Buying bitcoin or other cryptocurrencies can be a fun way to explore an experimental new investment. However, it is also true that any investment in cryptocurrency should carry a warning label such as cigarettes: “This product can be harmful to your finances. Never buy more than you can afford to lose. “
The value of Bitcoin – the world’s first and most popular cryptocurrency – has risen from $ 3,237 in December 2018 and is now breaking new record highs (see price below). Like all cryptocurrencies, Bitcoin is experimental and subject to much higher volatility than many proven assets such as stocks, bonds, and mutual funds.
A rule of thumb is not to invest more than 10% of your portfolio in individual stocks or risky assets like Bitcoin. If you are new to investing, learn more about how to invest money.
Current Bitcoin trading price
The spot price for Bitcoin exceeded $ 50,000 for the first time on February 16, 2021. Here is the price in US dollars to buy a bitcoin today:
Data is pulled from Google Finance and can be delayed up to 20 minutes. Information is provided for informational purposes only and not for commercial purposes or advice.
Buying Bitcoin and other cryptocurrencies in 4 steps
Decide where to buy bitcoin. Cryptocurrency exchanges like Coinbase and some traditional brokers like Robinhood can get you to invest in Bitcoin.
Think about how you can store your cryptocurrency. Do you keep your Bitcoin in a hot or cold wallet?
Do your shopping. Find out how much you want to invest in bitcoin.
Manage your investment. Determine your long-term plan for this asset.
1. Decide where to buy Bitcoin
There are several ways to buy Bitcoin and other cryptocurrencies, including exchanges and traditional brokers.
You can buy Bitcoin on several cryptocurrency exchanges. Many charge a percentage of the purchase price. Do your due diligence to find the right one for you. Some of the most popular exchanges are:
Coinbase: This is a popular choice for US Bitcoin buyers, also because you can easily link your bank account. Coinbase also offers access to Etherium, Litecoin and other cryptocurrencies. For each transaction, Coinbase calculates a spread (an adjustment to the buying or selling price of an investment) of approx. 0.5% plus a fee. The fee is higher than a variable percentage based on region and payment method – for example, 1.49% for a purchase funded through a US bank account – or a flat fee that ranges from $ 0.99 depending on the amount transferred and $ 2.99. (Would you like to know more? Read our Coinbase review.)
Binance: Binance is the world’s largest exchange by volume for all cryptocurrencies and charges a 0.1% fee on all crypto trades (some discounts are available) as well as a withdrawal fee. In general, you can only shop using cryptocurrency, although Binance recently added the option to pay by credit card for an additional fee (this option is not available in some US states).
Twins: This US-based crypto exchange trades Bitcoin, Ether, Bitcoin cash, Litecoin and Zcash. Transaction fees range from $ 0.99 to 1.49% of your order depending on the size of the purchase or sale, plus a fee of approximately 0.5%.
Coinmama. This exchange trades eight cryptocurrencies, including Bitcoin. Coinmama requires a purchase of at least $ 60 and charges a 5.9% transaction fee (plus an additional 5% fee for credit card purchases).
Traditional stock brokers
Currently, there are few options among traditional brokers that offer customers the ability to buy and sell Bitcoin. Robin Hood was the first mainstream investment broker to offer Bitcoin (Robinhood Crypto is available in most, but not all, US states). Like its stock trading platform, Robinhood does not charge any fees for Bitcoin trades. TradeStation offers trading, including Bitcoin, as well as crypto eToro – With a unique social trading platform that allows users to match the movements of popular traders.
Other brokers have announced plans to offer cryptocurrency trading in the near future.
Other ways to buy or invest in bitcoin
Bitcoin ATM. These work like regular ATMs, only you can use them to buy and sell Bitcoin. Coin operated radar shows more than 7,000 Bitcoin ATMs in the US
Peer-to-Peer Bitcoin Owners. You can buy bitcoins directly from other bitcoin owners, much like you would buy items on Craigslist through peer-to-peer tools like Bisq, Bitquick, and LocalBitcoins.com. Use extreme caution when buying Bitcoin directly from individuals.
Grayscale fund. Grayscale Investments is a digital currency asset manager. Two of its investment trusts – the Grayscale Bitcoin Trust (its ticker symbol is GBTC) and the Grayscale Ethereum Classic Trust (ETCG) – are publicly traded over the counter, which means you can buy them through many discount brokers. There are fees, and GBTC often trades at a premium, which means that GBTC stocks often cost more than Bitcoin, even though Bitcoin is the only holding. It is believed that some investors will be willing to pay additional fees to buy Bitcoin through a traditional exchange without worrying about wallets and custody.
What you should know before buying
Have information ready that you may need. Setting up a cryptocurrency account only takes a few minutes. However, you will need to provide some information, including your social security number and your bank account, debit card, or credit card number, in order to fund your Bitcoin account. Some providers may also require photo identification. Write down and protect any new passwords for your crypto account or digital wallet (more on this below).
Don’t use a credit card. Although you can buy Bitcoin by credit card from some vendors, investing in a high-yielding product like a credit card by borrowing is never a good idea.
Bitcoin and other cryptocurrency investments are not insured by the Securities Investor Protection Corporation Protection against exchange errors or theft that conventional stockbroker accounts enjoy up to $ 500,000. Some exchanges like Coinbase offer private insurance, but that doesn’t protect against individual online breaches like someone stealing your password.
Use a secure, private internet connection is important whenever you make financial decisions online. Buying Bitcoin in a coffee shop, in your hotel room, or over any other public internet connection is not recommended.
2. Decide how to store Bitcoin
Bitcoins can be stored in two types of digital wallets: a hot wallet or a cold wallet. With a hot wallet, transactions are generally faster, while a cold wallet often includes extra security steps that will help protect your assets, but will also take longer.
With a hot wallet, Bitcoin is stored in the cloud by a trustworthy exchange or a trustworthy provider and accessed via an app or a computer browser on the Internet. Every trading exchange you join offers a free Bitcoin wallet that will automatically save your purchases. However, many users prefer to transfer and store their Bitcoin with a third-party hot wallet provider, which is usually also free to download and use.
Why should you choose a wallet from a provider other than an exchange? While proponents say the blockchain technology behind Bitcoin is even more secure than traditional electronic money transfers, Bitcoin hot wallets are an attractive target for hackers. How Bitcoin.org warns: “Many exchanges and online wallets have had security flaws in the past, and such services still generally do not offer enough insurance and collateral to keep money like a bank.”
There are many hot wallet providers that offer a range of wallet types. Here are a few:
Coinbase: Coinbase is also a popular bitcoin currency exchange. It offers free online hot wallets and insures losses due to security breaches or hacks, employee theft or fraudulent transfers.
Electrum: Software that can be used to store your Bitcoin on your laptop or desktop computer.
Blockchain: Like Coinbase, blockchain is a hot online wallet. Unlike Coinbase, blockchain is not a currency exchange and is seen as a less attractive target for hackers.
Mycelium: A Bitcoin wallet for phones only with versions for Android or iPhone users.
Although some hot wallet providers offer insurance for large-scale hack attacks, this insurance may not cover one-off cases of unauthorized access to your account.
A cold wallet is a small, encrypted portable device that you can use to download and carry your Bitcoin. Cold wallets can cost up to $ 100 but are considered to be much safer than hot wallets.
Cold wallet providers include:
For sure: This company offers small key size cold wallets between $ 80 and $ 170.
Ledger Nano: Ledger Nano is designed like a USB stick and has cold wallets between $ 60 and $ 120.
Use strong password and two-factor authentication when creating accounts for your digital wallets and currency exchange.
3. Buy one
After you’ve linked your bitcoin wallet to the bitcoin exchange of your choice, the final step is the easiest: you decide how much bitcoin you want to buy. While Bitcoin made news in January by surpassing $ 40,000 for the first time, Bitcoin (trading symbol BTC or XBT) can be bought and sold for fractional stocks, so your initial investment can be as low as $ 25, for example.
4. Manage your investment
If you like the idea of day tradingOne option is to buy bitcoin every now and then and then sell it when its value increases. However, if you see a future for Bitcoin as a digital currency, your investment plan may be to buy and hold for the long term.
Should You Buy Bitcoin?
Bitcoin is an incredibly speculative and volatile purchase. Stock trading can give you a similar thrill – and choosing stocks from established companies is generally less risky than investing in Bitcoin.
Which online brokers offer Bitcoin?
Of the online brokers and cryptocurrency exchanges that NerdWallet reviews, the following are currently offering Bitcoin.
Access to buy and sell more than 30 cryptocurrencies.
Trading platform with access to 15 cryptocurrencies.
Seven cryptocurrencies including Bitcoin, Bitcoin Cash and Ethereum.
Offers three cryptocurrencies for trading: Bitcoin, Ethereum and Litecoin.
Offers trading in five cryptocurrencies including Bitcoin, Bitcoin Cash and Ethereum.
Offers four cryptocurrencies for trading: Bitcoin, Bitcoin Cash, Ethereum, and Litecoin.
* These providers are NerdWallet advertising partners.