The Ultimate Guide To Investing In Bitcoin (Philippines)

Bitcoin is a digital currency that has grown in popularity in the Philippines. It is a decentralised, peer-to-peer system for online payments, cutting out the middlemen or central authority, such as banks or remittance centres. It is a volatile market, and investors need to be aware of the risks involved. There are several ways to invest in Bitcoin in the Philippines, including through legitimate exchanges, such as PDAX and Coins.ph, or by using a crypto wallet, such as a hardware, software, or exchange wallet.

How to set up a Bitcoin account

Setting up a Bitcoin account can be as easy as installing an app on your mobile device or laptop. However, it's important to choose a secure wallet to store your Bitcoin. Here's a step-by-step guide on how to set up a Bitcoin account:

• Research: Familiarize yourself with the different types of Bitcoin wallets available, such as hot wallets (online) and cold wallets (offline). Compare popular options like Coinbase, Kraken, or Bitstamp to determine which platform suits your needs.
• Registration: Visit your chosen cryptocurrency exchange website and register by providing your email address and creating a strong password. You will then receive a verification code via email.
• Verification: Most exchange platforms have Know Your Customer (KYC) and Anti-Money Laundering (AML) protocols in place. Submit the required documents, such as proof of address and ID, to verify your account. The verification process can vary in duration, depending on the platform's requirements.
• Deposition: Once your account is verified, you can start depositing funds. Common methods include bank transfers and credit cards, but be sure to check the processing time and fees associated with each method, as they may vary across platforms.
• Buying and Selling Crypto: With your funds deposited, you can now buy and sell Bitcoin and other cryptocurrencies supported by the platform.

It's important to note that Bitcoin wallets come in various forms, including software applications, hardware devices, and even paper printouts. Each type of wallet has its own advantages and disadvantages in terms of security, accessibility, and user experience. Choose a wallet that aligns with your needs and ensure you understand the risks involved before investing in Bitcoin.

How to buy and sell Bitcoin

Step 1: Research and Understand the Risks

Before investing in Bitcoin, it is important to understand the risks involved. Cryptocurrencies are highly volatile and carry significant risk. It is recommended to assess your risk tolerance, conduct thorough market research, and understand the fundamentals of cryptocurrency and the technical analysis.

Step 2: Select a Crypto Exchange or Broker

Choosing a reputable crypto platform is crucial. When evaluating a platform, consider factors such as security (e.g., two-step authentication, SSL encryption), fees and pricing structure, user interface, and the range of supported cryptocurrencies. Examples of crypto exchanges include Binance, Coins.ph, and PDAX.

Step 3: Create an Account and Verify Your Identity

Once you've selected a platform, create an account by filling out the registration form and completing the Know Your Customer (KYC) process. Provide identification documents such as an ID card, passport, or driver's license, and proof of residence, such as a utility bill or bank statement.

Step 4: Fund Your Account

After your account is verified, you can add funds to it using various payment methods, including debit/credit cards, wire transfers, PayPal, Skrill, or Neteller. Compare the fees and processing times associated with each payment option before choosing the most suitable one for your needs and budget.

Step 5: Invest in Bitcoin

With funds in your account, you can start investing in Bitcoin. You have two main options: buying real crypto coins or trading them as Contract for Differences (CFDs). Buying real crypto coins gives you full ownership, while CFDs allow you to trade with a fractional amount. Consider factors such as market conditions, order types, and transaction costs when investing.

Step 6: Store Your Bitcoin Securely

It is important to store your Bitcoin securely in a digital wallet. Hardware wallets, such as Keepkey, Ledger, and Trezor, are considered the safest option as they are not connected to the internet. Software wallets, like Trust Wallet and Exodus, are another option but are less secure; be sure to enable two-step authentication. Exchange-provided wallets are generally not recommended due to security concerns.

Step 7: Monitor the Market and Sell When Appropriate

To make informed decisions about when to sell your Bitcoin, stay updated with market news and analysis. You can also employ technical analysis to predict price movements. Remember to consider the associated taxes and fees when selling your Bitcoin.

Additional Considerations

• Regulations and Legitimate Exchanges: In the Philippines, cryptocurrency transactions are legal, but crypto coins are not considered legal tender. Ensure you use a legitimate and BSP-regulated exchange, such as PDAX or Coins.ph, to trade or transact with crypto.
• Due Diligence: Understand the technology behind Bitcoin and the broader cryptocurrency market. Avoid investing based on emotions or impulse. Stay informed about potential scams and only invest through trusted platforms and sources.
• Volatility and Risk Management: The cryptocurrency market is highly volatile. Be prepared for price fluctuations and have a risk management strategy in place. Diversifying your portfolio across multiple cryptocurrencies can help mitigate risk.
• Long-Term Investment Perspective: Consider the long-term potential of Bitcoin and whether you are willing to hold your investment for an extended period. HODLing (Holding On for Dear Life) is a strategy employed by those who believe in the long-term growth of Bitcoin.

How to monitor the price of Bitcoin

Given the uncertainty and potential volatility of Bitcoin, it is a good idea to monitor its price, especially if you are trying to make a profit from an investment. Here are some ways to monitor the price of Bitcoin:

Websites

There are several websites that can be used to track the price of Bitcoin, including:

• BitcoinWisdom: Tracks the price of Bitcoin on major exchanges such as Bitstamp, BTC-e, and Coinbase, as well as in relation to other cryptocurrencies on exchanges like Cryptsy and Bter.
• CoinDesk: Features the Bitcoin Price Index (BPI), which averages prices from Bitfinex, Bitstamp, and BTC-e. The site also includes historical data for Mt. Gox.
• Bitcoinity: Tracks the price of Bitcoin across various exchanges and currencies. It also has a preferences section where you can customize your experience, such as the default theme, price precision, and whether to show prices in BTC or mBTC.
• Coinbase: While not a dedicated price tracker, Coinbase has a Charts view that tracks Bitcoin's price in USD and the number of transactions per day.
• Winkdex: Offers a clean interface with a range of options, from one day to a maximum setting that shows all available data.
• Binance: Features a dedicated Bitcoin page with a chart that tracks the price of Bitcoin against various fiat currencies.
• Blockchain: Draws data from Bitcoinity but presents it in a more user-friendly way, tracking only three currencies: USD, EUR, and GBP.
• Bitcoin Ticker: Tracks the value of Bitcoin in real time on six different exchanges, including BitStamp, Bitfinex, and Kraken. It also includes a news ticker and a real-time readout of buy and sell orders.

Mobile Applications

• Bitcoin Monitor: Visualizes crypto prices across exchanges, allowing for the comparison of prices for the same cryptocurrency on different exchanges. It also provides AI-driven trade signals and recommendations.
• Bitcoin Monitor - BTC Price Alert: Allows you to track and receive alerts for various cryptocurrencies, including Bitcoin, Ethereum, Litecoin, and more. You can set tracking periods, view historical prices, and set price decrease alerts.

How to store Bitcoin

When you buy Bitcoin, you are given a public key, which is your wallet address, and a private key, which allows you to access your Bitcoin. It is important to keep your private key safe and secure.

There are several different types of Bitcoin wallets, each with its own pros and cons. These include:

• Hardware wallets: These are devices similar to USB drives that store your private keys in cold storage, meaning they are not connected to the internet. They are considered one of the safest options for storing Bitcoin. Examples include Ledger, Trezor, and Coldcard.
• Desktop wallets: These are programs that are downloaded and installed on your computer. They are more secure than online and mobile wallets but are still connected to the internet, making them vulnerable to hacks.
• Mobile wallets: These are apps that run on your smartphone, allowing you to pay, trade, and store crypto. While they are convenient, they are more susceptible to malware and hacking. Examples include Guarda and Mycelium.
• Web wallets (or exchange wallets): These are wallets that store your private keys on a server controlled by a third party, such as an exchange like Coinbase. They are convenient but less secure, as they are frequently targeted by hackers.
• Paper wallets: These are physical documents that contain your public address for receiving Bitcoin and your private key. While paper wallets are highly secure against hacking attempts, they are vulnerable to physical damage, theft, or loss.

When choosing a Bitcoin wallet, it is important to consider your individual needs and preferences. If you prioritize security, a hardware wallet or paper wallet may be the best option. If you need quick and easy access to your Bitcoin, a mobile or web wallet might be more suitable. Additionally, it is recommended to use two-factor authentication (2FA) for added security.

Risks of investing in Bitcoin

Bitcoin is a digital currency that has grown in popularity in recent years. However, there are several risks associated with investing in Bitcoin that you should be aware of. Here are some of the key risks to consider:

• Volatile and fluctuating market: The price of Bitcoin is highly volatile and constantly changing. This means that there is no guarantee of getting a return on your investment. It is important to closely monitor the market and make small investments to mitigate the risk of significant losses.
• Cyberattacks and hacking: Bitcoin is technology-based, which makes it vulnerable to cyberattacks and hacking attempts. If your Bitcoin is lost or stolen due to hacking, there is typically no way to retrieve it. Additionally, exchanges and wallets are common targets for hackers, so it is crucial to carefully research and select secure options.
• Fraud and scams: The rise in popularity of Bitcoin has led to an increase in fraudulent activities and scams. Fake exchanges, Ponzi schemes, and complex investment schemes have been used to dupe unsuspecting investors out of their Bitcoins. It is important to exercise caution and conduct thorough research before engaging in any Bitcoin transactions.
• Lack of regulation: The Bitcoin market currently operates with little to no major regulations, as governments and authorities are still figuring out their stance on cryptocurrency. The lack of taxation and clear government policies can create uncertainty and potential legal complications in the future.
• Technology reliance: As a digital currency, Bitcoin is entirely reliant on technology. Without the underlying technology, Bitcoin has no value. This reliance on technology also exposes investors to cyber threats, online fraud, and the risk of system failures or shutdowns.
• Block withholding: Bitcoin mining involves solving mathematical equations called "blocks." However, a mining pool can use computational power to mine a block and withhold it from honest miners, allowing a select few to benefit while others miss out.
• Limited acceptance: While Bitcoin is gaining traction, there are still relatively few companies that accept it as a legitimate form of currency. This limited acceptance could impact its viability as a widespread payment system.
• Legal and tax considerations: The legal standing of cryptocurrency is still evolving, and investors need to stay updated on the latest pronouncements from government tax authorities. In the US, for example, the IRS has defined cryptocurrencies as property, subjecting investors to capital gains tax laws. The lack of centralized authority in cryptocurrency can create legal and financial risks for owners.
• Decentralized status: Cryptocurrencies like Bitcoin are decentralized, meaning they have no physical presence or backing from a central authority. While this frees investors from institutional control, it can also lead to legal complications, transaction disputes, and challenges in recovering funds in the event of theft or fraud.
• Fraud and money laundering: Cryptocurrencies have been associated with fraud, money laundering, and other financial crimes. While this may not directly affect all investors, it is important to recognize that victims of financial crimes involving cryptocurrency may have limited legal recourse and face challenges in recovering their funds.

These are some of the key risks associated with investing in Bitcoin. It is crucial to thoroughly understand these risks and conduct your own due diligence before deciding whether to invest in Bitcoin or any other cryptocurrency.

Frequently asked questions