Bitcoin is increasingly attractive as an investment instrument. But I'm sure many of us don't understand what bitcoin is and how to invest in this cryptocurrency. I want to discuss how to buy and sell Bitcoin for beginners, including regulations and risks.
Why is investing in Bitcoin attractive and we need to see how investing in this financial instrument is still very new?
First , the price of Bitcoin, the most popular type of crypto coin (token), has increased quite dramatically. In just a matter of months, the value broke the new all-time high.
Bitcoin is up 354% in 2020 as well as breaking the record high price in 2017. Beating the return of other financial assets.
Second , I have observed that cryptocurrencies are increasingly being accepted as a means of payment. I myself have experienced firsthand, being asked to be paid in crypto currency for a digital transaction.
Recently, PayPal, the world's largest online transaction payment instrument - 300+ million users, announced that they now accept Bitcoin . PayPal users can store and make transactions with Bitcoin on PayPal.
The decentralized nature of cryptocurrency, without a central bank, makes it easy to use in digital transactions. Perfect for making buying and selling online payments.
Third , crypto asset trading has been allowed in Indonesia under Bappebti - the institution that regulates commodity futures trading. Buying and selling cryptocurrencies, such as Bitcoin, is legal.
Didn't the government announce that Bitcoin was illegal?
What is not or has not been allowed in Indonesia is to use Bitcoin for payment transactions. In Indonesia you cannot buy things and pay with Bitcoin.
The process of buying and selling in Bitcoin is carried out on an exchange or exchange. This exchange functions like a marketplace, a place that brings together buyers and sellers of bitcoin.
Services on the Exchange are buying, selling, storing and transferring crypto assets. Crypto asset transactions take place between the members of the exchange.
Exchange itself does not buy and sell. Its role is only to be a place for intermediaries and for that it will collect a number of fees, such as fees for buying and selling and withdrawing money.
Each exchange will determine the types of crypto assets that can be traded on their marketplace. Each exchange has a different list of crypto assets.
Unlike transactions on the stock exchange, where investors have to pass through a broker as an intermediary, on a bitcoin exchange, direct transactions take place between investors. There is no intermediary broker in transactions on the bitcoin exchange.
Storage of bitcoin or crypto assets is done in a 'wallet'. It is exactly the same when we have money it is stored in a wallet or safe, but the difference is that bitcoin storage is done digitally.
Wallet is provided by an exchange or investors can have their own wallet. Just like customers who can save their money in the bank or at home.
In the wallet, bitcoin owners store a 'private-key', which is a unique code to be able to access bitcoin. The code must be maintained carefully, not to be forgotten or stolen.
Bitcoin owners will get a wallet address. This address is like an account number at a bank, which is the destination if money transfers are made.
The most popular pair is Bitcoin / Rupiah (BTC / IDR).
Because bitcoin transactions occur between exchange members, the buying and selling price of bitcoin between exchanges can vary. Prices can differ depending on liquidity, whether or not there are busy transactions on the exchange.
Investors can monitor at any time on the internet about which bitcoin prices are the most competitive. Shows the comparison of Bitcoin prices on each exchange.
How do you do if you want to start selling, buying and storing Bitcoin? How much are the fees and fees for transactions?
How to Buy and Sell Bitcoin
I entered several bitcoin exchanges in Indonesia that are officially registered with Bappebti. See how to register, KYC, minimum deposit, how to buy and sell, and the fee requested by the exchange.
I summarize the steps below.
1. Open an Account
The first requirement is to register and open an account on the exchange. The method is quite easy.
The terms of opening an account are to fill in your name, email, address, and agree to the terms of the agreement and privacy policy.
Can apply via the mobile application or via the website. Applications can be downloaded on the Google PlayStore and Apple Store.
Everything is done online. There is no paper to fill in, nor need a wet signature.
2. KYC verification
After opening an account, the user must continue with KYC verification. Without passing this verification, users cannot make transactions even though they have opened an account.
KYC verification is an important process to protect all participants in the exchange and ensure that AML (Anti Money Laundering) policies are implemented properly.
The KYC verification process consists of uploading an ID photo, filling in personal data, taking selfie photos with normal movements and random movements. KYC data will be processed which takes at least 1 working day.
It's not uncommon for verification to fail. Some things that need to be considered during verification are making sure you don't have an account on the exchange, providing correct and accurate personal data, and providing photos that match your KTP.
KTP must be original and must be clear at the time of upload. When taking pictures, make sure the face is clearly visible without wearing a hat and glasses.
When selfie, make sure the face is in the middle so that the photo matches the face and in the photo liveness, the user will be asked to make one of the movements. When taking a photo, make sure to hold the motion for 3 seconds, if that fails, please repeat it up to a maximum of 3 times, if it is successful, please select the finish button, and wait for confirmation in the email.
3. Deposit
Passing verification, the next step is to make a deposit to be able to buy Bitcoin. There are two types of deposits, namely Rupiah and Bitcoin.
(a) Rupiah
Rupiah deposit is made to an account that has been determined. This deposit is used to buy Bitcoin or other crypto assets.
Minimum deposits start from IDR 30 thousand to IDR 50 thousand in general. However, there are also exchanges that ask for a minimum deposit of up to a minimum of IDR 500 thousand.
Some of the deposit methods offered by the exchange are:
bank transfer (account & virtual account)
e-wallet ( OVO , GoPay, ShoppePay)
Cash deposit to the office
PPOB (Alfamart etc.)
Credit Card, Debit Card (only overseas exchanges)
Please study each method because some are free, some are subject to a deposit fee. Some automatically arrive without the need to send proof of transfer, some have to send proof of transfer.
The most convenient way in my opinion is to use a virtual account (VA) because the money arrives immediately and there is no need to send proof of transfer. However, deposits with VA are subject to a deposit fee (check the fee exchange policy).
(b) Bitcoin
It can also deposit in the form of coins, it can be Bitcoin, Ethereum and other types of coins. On each exchange there is a list of coins that are accepted as deposits.
Deposit bitcoin or cryptocurrency can be used to buy other cryptos. Choose the appropriate cryptocurrency pair.
In fact, the easiest, fastest and cheapest way to deposit crypto assets, compared to rupiah or US $.
Exchange will issue a wallet 'address'. This address is used to send coins from other exchanges.
The fee is also cheaper than the cost of transferring money via bank.
For coins, exchanges have different minimum accepted deposits, depending on the type of coin.
(c) Accounts
For those who usually invest in stocks, surely you know that in the capital market, the customer's money is kept separate from the company's account to the Customer Fund Account (RDN) which is on behalf of the customer. Customers can access RDN from the Bank.
In different Bitcoin, the deposit money will be deposited in an exchange company account, for example in an account in the name of Indodax or TokoCrypto. The customer checks the rupiah deposit balance on the bitcoin platform application.
5. Pair of Crypto Assets
Before starting a transaction, the user must choose the pair or pair he wants to trade with. The most popular pair is Bitcoin against Rupiah, what is the price of Bitcoin in Rupiah.
This pair is the same as when buying foreign currency, USD to IDR, how much Rupiah costs 1 US $. There are many other pairs.
The types of crypto asset pairs that can be traded vary from exchange to exchange. As far as I know, Indodax currently offers the most crypto asset pairs, with over 100 crypto asset pairs.
However, beginners can start with the Bitcoin Rupiah pair, which is the most popular and most liquid crypto asset today. All exchanges provide this Bitcoin pair.
4. Order
To make a sale and purchase, the user must place an order on the application or exchange website. There are several types of orders that must be known because the type of order is related to the fee that must be paid.
(a) Limit (Maker)
This type of order is that the user places it at a certain price and not at the price that is in the market at that time. So the order does not happen immediately.
If it is a sell position, the limit order is placed at a price higher than the market price, if it is a buy position, it is placed at a price lower than the market price.
Pending orders will be entered in the Buy / Sell order queue (Order Book). That way, the member has become a Market Maker.
This type of order is called a 'maker' because it creates a new order. In contrast to the order taker, which follows the current market price.
This order is executed only when the market price moves to touch the price set by the limit order. As long as the price does not move at the posted price, no transaction will occur.
Exchange does not charge fees for this type of order maker. Zero buying and selling fee.
(b) Market (Taker / Instant)
This type of order can be executed immediately because it follows the existing market price position. So if it is a buy order, buy it at the current market price, if it is a sell order, sell it at the current market price.
That's why these orders are often referred to as taker or instant orders. It is called Instant because the order occurs immediately, while it is called a taker because it takes an existing price in the market and does not create a new price.
This type of order is charged by the exchange. The order fee is usually a certain percentage of the transaction value, ranging from 0.1% to 0.3%.
(c) Order Book
The order book is data provided by the exchange in the application, which shows the order of orders currently on the exchange based on price and quantity. When an order has been made, the order will be out of the order book.
The benefit of the order book is that it shows how prices are moving in the market and the depth of the order quantity. If you want to set a price, how much is appropriate so that the order placed can be executed, you can refer to the information in the order book.
4. Buy Sell
The process of buying Bitcoin is fairly straightforward. Starting by choosing the pair you want to buy and sell.
Place an order by entering the price and amount of Bitcoin you want to buy, then the amount of rupiah needed will appear. Choose the type of order, whether taker or maker.
You can also pay with crypto assets. Just choose the appropriate pair.
If the taker, the order will be executed immediately according to the existing market price. The amount of Bitcoin ownership will be updated immediately and the amount of the Rupiah deposit will decrease according to the purchase amount.
For the maker, the order does not occur immediately, wait until the match at the desired price. While not yet matched, the order will wait in the order book.
The unit for the amount of buying and selling Bitcoin can be up to eight digits after the decimal point, which is 0.00000001 BTC. So, users can transact with fairly small numbers (such as 0.4981537 BTC).
That's why I see that some exchanges can accept transactions as small as IDR 30 thousand. This amount can be done even though the price of 1 bitcoin reaches hundreds of millions because the digits of Bitcoin that can be purchased are as small as eight digits behind the comma.
The process of selling Bitcoin is the same as buying. Only now, after successful execution, the Rupiah deposit increases and Bitcoin holdings decrease.
5. Withdraw
Rupiah money can be withdrawn from the Exchange to the user's rupiah account. The method is quite easy, submit a withdrawal in the application.
Users can also withdraw bitcoins held on the exchange. All you have to do is enter the address of the wallet where you want to send bitcoins.
It takes a few minutes to 1 x 24 hours for the rupiah withdrawal process. Since exchanges use the banking network to send money, the length of time is determined by the process at the bank as well.
Withdrawals will be charged. There are also provisions regarding the minimum and maximum withdrawal for rupiah and crypto coins.
Each exchange sets a different withdrawal fee policy.
For rupiah withdrawals, some apply a fee in the form of a percentage of the withdrawal amount or a flat fee regardless of the amount of withdrawal made. Meanwhile, for the withdrawal of crypto assets a flat fee is paid for the coins transferred.
7. Costs
Exchange applies a number of fees and fees in bitcoin transactions, namely:
Buy and sell. The fee is calculated based on a percentage of the number of transactions.
Withdrawal. Fee for money withdrawal to a rupiah account. Some are percentage fees, some are flat regardless of the amount of withdrawal
Deposit. Fee for depositing rupiah to an exchange account to be able to purchase crypto assets.
Transfer. Crypto assets that are owned can be transferred to other exchanges or to fellow members in the same exchange.
8. Transfer Bitcoin
Crypto assets can be transferred to other exchanges or can be among members on one exchange. Just fill in the wallet address to which you want to send out the exchange or write down the user ID to send to one exchange.
Wallet address becomes a kind of account number when transferring money.
Blockchain transactions take about 30 minutes for Bitcoin, and 5-10 minutes for other assets. Quite fast, considering transactions are carried out between countries.
Every delivery of crypto assets can be checked by looking at the block confirmation on the blockchain and also on the support chain. Each exchange has a different minimum block confirmation limit to validate delivery of crypto assets.
For Bitcoin transactions, checks are made at https://www.blockchain.com/id/explorer , Ethereum at https://etherscan.io , Bitcoin Cash at https://www.blockchain.com/id/explorer .
Unlike deposits, which are usually free of charge, crypto bitcoin withdrawals will be subject to fees. And there are minimum and maximum withdrawal conditions in a day for crypto bitcoin.
9. Wallet
Wallet is a place to store crypto assets. Same with us keeping money in our wallets.
We'll get a wallet address. This address is used to transmit or receive crypto assets.
We can store crypto assets on an exchange, where the wallet will be managed by the exchange, or we can have our own wallet. Wallet security must be ensured because our assets are stored there.
The greater the ownership of bitcoin or other crypto assets, the more attention should be paid to this wallet. We want Bitcoin to be safe.
10. Security
Exchange implements 2FA (Two Factor Authentication) which is an online security feature, where users will verify their identity twice.
When logging in to an account on Exchange, after entering the user ID and password, the user will be asked to enter a special code sent via SMS or use Google Authenticator on a cellphone.
This method ensures that every transaction is validated by the user's own account. Not only do you have to know the user ID and password, but also have access to your cellphone, to be able to open an account.
11. Trading Features
For those who want to focus on trading, the exchange provides various features, namely:
Chart analysis to analyze technical prices, such as transaction history (orders and trades).
Order Book that shows the current order position. This information is important for analyzing possible price movements.
Stop Loss . An important cut-loss feature to manage the risk of sharp price fluctuations
Short-Selling. Can short-sell when the market is down.
OCO, or “One Cancels the Other” for placing two orders at the same time, limit and stop-limit orders, which are useful for taking profits and minimizing potential losses.
Experience Playing Bitcoin in Applications
Estimate Cost: IDR
Time Needed: 01 hours 00 minutes
How to Buy and Sell Bitcoin on the Crypto Marketplace Application
Bitcoin application
Download one of the Bitcoin marketplace applications that have been registered with Bappebti. Currently, Bappepti has granted licenses to 13 companies
Open an Account
Open an account on the Bitcoin marketplace application by filling in data and providing an identity document and a photo of yourself.
Document Verification
KTP verification is required and take a selfie. This data will be checked and approved by the marketplace as a condition for opening an account
Rupiah deposit
After the account is approved, the customer must deposit rupiah into the bank account of the marketplace company before they can make Bitcoin purchases.
Rupiah balance
Rupiah deposits can be checked in the in-app wallet which shows the balance of rupiah and other cryptocurrencies the customer currently has.
Buy Bitcoin
Bitcoin is one of the first and most popular cryptocurrencies. There are many other cryptocurrencies that are traded on crypto exchanges. To start a transaction the customer must choose a Bitcoin pair, namely Bitcoin with Rupiah (BTC / IDR)
Deposit Withdraw Bitcoin
Bitcoin as a digital asset can be deposited from other applications or can be withdrawn to be sent to other applications. To make a Bitcoin withdrawal deposit, the marketplace application provides a Bitcoin wallet address.
Bitcoin Chart
The marketplace application provides complete and comprehensive charts for Bitcoin and other digital currencies. The chart can be used for technical analysis.
Tools
Bitcoin Crypto Marketplace Application
Materials
Cell phone, cellphone
Bitcoin Investment Risks
Obviously the risk of investing in Bitcoin is not small.
On each exchange at the bottom of the site, it says “Disclaimer: Crypto asset trading carries high risk and opportunity . Make sure you use careful judgment in making decisions about buying and selling your assets. Exchange does not force users to make buying and selling transactions and all decisions to buy and sell your digital money assets are your own decision and are not influenced by any party. "
1. Price Fluctuation
The phenomenon of the increase in the bitcoin exchange rate that occurs so fast at the same time shows that the price of bitcoin can decline quickly too. High Risk High Return is a characteristic of cryptocurrencies.
Price fluctuations in Bitcoin can be extreme. The rise, and of course the decline, was extremely sharp.
Whoever played Bitcoin once told me that in 1 month the price of Bitcoin could jump 10 times. That means it can go down 10 times as well.
2. Breached Hacked
The blockchain system is very safe and transparent. The peer to peer mechanism makes the control process on the blockchain very solid.
Bitcoin security mechanism is to use public-key (this is the address in the wallet - it can be known publicly) and private-key (secret). To be able to control it, people must have these two keys, such as account numbers and PINs.
The problem is, when making Bitcoin transactions via Exchange, the private-key is not given, but is held by the exchange. Customer is only given a public-key.
However, what is prone is that there are many cases of exchanges being hacked, especially in 2019. You can check the internet about cases of exchange breaches in various countries.
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And the breach is not only happening on small exchanges, but big exchanges. Exchanges that already have millions of dollars in transaction value every day can be subject to hacker attacks and suffer significant losses.
This burglary, which aims to take digital assets, was carried out not only by outsiders but also insiders.
3. Regulation
The regulations regarding cryptocurrency are still quite new in Indonesia. Although these regulations provide solid legality for cryptocurrency trading in Indonesia, they also make a number of provisions that can pose risks to customers.
One of them is the provision that an exchange can have the status of being registered as a "Physical Crypto Asset Trader Candidate", then after that a maximum of 1 year apply to become a "Physical Crypto Asset Trader". Bappebti may reject applications after 1 year and if rejected, their registered status is revoked and they must return or transfer the member's crypto assets to another exchange.
The process of closing the exchange after 1 year from being registered can cause customer difficulties. Because they have to take care of asset transfers and ensure that the closed exchange fulfills its obligations.
Although the risk of cryptocurrency is not small, it is still an attractive instrument. Promises an alternative instrument with very attractive returns.
4. Fraud Mode
The risk of Bitcoin investment scams is not a figment. Quite a few cases of fraud on behalf of Bitcoin.
This is due to the increasing popularity of Bitcoin. And this is a new instrument.
The OJK Investment Alert Task Force said many irresponsible parties took advantage of the popularity of Bitcoin. The mode is that people offer high-yield investments without the risk of tricking others.
The Task Force has stopped several fraudulent modes under the guise of investing in cryptocurrency.
One example in 2015 there was a fraud case by an American citizen named Trendon Shavers. He founded a Bitcoin exchange company called Bitcoin Saving. Shaver was later found guilty of defrauding a US $ 150 million Ponzi scheme.
5. Forgot Password
What if you have a safe at home to store your valuables, then forget the combination of keys? It's a disaster ! Safe can not be opened.
The same thing happens if the bitcoin owner forgets the wallet PIN / password. Equally, you cannot open and sell Bitcoin because the wallet is stored in a private-key that is used to access Bitcoin.
Can I forget the password / PIN that cannot be reset, such as in the online banking application?
This is what distinguishes Bitcoin from a bank account or PayPal.
The design of Bitcoin is made in such a way that only the owner can know and control the wallet passwords and the private-key digital money. The goal is that no other person, country or institution, can open bitcoin, other than the owner.
This condition is different from the mobile application or PayPal account, where if the user forgets the password can be reset again with the help of the bank. In Bitcoin once forgot, it's gone. Cannot reset again.
Make sure to keep the private - key carefully, not only from theft, but also don't forget the PIN / password wallet combination. Remember carefully, don't forget.
This is a matter that seems simple, but has serious implications. The well-known newspaper NYTimes has written stories about people who have lost millions of dollars because they forgot their wallet PIN / password.
6. Incorrectly Send Wallet Address
Have you ever seen a wallet address?
The shape is alphanumeric which is quite long and unique. It is difficult to remember, in contrast to a bank account number which is quite short, so it is easy to remember.
The problem is, if the wallet address is wrong, bitcoins can be sent to the wrong person and cannot be recovered again. Unlike the wrong transfer at the bank, the customer may still be able to ask the bank to return the funds.
In bitcoin, there are no intermediaries, such as banks, so any transactions that have occurred cannot be canceled or reversed. Wrong writing of the wallet address will definitely be sent to the wrong person and it can't be done anymore.
So, make sure that the wallet address is written correctly, before sending bitcoins.
Tips for managing risk
Tips for Choosing a Bitcoin Exchange
What is Bitcoin
Crypto Regulation in Indonesia
Conclusion
Bitcoin is a very attractive type of investment, especially in terms of returns. This cryptocurrency has many benefits that make its price soar in a short time.
However, the risk is also not small, prices can fluctuate 10 times in 1 month. Moreover, because it is still not mature, there are many pros and cons regarding this instrument.
Crypto is really taking over and I'm happy is no longer difficult as it was to get started. Some reliable crypto wallet today like Atomic Wallet one of the best multi crypto wallet has made crypto very easy to everyone especially newbies. more about Atomic Wallet - https://atomicwallet.io