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What to Do After Buying Bitcoin
So, you’ve purchased Bitcoin—now what? Many new investors experience uncertainty after making their first BTC purchase. Whether you’re wondering how to keep it safe, where to use it, or what strategies can increase its value, this guide will walk you through the necessary next steps. Bitcoin is not just a digital asset; it is a decentralized currency with numerous applications. This section will walk you through the key decisions you’ll need to make to effectively manage your Bitcoin from the start.
Securely Storing Your Bitcoin
One of the most important steps after purchasing Bitcoin is to secure it properly. Unlike traditional banks, Bitcoin transactions are irreversible, so if you lose access to your funds, there is no way to recover them. This section will cover the following:
- The importance of secure storage: Why keeping your BTC in an exchange isn’t ideal.
- Hot vs. cold wallets: The key differences between software wallets (convenience) and hardware wallets (security).
- Best wallets for Bitcoin: A breakdown of trusted crypto wallet options based on security, usability, and backup features.
- How to transfer Bitcoin to a wallet: A step-by-step guide on safely moving your BTC off an exchange.
Hot wallets (software wallets) like Trust Wallet vs MetaMask are user-friendly but remain connected to the internet, making them more vulnerable to cyber threats.
Cold wallets (hardware wallets) like Ledger Nano X and Trezor provide offline storage, offering maximum security against hacks.
Security
If you haven’t already learned how to securely use and store bitcoin, you will want to make that your priority. To get an idea of your current level of bitcoin security, consider the following questions:
- Does anyone else, including cryptocurrency exchanges and wallet providers, have access to your bitcoin private keys? If your answer is yes, then you will want to consider moving your bitcoin to a wallet that only you control. To understand why this is important, read “Why Do I Need a Bitcoin Wallet?”, and if you need help choosing a wallet, check out our guide. We recommend using a hardware wallet like a Ledger Nano X if you plan to store other cryptocurrencies, or a ColdCard if you plan to store bitcoin only.
- If your house burned down tomorrow, would you still be able to access your bitcoin? It’s important to store your private keys (or seed phrases) in multiple physical locations so that you can always recover your funds.
- Are you familiar with the many types of online scams and cryptocurrency scams? If not, then read our article “How to Spot Cryptocurrency Scams” to protect yourself from falling victim to one.
- Do you mind having your financial history, including account balances, recorded on a public ledger? Bitcoin is a transparent payment system where everyone can see everyone else’s transaction history. It is very difficult to transact privately using bitcoin, so be sure to understand the privacy best practices.
Keep Learning
Perhaps the most important thing to do after buying bitcoin is to keep learning! Bitcoin is a multifaceted system that involves economics, technology, and some pretty big social implications.
Vijay Boyapati’s article “The Bullish Case for Bitcoin” does an excellent job describing the monetary and economic significance of Bitcoin. The article takes about an hour to read, although it was originally released in four parts for easier reading (Part 1, Part 2, Part 3, Part 4).
For a better overall understanding of how Bitcoin works on a technical level, check out this video “How Bitcoin Works In 5 Minutes”.
Finally, it is important to learn about the social implications of Bitcoin. A great starting place is “Why Bitcoin Matters for Freedom” by Alex Gladstein of the Human Rights Foundation, which describes some of the social impact Bitcoin is already having today.
Understanding Bitcoin Transactions
If you’re new to Bitcoin, sending and receiving transactions can be confusing at first. This section will guide you through the fundamentals of Bitcoin transactions, which include:
- How to send Bitcoin: Similar to an email address, a Bitcoin address is a unique identifier where BTC can be sent.
- How to receive Bitcoin: Setting up a secure wallet address to accept payments or transfers.
- Bitcoin transaction fees: Bitcoin miners process transactions for a small fee, which fluctuates based on network congestion.
- Avoiding mistakes: How to double-check addresses and avoid sending Bitcoin to the wrong destination. Once a Bitcoin transaction is sent, it goes through the blockchain and requires confirmations before it’s fully processed.
To send Bitcoin, you’ll enter the recipient’s wallet address, set a network fee (higher fees ensure faster processing), and confirm the transaction. To receive Bitcoin, you’ll share your wallet address with the sender. Always double-check addresses to avoid mistakes—Bitcoin transactions are irreversible!
Bitcoin Saving Insights:
Many people become interested in Bitcoin because it is an alternative financial system outside the reach of central banks and governments and is not prone to inflation or economic interventionism. The current economic system causes inflation intentionally as a way to encourage people to spend rather than save. This is done to discourage people from “hoarding cash,” which ultimately makes traditional currencies a poor way to store value in the long term.
On the other hand, Bitcoin’s monetary policy is controlled by computer algorithms and cannot be changed. There will only ever be 21 million bitcoins, which means your portion of the total supply cannot be decreased through monetary inflation. Despite the volatility of bitcoin’s price, its monetary policy gives it the potential to be a good store of value in the long term. If you are on the fence about what to do with your bitcoin, consider saving it for the future.
Where to Use Your Bitcoin
Bitcoin isn’t just a speculative asset—you can actually use it in everyday life. This section will guide you through the different ways you can spend or utilize your BTC, including:
- Buying goods and services: A list of online and physical stores that accept Bitcoin payments.
- Bitcoin gift cards & payment platforms: How to convert BTC into usable gift cards for Amazon, Walmart, and more.
- Bitcoin debit cards: How crypto cards work and which providers let you convert BTC into fiat for real-world spending.
- Peer-to-peer (P2P) transactions: Using Bitcoin for direct payments without intermediaries.
Spending Insights:
If you decide not to save your Bitcoin, you can always use it online. After all, Bitcoin was intended to be a peer-to-peer electronic cash system. Paying for goods and services with Bitcoin is as simple as using a credit card—at checkout, simply send the requested amount to the provided Bitcoin address.
However, keep in mind that Bitcoin transactions must be confirmed before they can be fully processed. This wait time can last anywhere from 10 to 60 minutes, depending on network congestion and the size of your order.
As Bitcoin adoption grows, more businesses are accepting it as payment, with some even building their entire platforms on top of Bitcoin. Whether you’re looking to buy products, book travel, or subscribe to services, Bitcoin offers a decentralized and global payment method. For a list of places where you can spend your bitcoin, take a look at “Where to Spend Bitcoin”.
Tax & Legal Considerations
Owning Bitcoin entails tax and legal responsibilities that vary by country. In many places, Bitcoin is considered a taxable asset, which means you may be required to report gains or losses when selling, trading, or purchasing it. Here’s what you should know.
- Capital gains tax: If you sell Bitcoin at a profit, you may owe taxes on the gains. Holding BTC for more than a year often qualifies for lower tax rates.
- Crypto tax tracking: Tools like ZenLedger, CoinTracking, and Koinly help track Bitcoin transactions and generate tax reports.
- Spending Bitcoin & taxes: In some countries, using Bitcoin for payments is considered a taxable event, as it involves converting BTC into fiat.
- Regulatory compliance: Governments worldwide are tightening crypto regulations. Staying informed about local laws helps you avoid penalties or compliance issues.
Understanding your tax obligations ensures that you stay compliant and avoid unexpected liabilities while using or holding Bitcoin.