Man shows bitcoin: How to invest safely in bitcoin

How to invest safely in bitcoin

Øyvind Kvanes23/01/2021

It can be difficult to get started with investing in bitcoin and other cryptocurrencies. The technology can be challenging to get acquainted with; there are many rogue players in the market and software for sending and storing bitcoin can be difficult to use. However, with sufficient preparation, a critical mind and common sense, investing in cryptocurrency is both safe and easy. Technically, it is quite easy to buy bitcoin, and you can read more about it here.

But it is a good idea to first go through what you should think about before you buy. In this article, we want to describe which factors you should take into account and explain how you can get started with investing in bitcoin safely and easily with us.

What should you think about when investing in bitcoin?

Bitcoin is by far the biggest cryptocurrency, and in our opinion it makes sense to get acquainted with this currency first. You can trade bitcoin for several different currencies, and internationally it is quite common to measure the Bitcoin price against the dollar. At Firi, you can trade bitcoin directly for Norwegian kroner, and in this way you avoid having to deal with the USD exchange rate.

Note: We cannot offer any advice in relation to price development. This article only describes how to invest and store bitcoin safely. Firi does not have knowledge concerning whether the price will increase or decrease.

Use a registered crypto exchange

The Ministry of Finance adopted new money laundering regulations on 15 October 2018. It entailed that all Norwegian providers of exchange and storage services for virtual currency had to adhere to the obligations under the Money Laundering Act, and must therefore be registered with the Financial Supervisory Authority of Norway (Finanstilsynet). We recommend everyone to check that the organization you want to buy bitcoin from is registered with Finanstilsynet before you establish customer relationships and carry out a transaction.

This makes it safer for you to invest without worrying about rogue players. As long as you follow our recommendations and other serious platforms, your valuables are safe in your account.

You can generate a report on the Norwegian Financial Conduct Authority’s website, which shows which organizations have a license to “provide exchange and storing services for virtual currency" (at present only available in Norwegian). Five actors are registered in Norway, at present. Firi is the only registered exchange that is open at present; you will find Firi AS registration information here.

Fees and prices on cryptocurrency trading

Some actors charge heavy fees for buying and selling bitcoin. It is not uncommon to see claims about trading being "free of charge", but it usually means that you get a very bad exchange rate. Along with the fact that the price can fluctuate widely, it can be hard to gain an understanding of how it all works.

Before you buy, you should make sure that you know what the price of bitcoin is. The easiest is to search for "BTC NOK" on Google. Other good services are Coinmarketcap, Coingecko or Tradingview. You can then compare these prices with what the stock exchange you want to buy from offers you.

As shown above, we clearly state what the price is and how much we charge. Firi charges 0.5%, i.e. about NOK 458 in this case. The total price is shown before the trade is completed, in this case NOK 92,122. This corresponds to about 1.5% above market price, which is very good. There are many players in the market that charge fees of up to 7-8%, so it is important pay attention.

Most exchanges also charge a fee for withdrawing cryptocurrency. We have to pay to carry out withdrawals of cryptocurrency, and therefore need to charge a fee for this. You will find information about our fees and withdrawal limits here. At Firi, we have low fees for this, but other exchanges charge very high fees for withdrawals. They can make good money on customers who do not check this before they trade.

Storage of bitcoin

The following is very important. If you buy bitcoin on an exchange such as ours, you receive an account where the bitcoin you buy is stored. Unfortunately, there are several stories going around about exchanges that have lost customers' cryptocurrencies, so it is important to make sure that the exchange you use stores your crypto in a safe way.

We have written a longer post about how we ensure bitcoin and other cryptocurrencies are securely store with us. We have extensive experience and extensive safety routines for this.

How to store cryptocurrency?

You can also secure cryptocurrency yourself. This is something that separates bitcoin and crypto from other currencies and financial products. You can store your assets yourself, and send transactions directly to whomever you want, without going through third parties. It is this aspect that makes bitcoin revolutionary – full personal control over your own assets. However, this does present challenges if you are not familiar with how it works.

There is no shortage of people who have lost access to their holdings, and consequently lost their money. It is also one of the downsides of cryptocurrency and decentralization, there is no one who can restore your inventory once you have lost it. With greater freedom also comes greater responsibility.

We recommend that you familiarize yourself thoroughly with how bitcoin works and how best to secure your funds before making large withdrawals to your own wallet. Feel free to start off by sending a small amount, so you do not lose considerable assets if you make a mistake.

Here is an example: Start with a small amount and send NOK 50 in bitcoin from your Firi account to your external bitcoin wallet. If this works, send the rest of your inventory.

Read more about how to use a digital wallet, or "crypto wallet", to store your cryptocurrency.

How to invest safely in bitcoin

Our recommendations in short:

  • Use a serious and registered party.
  • Confirm the price you pay, including fees.
  • Examine how the stock exchange you use stores your funds.
  • Learn how bitcoin wallets work before you secure your funds.

We hope this article provided you with a slightly better idea of how to invest safely in bitcoin. Read more here about how you can get started and buy cryptocurrency on Firi.