Cash App Bitcoin Investing: A Beginner's Guide

Cash App is a peer-to-peer money transfer app that allows users to buy, sell, store, send, and receive Bitcoin. It is a straightforward platform for investing in Bitcoin, but it is limited in that it only allows users to buy and sell Bitcoin. Users looking to purchase other cryptocurrencies will have to look elsewhere. Cash App is also a custodial wallet for any BTC purchased on the app, meaning that users can keep their Bitcoin stored within the application itself.

Creating a Cash App account

To create a Cash App account, you'll first need to download the application. Once you've done this, the app will guide you through the sign-up process, where you'll create a username and password. You'll then need to link your Cash App account to your bank account. This will allow you to make purchases through the app.

Cash App is a peer-to-peer money transfer app, similar to Venmo or PayPal, that allows users to buy, sell, send, and receive Bitcoin. It acts as a custodial wallet for any Bitcoin you purchase, allowing you to keep your Bitcoin stored within the app. You can also transfer your Bitcoin to any other crypto wallet.

It's important to note that Cash App only allows you to buy and sell Bitcoin. If you're interested in purchasing other cryptocurrencies, you'll need to use a different platform or exchange.

Cash App takes precautions to ensure your Bitcoin is secure. The majority of Bitcoin stored on Cash App is kept in cold storage, meaning it's offline and disconnected from the internet to protect your funds from online threats. Cash App also uses advanced encryption and fraud detection technology to protect your data and money.

Additionally, Cash App provides a Form 1099-B for tax purposes when you buy and sell Bitcoin on the platform. However, it's your responsibility to understand the tax implications of your transactions, as Cash App does not provide tax advice.

Navigating to the 'Buy Bitcoin' screen

To navigate to the 'Buy Bitcoin' screen on the Cash App, follow these steps:

Firstly, open the Cash App on your device. On the home screen, you will see a tab labelled 'Money'. Tap this tab, and then tap on the 'Bitcoin' tile. Here, you will be able to select an amount of Bitcoin that you wish to purchase, or enter a custom amount.

Before you can finalise your purchase, you will need to enter your PIN or Touch ID and tap 'Confirm'. It is important to note that you must have a balance in your Cash App account to purchase Bitcoin. You may also be required to enter additional geographical information.

Once you have confirmed the transaction, you will be shown a final confirmation screen, which will detail how much of your purchase will go towards fees. Cash App fees vary depending on the size of the transaction and are built into the purchase price. For example, a $200 purchase will result in approximately $4 being deducted in fees.

The app also includes a spread, meaning that you will pay slightly more than the market value for the Bitcoin, and sell for slightly less. Additional fees also apply for withdrawals with expedited settlements.

Finalising your purchase

Now that you've entered the amount of Bitcoin you want to buy, it's time to finalise your purchase. You will be asked to enter your PIN or Touch ID and confirm the transaction. Before you confirm, you will be able to see a breakdown of the fees that will be applied to your purchase.

Cash App fees are based on the size of the transaction and are built into your purchase price. For example, if you enter that you want to purchase $200 worth of Bitcoin, you will get approximately $196 worth of Bitcoin and pay roughly $4 in fees. The app also includes a spread, meaning you'll pay slightly more than the market value for the Bitcoin, and you'll sell it for slightly below market value. Additional fees also apply for withdrawals with expedited settlements.

If you are purchasing Bitcoin for the first time, you may need to enter some additional personal and geographical information before your purchase can be confirmed.

Once you have confirmed your purchase, you can choose to store your Bitcoin in your Cash App account, which acts as a custodial wallet. Alternatively, you can transfer your Bitcoin to a cryptocurrency wallet. To do this, go to the Bitcoin tab on the application, tap the airplane icon, and select "Send Bitcoin". From here, you can enter your unique wallet address manually or use a QR code. Then, select a withdrawal speed and press "Confirm and Send" to complete your transaction.

It is important to note that Bitcoin is taxed like any other financial investment, so be sure to understand the tax implications before you buy or sell. While Cash App will provide you with a Form 1099-B for filing your taxes, determining the tax impact of your Bitcoin transactions is your responsibility.

Storing your Bitcoin on Cash App

Cash App acts as a custodial wallet for any Bitcoin (BTC) that you purchase on the app. This means that you can keep your Bitcoin stored within the application itself. Cash App also allows you to transfer Bitcoin to any other crypto wallet.

To deposit Bitcoin into your Cash App, you must first enable Bitcoin withdrawals and deposits within the app. Then, tap the Money tab on the Cash App home screen, tap the Bitcoin tile, and select Deposit Bitcoin to get started. You can deposit up to $10,000 worth of Bitcoin in any 7-day period.

It's important to note that Cash App only supports Bitcoin and does not support any other type of cryptocurrency. Sending non-supported cryptocurrencies will result in the loss of funds.

Storing your Bitcoin in a separate wallet is generally a more secure option. Institutions that handle transactions or store cryptocurrency for their users can be a common target for hackers, as all of the user data is stored in one centralized location. In 2022, Cash App had a data breach that affected many of its users, and hackers were able to gain access to accounts and siphon funds out.

To transfer your Bitcoin to a separate wallet, go to the Bitcoin tab on the Cash App, tap the airplane icon and select Send Bitcoin. Then, tap the top left corner to access a QR code, or press the Send button to enter your unique wallet address manually. After that, tap Next and select a withdrawal speed, and then press Confirm and send to complete your transaction.

You can also send Bitcoin from a wallet to your Cash App account by selecting Deposit Bitcoin from the Bitcoin tab on the application.

Withdrawing your Bitcoin

To withdraw your Bitcoin from Cash App, you will need to transfer it to a third-party Bitcoin wallet. You can do this at any time, and Cash App offers a variety of withdrawal speeds to suit your needs. The app provides three withdrawal speed options: Standard, Rush, and Priority. Each option has a different minimum withdrawal amount. For Standard, the minimum withdrawal amount is 0.001 bitcoin, while Rush and Priority withdrawals have a minimum amount of 0.00005 bitcoin.

Before making your withdrawal, you will need to verify your identity. This process may take up to 24 hours. Cash App will ask for your full name, date of birth, and the last four digits of your social security number. Additionally, you will need to provide a photo ID, proof of income, and a selfie.

To initiate the withdrawal process, follow these steps:

• Toggle from USD to BTC by tapping "USD" on your Cash App home screen.
• Enter the amount of Bitcoin you wish to withdraw. You can toggle between BTC or USD to input the amount.
• To access the QR code scanner, tap the top left corner of the screen. Alternatively, you can manually enter the external wallet address by tapping "Send".
• Tap the wallet address to confirm the destination of your withdrawal.
• Select your preferred withdrawal speed.
• Tap "Confirm & Send" to finalise your withdrawal request.

It is important to note that withdrawing Bitcoin from Cash App may incur fees. While the app does not charge explicit fees, it uses a price spread for purchasing Bitcoin, which means you pay slightly above the market value. Additionally, there are additional fees for withdrawals with expedited settlements.

When considering where to send your Bitcoin, it is recommended to choose a wallet that supports "cold storage". This means that your Bitcoin is stored offline, disconnected from the internet, reducing the risk of theft or hacking.

Frequently asked questions