Bitcoin FAQs- When to Buy, How to Tax, Should You Mine It …

Buying Bitcoins is hard, and if you still need help, I hope this FAQ will help to answer any remaining questions.

  1. When is the Right Time to Buy Bitcoin?

Bitcoin is traded 24/7 and its price changes every second, so nothing is for sure.

bitcoin logo

The price of Bitcoin in USD during 2015 and 2016. As with any market, it’s impossible to say when to buy.

You can use tools like Cryptowatch or Bitcoin Wisdom to analyze charts from other Bitcoin trading sites and understand Bitcoin’s price history across the many global Bitcoin exchanges.

 

  1. Can Anyone Buy Bitcoin?

Bitcoin requires no permission from anyone to use or buy.

You will have to check the legality of Bitcoin in your country, but in most countries Bitcoin is legal!

 

  1. Why Does Buying Bitcoin Take So Long?

It’s important to note that long wait times are usually an issue with existing payment systems, not with Bitcoin itself.

Bitcoin transactions can be confirmed as quickly as 10 minutes. On the other hand, bank transfers in the U.S. can take up to five days to complete.

Bitcoin transactions only take about 10 minutes to confirm; it’s rare to experience a delay longer than one hour.

 

This means that Bitcoins can’t be released to a customer until five days have passed, unless a merchant is willing to take on risk.

 

  1. Can You Sell Bitcoins?

Of course! Most exchanges that let you buy Bitcoins also let you sell them. However, they do it for a fee of course.

 

  1. Why Do Some Exchanges Require Me to Upload my ID?

This is due to Know Your Customer (KYC) laws which require companies that will be exchanging CASH for Bitcoins (or Bitcoins for CASH) to get a Money Service Business license, and then to collect identifying information about the customer.

 


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  1. Should I Buy Physical Bitcoins?

Physical Bitcoins are just objects like coins with a Bitcoin private key embedded inside.

Unless you’re a numismatist, we highly recommend that you stay away from physical Bitcoins.

Physical coins sound like a good idea. However, they force you to trust the honesty of the creator of the coin. The problem is that the creator could create two copies of the private key.

The creator could at any time steal the funds it contains unless you immediately open and withdraw the digital Bitcoins from your physical Bitcoin.

 

  1. Can I Buy Partial Bitcoins?

Of course!

Each Bitcoin is divisible to the 8th decimal place. This means that each Bitcoin can be split into 100,000,000 pieces. Each unit of Bitcoin, or 0.00000001 Bitcoin, is called a satoshi, after the guy who originally proposed/invented Bitcoin.

You can buy as little as $5 worth of Bitcoin from most exchanges.

 

  1. Do I need a Bitcoin Account before Buying?

There are not really accounts with Bitcoin.

Instead, you need a Bitcoin wallet. If you want to store Bitcoins you will need to find a proper wallet for BTC.

In Bitcoin these wallets are not called an account. However, a Bitcoin wallet functions almost the same way. The only difference is that, in this case you are responsible for the security of your wallet rather than placing the security in the hands of a trust or a bank.

 

  1. Why Should I Buy Bitcoin Instead of Mining?

A long time ago anyone could mine Bitcoins on their computer at home, but today, only specialized computer hardware is powerful enough to do this. Today, custom-built ASIC rigs are being used to mine a fraction of a Bitcoin. But the problem with these systems is that they require extremely high amounts of energy.

Think about it like this:

What’s the better idea – to buy gold or mine gold? Well, to mine gold you need big powerful machines, a lot of time, and money to purchase the machinery, so most people just buy gold online or from a broker.

And Bitcoin is no different.

If you want coins, you should just buy some without trying to mine.bitcoin protocol

 

  1. Why Would Someone Even Want to Buy Bitcoins?

Today, many people want to own Bitcoins and there are many reasons for that.

Many people are using Bitcoins to remit money to their families from out of the country because Bitcoin is currently one of the cheapest ways to do this.

Many people like to buy some Bitcoins and put them to the side in the hopes that they will be worth more in the future (those people who bought Bitcoins for $5 seven years ago are today richer by over $4.4 millions).

Some people also buy things online using Bitcoins. Big companies like Overstock, Newegg, Dell, and Microsoft all accept Bitcoins.

Bitcoin is also very unique compared to other markets in that it trades 24 hours a day and never stops, so many traders buy and sell Bitcoins because it is a fun and fast market to trade.

 

  1. What Happens When you Buy Bitcoins?

Bitcoins are actually just secret digital codes that cannot be hacked or copied. When you purchase Bitcoins, the seller is using a wallet to transfer the ownership of the coins to you, and once your purchase is complete, the codes are now owned by you and not the seller.

 

  1. Can I Buy Bitcoin Stock?

What I like to point out is that Bitcoin is not a stock, despite it functioning somewhat like one. Bitcoins cannot be bought through a traditional stock fund. Instead, you have to purchase Bitcoins yourself, and this may change in the future if a Bitcoin ETF ever gets approved.

 

  1. Is Bitcoin Legal?

Bitcoin is legal in most developed countries in the world. Only a few countries, like Bolivia and Ecuador, have actually banned the use of Bitcoins. Make sure you double-check the legal status of Bitcoin in your country before you buy it.

 

  1. Why Are the Chinese Purchasing So Much BTC?

It seems the Chinese really like Bitcoin’s properties such as its sound monetary policy and its volatility. Also, the fact that it can be used anywhere in the world makes it interesting for people in China.

 

  1. Am I Anonymous when I Buy Bitcoins?

Bitcoin is not anonymous and untraceable, but rather pseudonymous. All Bitcoin transactions are public but the real identity behind any give Bitcoin address is not always known.

 

  1. Do I need to Pay Taxes on Bitcoin?

In most countries if you buy Bitcoins, sell them, and make a gain you will need to pay some kind of tax. In the US you must pay tax on every transaction.

It’s highly recommended to check with tax authorities in your country of residence to make sure that you are paying all the required taxes on your Bitcoin use.

 

  1. Can I use Multiple Exchanges?

If the limits on one exchange are too low and you want to buy more, you can simply signup, join, and use as many Bitcoin exchanges as you want that are available in your country.

 

  1. Are There Any Other Ways to Get Bitcoins Besides Buying?

You can get Bitcoins by requesting from your employer to be paid in Bitcoins.

 

CaptainAltcoin's writers and guest post authors may or may not have a vested interest in any of the mentioned projects and businesses. None of the content on CaptainAltcoin is investment advice nor is it a replacement for advice from a certified financial planner. The views expressed in this article are those of the author and do not necessarily reflect the official policy or position of CaptainAltcoin.com

Felix Kuester works as an analyst and content manager for Captainaltcoin and specializes in chart analysis and blockchain technology. He is also actively involved in the crypto community - both online as a central contact in the Facebook and Telegram channel of Captainaltcoin and offline as an interviewer he always maintains an ongoing interaction with startups, developers and visionaries. The physicist has couple of years of professional experience as project manager and technological consultant. Felix has for many years been enthusiastic not only about the technological dimension of crypto currencies, but also about the socio-economic vision behind them.

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