MoneyLife

How Much Does It Cost to Buy Bitcoin?

By Jacinta Sherris
How Much Does It Cost to Buy Bitcoin

You’ve been hearing a lot about cryptocurrency and Bitcoin. But how much does it cost investors to buy Bitcoin? Even though a single Bitcoin has already reached a 5-figure value, it doesn’t mean you have to drop a sum of cash this large to buy Bitcoin. 

Almost all exchanges will allow you to purchase a percentage of a Bitcoin based on the money you want to invest. In other words, you can buy $50, $100, or $500 worth of Bitcoin, and so on. Still, there are other fees attached. 

In this guide, we’ll go over the answer to the question, “How much does it cost to buy Bitcoin?” as well as many other common cryptocurrency questions.

What is Bitcoin? 

Bitcoin is the first-ever cryptocurrency that’s taking the financial world by storm. It was created in 2009 by an anonymous developer known only as Satoshi Nakamoto. 

No one knows the real identity of the person—or persons—responsible for Bitcoin’s creation. Even so, as of today, Bitcoin is the largest cryptocurrency in the world by market capitalization. 

As a cryptocurrency, Bitcoin is a type of digital money with no physical counterpart. People can buy, sell, and exchange Bitcoin for other currencies or items of value. 

Bitcoin is also frequently treated as an investment. Bitcoin is extremely volatile due to its dramatic value changes. Nonetheless, its value has skyrocketed in recent years, turning several people into millionaires overnight. 

Just like the dollars in your bank account, most currencies are backed by a government or physical commodity, like gold. This isn’t the case for Bitcoin. Bitcoin isn’t a legal tender, meaning it’s not backed by the government, central banks, or any other commodities. 

Instead, Bitcoin is created, distributed, traded, and stored on a decentralized archive system known as a blockchain. In other words, Bitcoin is a currency entirely regulated by computer code. 

Bitcoin transactions are completely anonymous, and there’s no way to track who is buying or selling Bitcoin. Some people hail this feature as a hallmark of Bitcoin’s decentralized nature. However, skeptics have pointed out that this can provide ample opportunities for criminals to conduct illegal transactions without the government’s knowledge. 

While the future of Bitcoin remains uncertain, it has without a doubt gained enormous popularity in recent years. It has also served as inspiration for numerous other cryptocurrencies and blockchain technology systems. 

How does Bitcoin work? 

Bitcoin works through its very own blockchain system, which also happens to be the first of its kind. Every single Bitcoin transaction is tracked through the blockchain network. In fact, some experts argue that Bitcoin’s primary value derives from its innovative blockchain technology. 

A blockchain is a digital record of information where information can safely be stored without the possibility of changes, alterations, or hacks. Blockchain networks are decentralized, meaning it’s not possible for anyone to control or alter the information in a blockchain. 

Instead, data is permanently embedded into the blockchain’s code, allowing for optimal transparency. New Bitcoins are generated through a process called mining. The mining process solves complex computational math problems using advanced computers. In exchange for this work, miners receive Bitcoin as their payment. 

Where can you buy Bitcoin?

Years ago, Bitcoin was only available for purchase through a limited set of exchanges. Since booming in popularity, more exchanges are making it easier than ever before to buy Bitcoin. Some popular cryptocurrency exchanges include: 

In order to buy Bitcoin, you’ll have to create an account with one of the exchanges listed above. You’ll need to have your personal information on hand, including your name, a valid form of identification, your address, your social security number, and your bank account information. From there, you’ll have to link your bank account before you can begin transferring funds to buy Bitcoin. 

Fees associated with buying and selling Bitcoin

It’s important to keep in mind that buying Bitcoin and other cryptocurrencies comes with fees attached. Every exchange is different, and some exchanges might impose more fees than others. Nonetheless, it’s important to be aware of the main fees associated with buying and selling Bitcoin. 

Transaction fees

Bitcoin’s blockchain network is able to maintain hundreds of thousands of transactions daily. However, as more and more people conduct Bitcoin transactions, the system becomes more and more congested. 

As a result, you’ll have to pay a fee for your transaction to be processed in a timely manner. In early 2021, Bitcoin transaction fees reached an all-time high of $59 per transaction. 

Exchange fees

Most cryptocurrency exchanges will charge you a fee every time you buy and sell Bitcoin. Some exchanges may charge a flat rate, while other exchanges will charge you a percentage of your transaction. Sometimes, that percentage is as high as .05% of your total purchase or sale. 

Wallet fees

Some exchanges will charge you a fee every time you withdraw money from your bank account and deposit them into your digital wallet or vice versa. In some cases, there may even be restrictions on how much money you can withdraw at a given time.

Taxes

Despite cryptocurrencies being a fairly recent innovation, the old rules still apply. If you’re generating income by day trading Bitcoin or other cryptos, you’re going to have to foot taxes, known as the capital gains tax, on your earnings. Keep in mind that capital gains taxes are higher if you’ve bought and sold the asset within the same year, whereas the tax is much lower if you hold onto your Bitcoin for the long-haul. 

Should you buy, sell, or hold Bitcoin?

Bitcoin is a complicated cryptocurrency. There are some who swear by its potential to disrupt the global financial system, and there are critics who argue that Bitcoin is inherently inefficient. These people also consider Bitcoin to be volatile, easy to ban, and potentially dangerous as it could encourage criminal behavior. 

Ultimately, it will take more research on your part to decide whether to buy, sell, or hold Bitcoin. However, if you’re looking for an easy way to buy Bitcoin, look no further than MoneyLion crypto. 

MoneyLion crypto is accessible to both crypto newbies and pros alike. Plus, you’ll be able to earn cryptocurrencies like Bitcoin and Ethereum through the trailblazing rewards program. Ready to learn more?

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