How do I buy Bitcoins?

Learning how to invest in bitcoin usually involves getting set up with a digital wallet and then signing up for a cryptocurrency exchange or broker that allows trading of cryptocurrencies like bitcoin. If you don’t want to invest in bitcoin directly, you can invest in a fund that buys bitcoin, like the Grayscale Bitcoin Trust.

“Important: Bitcoin is a cryptocurrency, which means it is a string of numbers. Bitcoin cryptocurrency is a distributed ledger of payment transactions, and when you own cryptocurrency, it just means you have access to the private key for a public account on the ledger.”

If you’re buying bitcoin directly, you must choose how much of the cryptocurrency to buy. You may even choose to purchase part of a bitcoin if you can’t afford an entire token. If you’re interested in cryptocurrencies in general, you might want to consider buying a portfolio of them to diversify your holdings, although most other cryptocurrencies rise and fall with bitcoin.

Most bitcoin investors hold onto the cryptocurrency for a while, but if you think the price will decline soon, you might want to sell some of your bitcoin. The easiest way to sell bitcoin is to cash it out on the exchange or broker you used to buy it.

As with all assets, there are some risks of investing in bitcoin. Volatility is the biggest risk of investing in bitcoin because the price can change quite rapidly with no warning.

Choose Where to Buy Bitcoin

Let’s start with where and how to buy bitcoin. Learning how to invest in bitcoin starts with setting up an account on a cryptocurrency exchange or broker that offers crypto trading. You also need a digital wallet to hold the bitcoin after you buy it.

Some of the most popular cryptocurrency exchanges are:

Coinbase (COIN)

With Coinbase, you don’t necessarily need a digital wallet because the company will store your bitcoin for free. However, you might still want a separate digital wallet because the cryptocurrency will be secure if hackers ever break into Coinbase. The exchange charges a base rate of 4% before waivers, which means the actual rate paid is less. The company waives part of the transaction fee based on what payment method you use. For example, Coinbase charges a 1.49% rate on bank account and Coinbase USD wallet conversions after the waiver. The company charges 3.99% on debit card or PayPal conversions and up to 1.5% on instant card withdrawals, with a minimum fee of 55 cents. The exchange is a good choice for beginners because the interface is simple, and there are limited transaction types.

Binance.US | Buy & Sell Crypto

Binance is harder to use than Coinbase, and there is a steep learning curve with it. Binance’s platform is user-friendly and offers three levels organized by trading experience, although it is still more difficult to use than Coinbase. Binance lacks a built-in digital wallet as well. The exchange charges 3% to 4.5% for debit or credit card transactions, although ACH transfers are free. Wire transfers are $15, while purchases are 0.02% to 0.1%. Trades are charged at the same rate. There is also an instant buy and sell fee of 0.5%.

Gemini

This crypto exchange offers site insurance to protect users’ digital assets against hacks on the exchange. Gemini offers products for both beginner and advanced cryptocurrency investors. There’s a simple interface for new investors, while its ActiveTrader platform is designed for advanced investors. Gemini is more expensive than other crypto exchanges, but its fees cover insurance and more features. The company charges trading and transaction fees of up to 1.49%, depending on the trading platform, 3.49% for debit card purchases, and other fees. Gemini also offers a digital wallet. For users of the exchange’s website and mobile app, it charges a flat 0.5% “convenience fee” on trading and transactions. In addition, it charges a flat fee ranging from 99 cents to $2.99 for transactions up to $200 and 1.49% of the order value for those higher than $200.

Coinmama

This exchange supports fewer cryptocurrencies than the other exchanges on this list and has higher fees. Coinmama offers a variety of payment options, including using Visa or Mastercard for transactions. The exchange differs from other exchanges because it doesn’t facilitate crypto transactions between two other parties. Instead, it sells bitcoin from its own inventory. Additionally, the company doesn’t provide a digital wallet. Coinmama requires a $50 minimum to buy cryptocurrency and a $200 minimum to sell. Trading fees amount to the market rate plus 2% to buy and the market rate plus up to 0.9% to sell. Transaction fees are up to 3.9% on purchases, plus 5% for credit and debit card transactions.

Some traditional brokers also offer cryptocurrency trading, including:

Robinhood

Robinhood is an online brokerage, and it offers bitcoin transactions in a way that brokers offer stock trades. In other words, you can enter different order types for your bitcoin trades, just as you do with stocks. For example, market orders are executed immediately, although Robinhood limits orders so that bitcoin won’t sell if the price falls more than 5% than what it was at the time you placed your market sell order or increases more than 1% from when you placed to buy order. This helps protect against volatility, which crypto exchanges do not. Unfortunately, you can’t withdraw bitcoin from Robinhood, which you can do with exchanges, although you can sell bitcoin at Robinhood. The company doesn’t charge any commission on transactions, instead making money through a pay-order-flow fee that varies according to trade. Robinhood also supports margin trading, which means you can borrow money to buy bitcoin. It charges interest on accounts that trade on margin.

eToro

eToro is also an online brokerage, so it offers charts and analysis tools similar to those it offers for stock trading on its platform. Unlike Robinhood, it’s a social trading platform that lets you see what other high-profile investors are doing with their bitcoin. You can also copy what they are doing with eToro’s CopyTrader. The brokerage also offers practice accounts for those who want to learn how to invest in bitcoin without actually putting any money into it at first. eToro also offers a digital wallet. The company doesn’t charge any deposit or trading fees other than spreads. There is also a $5 fee for withdrawals with a minimum amount of $50. Trades on eToro are conducted in U.S. dollars, so there is a conversion fee on withdrawing or depositing in a foreign currency.