4-Step Guide: How to Buy Bitcoin

Welcome to Financial Fluency - a newsletter designed to boost your understanding of financial terms and provide you with investment ideas for long-term financial success.

In today’s newsletter:

• A Look at the Markets: Performance March 2025

• Main Content: 4-Step Guide: How to Buy Bitcoin

• Quote of the Day: Raoul Pal

• What I’m Watching: Marko - Whiteboard Finance

• Word of the Day: Macro (Macroeconomics)

• Whenever you are ready, here is how I can help you

Receive Honest News Today

Join over 4 million Americans who start their day with 1440 – your daily digest for unbiased, fact-centric news. From politics to sports, we cover it all by analyzing over 100 sources. Our concise, 5-minute read lands in your inbox each morning at no cost. Experience news without the noise; let 1440 help you make up your own mind. Sign up now and invite your friends and family to be part of the informed.

Sign up today!

A Look at the Markets: Performance March 2025

Vanguard FTSE All-Word ETF (Accumulating)

An all-red month in all the charts for March as the market tried to digest the prospect of the Trump tariffs. My personal choice is to invest in a global index so I am not too exposed to one country. The drawdown in the FTSE all-world index is slightly less in the S&P 500, as we will see below.

iShares Core S&P 500 UCITS ETF USD (Accumulating)

As expected, the uncertainty in the USA means that the S&P500 performed worse than a global index in March.

Vanguard EUR Corporate Bond ETF (Accumulating)

In a strong bullish period, it is tempting to think that all your funds should be in stocks. When there is a correction, however, investors can see the power of diversification. While the Vanguard EUR Corporate bond ETF is still down, it is only by around 1%.

Bitcoin Monthly Performance

Bitcoin has been range-bound since the correction in February. A fairly modest drop, for Bitcoin, of 2.3% for March.

April’s performance will largely depend on how the market responds to the Trump tariffs announced this week.

4-Step Guide: How to Buy Bitcoin

Introductory Guide to Buying Cryptocurrency with Confidence

Introduction

Should you consider adding Bitcoin to your portfolio?

Bitcoin has gained significant traction and is now increasingly recognised as a mainstream asset by institutional investors and even governments. As with any investment, the decision to invest in Bitcoin depends on your personal goals, risk tolerance, and a thorough understanding of the asset. Some investors suggest allocating a small portion of your portfolio to Bitcoin.

If you’re interested in investing in Bitcoin, here’s a four-step guide to help you navigate the process.

Choose a Broker

As with any asset, choosing a broker or provider is your first step.

I would always recommend choosing a well-established broker like Coinbase, Binance, Kraken, or Gemini. When choosing a broker, consider factors such as ease of use, transaction fees, available cryptocurrencies, and customer support. You may also be limited by geographic location and regulatory requirements.

Choosing a broker with a good reputation may give you peace of mind, but remember that even FTX had many supporters and advocates before its collapse.

On-Ramping - Converting Traditional (Fiat) Money to Digital Money

Crypto on-ramps and off-ramps serve as the gateways between traditional banking and the cryptocurrency ecosystem.

Most exchanges require identity verification through Know Your Customer (KYC) procedures, including government ID, proof of address, and sometimes biometric verification, before allowing you to deposit funds through bank transfers, cards, or payment services like PayPal. While some platforms enable direct purchases of Bitcoin with fiat currency, others require an intermediate step of converting to stablecoins like USDT (Tether), which are designed to maintain a value closely pegged to the US dollar, though slight fluctuations can occur. The conversion methods typically involve different fee structures, with credit card purchases often carrying higher fees (3-5%) compared to bank transfers (0-1.5%), making it worthwhile to compare options before completing your first transaction.

Many investors choose to keep their money in digital form rather than converting it back to fiat currency.

Buy Your Asset - Bitcoin or Other Major Cryptocurrencies

Once your money is on the exchange, in either fiat or digital form, it is a relatively straightforward process to buy your asset.

You can buy your assets at a current market price or set a buy limit order to buy at a lower price. You do, however, run the risk of missing the purchase in the event that the price increases significantly.  Buying is not the end of the process - you must decide how to securely store your digital assets.

There are two main options: leave the assets on the exchange, as you would with a stockbroker which has more regulatory protection, or transfer them to a hardware wallet (software wallets provide a middle-ground or hybrid option).

Highly Recommended - Transfer to a Hardware Wallet

I would not be happy to leave my cryptocurrencies on any exchange and self-custody is recommended.

This is not a reflection of the exchanges, but considering what happened to FTX, transferring your assets to a hardware wallet is the best practice. You should buy your hardware wallet directly from the manufacturer, such as Trezor or Ledger, before setting up a seed phrase by following the manufacturer’s instructions.  Even a hardware wallet has risks: if you lose both your wallet and your seed phrase, your crypto assets become inaccessible.

Moving your cryptocurrency from an exchange to a hardware wallet is an easy process by following the instructions on the platform.

Conclusion

You now should be the proud owner of some cryptocurrency.

However, I understand that this process might be off-putting for some investors. Next week, I will show you how to gain exposure to Bitcoin without actually buying or storing it directly. Is Bitcoin a good fit for your portfolio considering your long-term objectives and goals?

Note that I have concentrated on Bitcoin this week but the process is the same for other major cryptocurrencies.

Glossary of Terms

Broker/Exchange: Platform that facilitates the buying and selling of cryptocurrencies.

Transaction Fee: Cost charged for processing cryptocurrency transactions on the blockchain.

Fiat Money: Government-issued currency not backed by physical commodities (e.g., USD, EUR, GBP).

On-ramp: The financial service or platform that allows users to convert traditional fiat money (like USD or EUR) into cryptocurrencies, serving as an entry point to the digital asset ecosystem.

Off-ramp: The financial service or platform that enables users to convert cryptocurrencies back into traditional fiat currencies, providing an exit point from the digital asset ecosystem.

KYC (Know Your Customer): Verification process to confirm customer identity.

Stablecoin: A type of cryptocurrency designed to maintain a stable value by being pegged to a reserve asset, such as a fiat currency (e.g., USD, EUR) or a commodity (e.g., gold), reducing volatility in digital transactions.

Hardware Wallet: Physical device that stores cryptocurrency private keys offline.

Seed phrase: A sequence of randomly generated words that serves as a backup for a cryptocurrency wallet, allowing users to recover their funds if they lose access to their wallet or private keys.

Private Keys: Cryptographic keys that provide mathematical proof of ownership of a specific cryptocurrency address, allowing the holder to sign and authorize transactions from that address.

Self-Custody: Taking personal control of your cryptocurrency rather than leaving it with a third party.

As always, none of this is financial advice. Everyone should invest according to their personal circumstances, risk tolerance and financial goals.

Quote of the Day: Raoul Pal

For many, the idea of investing in Bitcoin or other major cryptocurrencies comes from this concept.

I will ask Raoul Pal’s bot to explain further:

Do you agree with Raoul Pal?

What I’m Watching: Marko - Whiteboard Finance

Some more ideas about buying Bitcoin.

Word of the Day: Macro (Macroeconomics)

Macro - noun/prefix - from Greek "makros" meaning "large" or "long" - in economics, refers to the study of economy-wide phenomena and the behaviour of the economy as a whole, rather than individual markets or businesses.

Context and Usage: Macro is commonly used as a shorthand for macroeconomics, which examines broad economic aggregates like national income, unemployment rates, inflation, and GDP growth. It contrasts with microeconomics, which studies individual markets, firms, and consumer behaviour.

Related Terms:

• Macro indicators - broad economic measurements that reflect the overall health of an economy (e.g., GDP, unemployment rate, inflation)

• Macro policy - government actions aimed at influencing the economy as a whole, typically through fiscal policy (government spending and taxation) or monetary policy (interest rates and money supply)

• Macro analysis - evaluation of economic trends and patterns at the national or global level

Raoul Pal’s Context

Raoul Pal studies how macroeconomic trends affect markets.

He focuses on how money moves through the financial system, how central banks set policies, and how markets rise and fall in cycles. He believes that factors like government debt, population changes, and new technology create investment opportunities. Through Global Macro Investor and Real Vision, he explains how the flow of money influences asset prices.

He often talks about Bitcoin, technology stocks, and digital assets as investments that benefit when central banks increase the money supply.

Whenever you are ready, here is how I can help you:

We provide Business English lessons and Cambridge and IELTS preparation courses. You can book an online lesson over Zoom here:

You can book a free 20-minute consultation with Iain over Zoom here:

Why not subscribe to our sister Business Fluency newsletter for English students interested in understanding essential business terms and concepts and providing you with practical strategies to boost your business and career prospects?

Disclaimer:

This newsletter is for informational and educational purposes only and should not be construed as financial advice. The information contained herein is generic and does not take into account your individual financial circumstances. You should always consult with a qualified financial professional before making any investment or financial decisions.

Additionally, the authors and/or publishers of this newsletter may hold investments in securities or other financial instruments mentioned herein. These are included for illustrative purposes only and should not be taken as a recommendation to buy or sell such securities or financial instruments.