L
% How to Buy Bitcoin Education General Dictionary Economics Corporate Finance Roth IRA Stocks Mutual Funds ETFs 401(k) Investing/Trading Investing Essentials Fundamental Analysis Portfolio Management Trading Essentials Technical Analysis Risk Management News Company News Markets News Cryptocurrency News Personal Finance News Economic News Government News Simulator Your Money Personal Finance Wealth Management Budgeting/Saving Banking Credit Cards Home Ownership Retirement Planning Taxes Insurance Reviews & Ratings Best Online Brokers Best Savings Accounts Best Home Warranties Best Credit Cards Best Personal Loans Best Student Loans Best Life Insurance Best Auto Insurance Advisors Your Practice Practice Management Financial Advisor Careers Investopedia 100 Wealth Management Portfolio Construction Financial Planning Academy Popular Courses Investing for Beginners Become a Day Trader Trading for Beginners Technical Analysis Courses by Topic All Courses Trading Courses Investing Courses Financial Professional Courses Submit Table of Contents Expand Table of Contents Before You Buy Bitcoin How to Buy Bitcoin Hot Wallets vs Cold Wallets How to Buy Bitcoin With PayPal How to Buy Bitcoin With a Credit Card Alternative Ways to Buy Bitcoin How to Sell Bitcoin Bitcoin FAQs The Bottom Line Cryptocurrency Bitcoin
How to Buy Bitcoin By Adam Hayes Full Bio Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance.
visibility
402 views
thumb_up
14 likes
C
Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses.
thumb_up
46 likes
J
He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem. Learn about our editorial policies Updated August 12, 2022 Reviewed by JeFreda R.
thumb_up
9 likes
L
Brown Reviewed by JeFreda R. Brown Full Bio Dr.
thumb_up
27 likes
R
JeFreda R. Brown is a financial consultant, Certified Financial Education Instructor, and researcher who has assisted thousands of clients over a more than two-decade career.
thumb_up
42 likes
O
She is the CEO of Xaris Financial Enterprises and a course facilitator for Cornell University. Learn about our Financial Review Board Fact checked by Kirsten Rohrs Schmitt Fact checked by Kirsten Rohrs Schmitt Full Bio Kirsten Rohrs Schmitt is an accomplished professional editor, writer, proofreader, and fact-checker.
thumb_up
38 likes
Z
She has expertise in finance, investing, real estate, and world history. Throughout her career, she has written and edited content for numerous consumer magazines and websites, crafted resumes and social media content for business owners, and created collateral for academia and nonprofits.
thumb_up
18 likes
S
Kirsten is also the founder and director of Your Best Edit; find her on LinkedIn and Facebook. Learn about our editorial policies Investing in Bitcoin (BTCUSD) can seem complicated, but trading Bitcoin only requires an account at a service or an exchange, and safe storage practices are recommended. Bitcoin investors need a cryptocurrency exchange account, personal identification documents if you are using a Know Your Client (KYC) platform, a secure connection to the Internet, a method of payment, and a personal wallet outside of the exchange account.
thumb_up
14 likes
T
Valid methods of bitcoin payment include bank accounts, debit cards, and credit cards and it's possible to get bitcoin at specialized ATMs and via P2P exchanges. Key Takeaways Bitcoin's value is derived from its store of value and payment system and its finite supply.A bitcoin's wallet or exchange account can be compromised so it's important to practice proper storage and security measures.Bitcoin can be purchased through services like Coinbase, PayPal, and Robinhood.
thumb_up
28 likes
N
Before You Buy Bitcoin Privacy and security are important issues and investors who gain the private key to a public address on the Bitcoin blockchain can authorize transactions. Private keys should be secret and investors must be aware that the balance of a public address is visible. Individuals can create multiple public addresses and distribute their collection of Bitcoin over many addresses.
thumb_up
12 likes
J
A good strategy is to keep significant investments at public addresses that are not directly connected to those used in transactions. The history of transactions made on the blockchain is transparent but identifying user information is not. On the Bitcoin blockchain, only a user's public key appears next to a transaction, making transactions confidential but not anonymous.
thumb_up
8 likes
D
Less Than 1 Bitcoin Investors can buy less than a whole bitcoin. Whether a wallet is one bitcoin, 15 bitcoins, or 0.01 bitcoins, investors are equally exposed to the ups and downs. At Coinbase, a $2.00 minimum investment is required.
thumb_up
28 likes
A
Bitcoin transactions are more traceable than cash because they are available for public view and it is very difficult to trace the transacting parties on the cryptocurrency's blockchain. However, researchers and the FBI have claimed they can track transactions made on the Bitcoin blockchain to users' other online accounts, including their digital wallets. When an investor creates an account on Coinbase, they must provide their identification and if they send it to another wallet, it can still be traced back to the Coinbase purchase that is connected to the account holder's identity.
thumb_up
35 likes
E
Be sure to check out the legal, regulatory, and tax status of purchasing and selling bitcoin where you live before transacting. Bitcoin Returns 1-Day
1-Week
1-Month
1-Year -0.3%
-0.4%
-8.3%
-39.3% As of 12:00 p.m. EST, March 14, 2022 Source: TradingView
How to Buy Bitcoin
Step 1 Choose a Crypto Trading Service or Venue Exchanges are a convenient option because they offer a breadth of features and more cryptocurrencies for trading, enabling investors to buy, sell, and hold cryptocurrency, and allow its users to withdraw crypto to their online wallet for safekeeping.
thumb_up
37 likes
H
When creating a cryptocurrency exchange account, use two-factor authentication and a long, unique password that includes a variety of lowercase letters, capitalized letters, special characters, and numbers. There are many types of cryptocurrency exchanges.
thumb_up
49 likes
E
Some exchanges allow users to remain anonymous and are decentralized and do not require users to enter personal information. For certain demographics, like refugees or those living in countries with little to no infrastructure for government credit or banking, anonymous exchanges can help bring them into the mainstream economy.
thumb_up
37 likes
A
Popular exchanges in the United States are not decentralized and follow laws that require users to submit identifying documentation. These exchanges include names like Coinbase, Kraken, Gemini, FTX, and Binance which offer Bitcoin and a growing number of altcoins. Binance caters to a more advanced trader, offering more serious trading functionality and a better variety of altcoin choices.
thumb_up
6 likes
A
FTX, a fast-growing crypto exchange that has garnered a multibillion-dollar valuation, offers a restricted number of altcoins to U.S. investors.
thumb_up
4 likes
L
Step 2 Connect Your Exchange to a Payment Option Depending on the exchange, personal identification is required and may include pictures of a driver's license or Social Security card, as well as information about your employer and source of funds. The process is largely the same as setting up a typical brokerage account. At most exchanges, you can connect your bank account directly or you can connect a debit or credit card.
thumb_up
19 likes
J
Although you can use a credit card to purchase cryptocurrency, cryptocurrency price volatility could inflate the overall cost of purchasing a coin when combined with a credit card's interest. Bitcoin is legal in the United States, but some banks may question or even stop deposits to crypto-related sites or exchanges.
thumb_up
41 likes
R
Fees vary for deposits via a bank account, debit, or credit card, and exchanges also charge fees per transaction. Step 3 Place an Order Cryptocurrency exchanges have evolved to mimic the same level of features as their stock brokerage counterparts. Crypto exchanges offer several order types and ways to invest.
thumb_up
35 likes
S
Almost all crypto exchanges offer both market and limit orders, and some also offer stop-loss orders. Kraken offers the most order types such as market, limit, stop-loss, stop-limit, take-profit, and take-profit limit orders.
thumb_up
42 likes
E
Exchanges also offer ways to set up recurring investments, allowing clients to dollar-cost average into their investments of choice. Coinbase, for example, lets users set recurring purchases for every day, week, or month.
thumb_up
21 likes
M
Step 4 Safe Storage Bitcoin and cryptocurrency wallets are a place to store digital assets more securely. Keeping crypto outside of the exchange and in a personal wallet ensures that investors have control over the private key to the funds.
thumb_up
50 likes
C
An exchange wallet is offered but not recommended for large or long-term cryptocurrency holdings. Hot Wallets vs Cold Wallets
Hot Wallets Online wallets, also known as hot wallets are wallets on devices such as computers, phones, or tablets.
thumb_up
3 likes
M
These wallets generate the private keys to your coins on these internet-connected devices. The user of this wallet type is not the holder of the private key to the cryptocurrency that is held in this wallet. Exchange wallets are custodial accounts provided by the exchange.
thumb_up
38 likes
Z
If the exchange is hacked investor funds are compromised. The phrase "not your key, not your coin" is heavily repeated within cryptocurrency forums and communities. Hot wallet holders who haven't created enough security run the risk of losing funds to theft.
thumb_up
1 likes
L
Strong passwords, two-factor authentication, and safe Internet browsing should be considered minimum requirements. Hot wallets are best for small amounts of cryptocurrency or cryptocurrency that are actively trading on an exchange and used like a checking account.
thumb_up
29 likes
I
Cold Wallets A cold wallet is not connected to the Internet and is at less risk of being compromised. These offline wallets or hardware wallets store a user's private key on something that is not connected to the internet and come with software that allows investors to view their portfolio without putting their private key at risk. A paper wallet is a wallet generated at certain websites that produces both public and private keys printed on paper.
thumb_up
31 likes
T
Many people laminate these paper wallets and store them in safe deposit boxes at their bank or even in a safe in their home. A hardware wallet is typically a USB drive device that stores a user's private keys securely offline.
thumb_up
36 likes
S
Such wallets have advantages over hot wallets because they are unaffected by viruses that could infect one's computer. With hardware wallets, private keys never come into contact with a network-connected computer or potentially vulnerable software.
thumb_up
23 likes
A
Cold wallets are the most secure way to store your bitcoin or other cryptocurrencies. But they require more technical knowledge to set up. How to Buy Bitcoin With PayPal You can also buy bitcoin through a payment processor like PayPal Holdings, Inc.
thumb_up
40 likes
E
(PYPL). There are two ways to purchase bitcoin using PayPal connecting your account to a debit card or bank account or using the balance of the PayPal account to purchase cryptocurrencies from a third-party provider. Four cryptocurrencies, Bitcoin, Ethereum, Litecoin, and Bitcoin Cash, can be purchased directly through PayPal.
thumb_up
40 likes
A
Except for those who live in Hawaii, residents of all states can either use their existing PayPal accounts or set up new ones. You can also use your cryptocurrencies to purchase products and services through the "Checkout With Crypto" feature. When you buy bitcoin directly from PayPal, it earns money from the crypto spread or the difference between Bitcoin's market price and its exchange rate with USD.
thumb_up
41 likes
S
The company also charges a transaction fee for each purchase. These fees depend on the dollar amount of the purchase. A disadvantage of purchasing cryptocurrencies through PayPal is that an investor cannot transfer the crypto outside the payment processor's platform to an external crypto wallet or personal wallet and few exchanges and online traders allow the use of the payment processor to purchase payment.
thumb_up
31 likes
J
eToro is among the few online traders that allow the use of PayPal to purchase bitcoin on its platform. How to Buy Bitcoin With a Credit Card Using credit cards for buying bitcoin is similar to debit cards or automated clearing house (ACH) transfers. However, not all exchanges allow bitcoin purchasing with credit cards due to associated processing fees and the risk of fraud.
thumb_up
46 likes
E
Credit card processing can add additional charges to such transactions and in addition to paying transaction fees, there may be processing fees that the exchange may pass onto the buyer. Credit card issuers treat bitcoin purchases as cash advances and charge hefty fees and interest rates on such advances.
thumb_up
31 likes
S
American Express users will pay the current cash advance fee for such transactions plus an annual percentage fee of 25%. The credit card company also limits users to $1,000 worth of bitcoin purchases per month.
thumb_up
37 likes
S
Bitcoin rewards credit cards function like a typical rewards credit card except they offer rewards in the form of bitcoin like the BlockFi Bitcoin Rewards Credit Card. Alternative Ways to Buy Bitcoin
Bitcoin ATMs Bitcoin ATMs act like in-person bitcoin exchanges. Individuals can insert cash into a machine and use it to purchase bitcoin which is then transferred to online wallets for users.
thumb_up
12 likes
D
Bitcoin ATMs have become increasingly popular in recent years, and are available at the retail giant Walmart Inc. (WMT). Two charges are associated with ATM bitcoin purchases, a purchase fee and a conversion fee for converting a fiat currency to bitcoin.
thumb_up
24 likes
B
Both fees are fairly steep compared to those of other options. The worldwide average purchase fee at Bitcoin ATMs is 8.4% of the purchase amount and 5.4% for sales at ATMs.
thumb_up
37 likes
O
Bitcoin ATMs require government-issued IDs as of early 2020. P2P Exchanges Some peer-to-peer (P2P) exchange services provide a more direct connection between users. LocalBitcoins is an example of such an exchange.
thumb_up
9 likes
E
After creating an account, users can post requests to buy or sell bitcoin, including information about payment methods and prices. Although P2P exchanges do not offer the same anonymity as decentralized exchanges, they allow users the opportunity to shop around for the best deal.
thumb_up
2 likes
A
Many of these exchanges also provide rating systems so users have a way to evaluate potential trade partners before transacting. Mainstream Brokerages Robinhood Markets, Inc. (HOOD) is one exchange that offers crypto trading facilities.
thumb_up
29 likes
N
It charges 0% commission for cryptocurrency trades and purchases and makes money from the payment for order flow, passing its trading volume onto other trading platforms or brokerages. Robinhood had enabled trading on its platform for seven cryptocurrencies: Bitcoin, Bitcoin Cash, Ethereum, Bitcoin SV, Dogecoin, and Ethereum Classic.
thumb_up
26 likes
I
In contrast, you can trade more than 100 cryptocurrencies on Coinbase, and as of 2022, traditional brokers like Fidelity Investments plan to include bitcoin investing for 401(k) accounts. Bitcoin and other cryptocurrency investments are NOT protected by insurance from the Securities Investor Protection Corporation (SIPC).
thumb_up
15 likes
M
At regular brokerages, the agency protects against the loss of securities and cash in brokerage accounts containing up to $500,000, with a $250,000 cash limit. That facility is not available to customers of cryptocurrency exchanges.
thumb_up
38 likes
E
Cryptocurrency exchanges like Coinbase have crime insurance to protect their infrastructure against hacks. But that insurance does not protect individual customers from password theft.
How to Sell Bitcoin You can sell bitcoin at the same venues where you purchased the cryptocurrency, such as cryptocurrency exchanges and P2P platforms. Typically, the process of selling bitcoin on these platforms is similar to the process for purchasing it.
thumb_up
50 likes
J
Cryptocurrency exchanges charge a percentage of the crypto sale amount as fees. For example, Coinbase charges 2.49% of the overall transaction amount as fees.
thumb_up
15 likes
L
Exchanges generally have daily and monthly withdrawal limits. Therefore, cash from a large sale may not be immediately available to the trader.
thumb_up
40 likes
E
However, there are no limits on the amount of cryptocurrency you can sell. What Are the Steps for Purchasing Bitcoin The process to purchase bitcoin consists of four steps: choosing a venue or exchange to place your order, selecting a payment method, and ensuring safe storage for your purchased cryptocurrency. There may be additional costs for an online wallet.
thumb_up
15 likes
K
What Are the Most Popular Venues for Buying Bitcoin The most popular venues for buying bitcoins are cryptocurrency exchanges, brokerages, and payment services like PayPal. For indirect ownership of bitcoin, investors can choose to invest in companies that hold the cryptocurrency on their balance sheets, such as Tesla, Inc.
thumb_up
31 likes
V
(TSLA) or MicroStrategy Incorporated (MSTR). How Much Should I Expect to Pay to Purchase Bitcoin Typically, the price for purchasing bitcoin consists of a fee per trade plus the cost to convert a fiat currency to bitcoin.
thumb_up
2 likes
I
The fee per trade is a function of the dollar amount of the trade. A higher trade amount will carry higher fees.
thumb_up
49 likes
H
Is My Bitcoin Purchase Protected by SIPC No, your bitcoin purchase is not protected by SIPC. At certain exchanges, like Coinbase, fiat balances in individual accounts may be FDIC-insured to $250,000 per account.
thumb_up
17 likes
I
The Bottom Line A bitcoin purchase process consists of four steps which include selecting a service or venue for the purchase, connecting with a payment method, placing an order, and ensuring safe storage for purchased cryptocurrency. Each of these steps requires research and a careful assessment of the pros and cons of each service.
thumb_up
12 likes
E
Bitcoin is available at Bitcoin ATMs or from payment services like PayPal and mainstream brokerages like Robinhood. Article Sources Investopedia requires writers to use primary sources to support their work.
thumb_up
3 likes
T
These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate.
thumb_up
14 likes
M
You can learn more about the standards we follow in producing accurate, unbiased content in our
editorial policy. The United States Department of Justice.
thumb_up
13 likes
A
"Department of Justice Seizes $2.3 Million in Cryptocurrency Paid to the Ransomeware Extortionists Darkside." Bitcoin. "Can You Buy Less Than a Bitcoin?" Coinbase. "What Is the Minimum Amount of Cryptocurrency that I Can Purchase?" New York Times.
thumb_up
9 likes
Z
"Pipeline Idea Upends Idea That Bitcoin is Untraceable." Coinbase. "Identity Verification FAQ." Axios.
thumb_up
35 likes
A
"FTX.US Nabs $8B Valuation." Internal Revenue Service. "Virtual Currencies." Kraken.
thumb_up
15 likes
B
"Order Types." Coinbase. "Recurring Purchases." PayPal.
thumb_up
33 likes
S
"PayPal Launches 'Checkout With Crypto.'" PayPal. "PayPal Fees." PayPal.
thumb_up
1 likes
V
"PayPal Cryptocurrency Terms and Conditions." eToro. "A Step by Step Guide on How to Buy Bitcoin with PayPal." LendEdu.
thumb_up
8 likes
J
"Can You Buy Cryptocurrency With an American Express Card?" BlockFi. "One Card. More Bitcoin." CoinATMRadar.
thumb_up
17 likes
W
"Fees." Robinhood. "Commission Free Cryptocurrency Investing." Coinbase.
thumb_up
42 likes
I
"Supported Cryptocurrencies." Fidelity Investments. "Fidelity Will Start Offering Bitcoin in 401(k) Accounts." Securities Investor Protection Corporation. "What SIPC Protects." Coinbase.
thumb_up
11 likes
N
"How Is Coinbase Insured?" Coinbase. "Coinbase Pricing and Fees Disclosures." Tesla.
thumb_up
50 likes
J
"Dogecoin." MicroStrategy. "MicroStrategy Acquires Additional 19,452 Bitcoins for $1.026 Billion." Compare Accounts Advertiser Disclosure × The offers that appear in this table are from partnerships from which Investopedia receives compensation. This compensation may impact how and where listings appear.
thumb_up
5 likes
A
Investopedia does not include all offers available in the marketplace. Provider Name Description Part Of Bitcoin Basics What is Bitcoin? How to Mine, Buy, and Use It 1 of 11 How Bitcoin Works 2 of 11 How to Buy Bitcoin 3 of 11 What are the Safest Ways to Store Bitcoin?
thumb_up
20 likes
E
4 of 11 How Does Bitcoin Mining Work? 5 of 11 How to Pay with Cryptocurrency 6 of 11 Bitcoin vs.
thumb_up
34 likes
A
Credit Card Transactions: What's the Difference? 7 of 11 Benefits and Risks of Trading Forex With Bitcoin 8 of 11 Cryptocurrency IRAs: Advantages and Disadvantages 9 of 11 Gold vs. Bitcoin: Which Is Better?
thumb_up
42 likes
Z
10 of 11 How Much of All Money Is in Bitcoin? 11 of 11 Related Articles Strategy & Education 10 Mistakes New Crypto Investors Make Bitcoin Protect Your Bitcoins Against Theft and Hacks Bitcoin Can Crypto Be Hacked? Bitcoin How to Pay with Cryptocurrency Strategy & Education How to Invest in Crypto without Buying Crypto Strategy & Education How to Earn Passive Income Through Crypto Partner Links Related Terms What Is a Cold Wallet?
thumb_up
2 likes
A
Cold wallets, a type of crypto wallet, are digital cryptocurrency storage on a platform not connected to the internet, which protects them from hackers. more What Is a Cryptocurrency Wallet? A cryptocurrency wallet is a software program that stores your cryptocurrency keys and lets you access your coins.
thumb_up
3 likes
G
Discover how crypto wallets work. more Crypto ATM A crypto ATM is a stand-alone electronic kiosk that allows users to buy and sell cryptocurrency in exchange for cash.
thumb_up
39 likes
L
more GDAX GDAX was the former name of a digital currency exchange linked to Coinbase. It is now known as Coinbase Pro. more What is Bitcoin?
thumb_up
3 likes
R
How to Mine, Buy, and Use It Bitcoin (BTC) is a digital or virtual currency created in 2009 that uses peer-to-peer technology to facilitate instant payments. more Crypto Insurance Cryptocurrency insurance offers investors and exchanges limited reimbursement of funds lost due to theft.
thumb_up
4 likes
A
more About Us Terms of Use Dictionary Editorial Policy Advertise News Privacy Policy Contact Us Careers California Privacy Notice EU Privacy # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z Cookies Settings, which can also be found in the footer of the site. Cookies Settings Reject All Accept All
thumb_up
6 likes
Similar Discussions
-
Juventus vs Bologna Prediction and Betting Tips 2nd October 2022
-
Garena Free Fire MAX OB36 Expected release date for Indian server explored
-
Lycoris Recoil Episode 10 Release date and time where to watch what to expect and more
-
Coping with Hearing Loss A guide to prevention and treatment Harvard Health
-
싸이오토 APK Download for Android
-
Coloring sponge and Cartoons APK Download for Android
-
l informatore APK Download for Android
-
Diet Doctor low carb keto APK Download for Android
-
C est insupportable Lambert Wilson s attaque Sandrine Rousseau… et rompt sa promesse ZAPTV Voici
-
Jenna Lyons and Marcia Kilgore Aren t Afraid of Failure Just Boredom Beauty Jenna Lyons
-
GTA V How to Get the Horror Pumpkin Mask and a Daily Bonus
-
Guy Wonders What s Wrong With His Cat Who s Obsessed With A Single Wall In The House Investigation Leads To Discovery Of A Hidden Basement
-
Peacock kicks off October with Halloween Horror collection Digital Trends
-
2022 Update 14 Best Phone Tracker Apps With Google Map
-
Chinese Car Companies May Have A Tough Time Coming To The US CarBuzz
-
2020 Audi RS7 All New Model Is A Big Step Up CarBuzz
-
How to activate eSIM on your iPhone 14 Tom s Guide
-
Die semantische Struktur natürlicher Sprache SpringerLink
-
Duffield Regional Jail New Phone Number
-
How Old Is My House Quiz
-
Walmart Tires San Jose
-
14 Inch Craftsman Chainsaw
-
Break The Chains Book By Malik Davis
-
California Love Cd
-
What Are the Possible Health Benefits of Vitamin D Everyday Health
-
How to Make Stairs in Terraria Materials Crafting Guide Uses Tips FAQs
-
5 best Minecraft mods for new bosses in 2022
-
Eintracht Frankfurt vs FC Koln prediction preview team news and more Bundesliga 2022 23
-
Ranking the best 3 French strikers to play in the Premier League
-
3 players Everton are expected to sign in the coming weeks