

Choosing a Cryptocurrency Exchange

While there are several exchanges like Coinbase, Kraken, and Binance that offer a plethora of features and functionalities to their users, it is essential to understand their encryption standards, transaction fees, storage, and insurance polices.

While Bitcoin is currently the most popular cryptocurrency traded across the world, you might still want to check out other cryptocurrencies. After all, not all tokens are available for trade given their respective criteria used to list tokens on their platforms. This becomes important if you plan on diversifying your investments into other cryptocurrencies like emerging altcoins.

While Binance offers advanced functionalities for traders, exchanges like Coinbase with over 73 million verified users showcase an intuitive dashboard and a swift account creation process that might suit beginners better.

Connecting a Payment Option

After choosing a cryptocurrency exchange and verifying your accounts, you'll have to link your bank account through a secure channel. Several exchanges allow you to link debit cards, credit cards, and even online payment gateways so you can add and withdraw funds from your new account.

Although Bitcoin is legal in many countries including the U.S, you need to find out if your bank supports these transactions first. Some banks might raise some questions or stop direct deposits to cryptocurrency exchanges. If you are using credit cards for deposits, you might also have to pay processing fees along with the transaction fees imposed by the exchange of your choosing.

Privacy and Security Measures Should be Your Top Priority

While the public address of any Bitcoin transaction is available on the blockchain ledger for anyone to see, cryptocurrency transactions require a private key that you need to protect. If criminals gain access to your private key, they might attempt to authorize transactions on your wallet, so make sure to keep it safe at all times.

When using a cryptocurrency exchange, safe Internet practices are therefore also vital. This includes a secure Internet connection, a strong password, and two-factor authentication. Moreover, you may want to create several public addresses, and use some for transactions while using the rest to store your investments.

Cold Storage for Maximum Protection

Cryptocurrency wallets are used to store digital assets, and there are primarily two types of wallets; online/hot wallets and cold wallets. Online wallets use devices like computers or phones that have Internet access to generate private keys for your crypto holdings and facilitate faster transactions and access to your assets.

Although cryptocurrency exchanges offer custodial wallets, the private key to that wallet is held by the exchange and not the account holder. This could prove to be a problem if your account or the exchange is compromised, leading to a loss of funds. As such, it would be wise to only use online wallets for transactions and not for large crypto holdings.

Cold wallets, on the other hand, will give you complete control of your investments with private keys that only you have access to. Cold wallets aren't connected to the Internet and are generally in the form of paper wallets or hardware wallets. Certain websites allow you to generate wallets with public and private keys that can be printed on paper, and then laminated and stored in a safety deposit box at a bank or home. Only those with access to the keys on the printed paper will be able to access the funds.

The hardware wallet is generally an encrypted USB stick used to store private wallets keys offline to significantly minimize the risk of private keys coming in contact with your online devices.

Overall, you could open an account on an exchange with a hot wallet for small holdings and a cold wallet for larger holdings that you don't wish to sell anytime soon.

Cryptocurrency Exchange With a Track Record

One of the largest cryptocurrency exchanges, Coinbase, is also one of the few exchanges that stores 98 percent of user funds in cold storage. Sensitive data is moved from their servers, encrypted using 256-bit AES standards, and transferred to FIPS-140 USB drives and paper backups that are securely stored in different safety deposit vaults across the globe.

With 2-step verification on all accounts and a website that entirely runs through SSL encryption, you can expect the highest possible protection for your funds. Furthermore, Coinbase offers crypto insurance where all fiat currency balances in USD, Pounds, and Euro are covered by FDIC insurance for up to $250,000.

With an outreach in over 100 countries and millions of global users, Coinbase claims a quarterly transaction volume of $327 billion on their platform. After creating and verifying an account with them, you may link your bank account to seamlessly start buying and selling cryptocurrencies. The platform lists and supports over 100 cryptocurrencies with an intuitive mobile app to manage your complete portfolio in one place.

Begin your cryptocurrency journey with Coinbase today.