The Ultimate Guide To Investing Bitcoin In The Usa

Bitcoin is a virtual currency that exists outside the control of any central entity, such as banks or governments. It is the world's first decentralised currency, with a limited supply.

There are several ways to invest in Bitcoin in the USA, including through a crypto exchange, a trading app, an online broker, or even a financial platform like Cash App or PayPal.

When deciding where to buy Bitcoin, it is important to consider safety, fees, investment selection, educational resources, and user interface.

- Crypto exchanges: Coinbase, Gemini, Kraken, Binance.US, and Crypto.com

- Trading apps: eToro, Robinhood

- Online brokers: Schwab, Fidelity

- Financial platforms: Cash App, PayPal

Choosing a crypto exchange

• Fees: The cost of buying and selling Bitcoin varies between platforms. Check the trading fees and withdrawal fees before signing up. Also, look out for the "spread", which is the difference between the buying and selling price offered by the platform.
• Investment selection: If you want to invest in other cryptocurrencies or begin crypto trading, choose a platform with a good selection.
• Educational resources: If you're new to crypto, consider choosing a platform with extensive libraries of articles, videos, and tutorials to help you learn about Bitcoin and other cryptocurrencies.
• Safety and security: Research the risks involved and look for crypto exchanges that are transparent about their security, assets, and insurance. Check if they use cold storage and whether they have external insurance to protect against theft. Also, make sure they offer user-level security features such as two-factor authentication.
• User experience: Depending on your needs, consider whether you want a simple user interface or a platform with more advanced trading features.
• Payment methods: Most platforms allow you to fund your account via bank transfer, credit card, or debit card. Check the fees for each payment method, as they can vary.
• Coinbase: One of the most popular crypto exchanges, Coinbase offers a wide range of cryptocurrencies and insures losses in the event of a security breach or fraudulent transfers. However, it is not the cheapest platform.
• Binance: Founded in 2017, Binance has a strong focus on altcoins and offers many different payment methods.
• Kraken: This exchange allows you to invest in Bitcoin using various currencies from around the world.
• Gemini: Gemini is available in all 50 U.S. states and prides itself on its security. It offers a simple app experience and a range of cryptocurrencies.
• Robinhood: Robinhood allows users to buy, sell, and trade Bitcoin alongside stocks, bonds, and other investment vehicles. There are no transaction fees for crypto, stocks, ETFs, or options.
• EToro: eToro is a versatile trading platform that allows you to copy your favourite investors using the CopyTrader feature. It also offers a broad range of products, including stocks and ETFs.
• Cash App: Cash App is a user-friendly option for beginners, allowing you to buy Bitcoin and stocks in one place.

Remember, it's essential to do your research and choose an exchange that suits your needs. Crypto investing is risky, so approach it with a long-term mindset and be prepared for ups and downs.

Setting up a cryptocurrency exchange account

Choose a Reputable Exchange

The first step is to select a cryptocurrency exchange that suits your needs. Some popular exchanges in the US include Coinbase, Kraken, Gemini, and Binance. These platforms offer a range of cryptocurrencies and follow regulations that require users to submit identifying documentation. It's also worth considering the fees, security features, and payment options offered by each exchange.

Sign Up and Create an Account

Once you've chosen an exchange, visit their website and create an account. This typically involves providing basic personal information such as your name, email address, and setting a password. Some exchanges may also require additional information, such as your address, phone number, and government-issued identification.

Verify Your Identity

As part of the sign-up process, you will need to verify your identity. This is known as the "Know Your Client" (KYC) process and helps ensure the security and legitimacy of the exchange. The level of verification may vary depending on the exchange and the amount you plan to trade. Some exchanges may require a copy of your government-issued ID, a selfie of you holding the ID, proof of address, and other information.

Set Up a Payment Method

After your account is created and verified, you'll need to add a payment method. This can be done by linking your bank account, debit card, or credit card to your exchange account. This will allow you to deposit and withdraw funds for purchasing cryptocurrencies.

Explore the Exchange Platform

Each exchange platform will have a unique interface and set of features. Take some time to familiarise yourself with the platform, including how to place orders, view your balance, and transfer funds. Some exchanges also offer additional tools and resources to help you make informed investment decisions.

Consider a Crypto Wallet (Optional)

While not mandatory, it is generally recommended to use a crypto wallet for added security. Crypto wallets can be hot wallets (online) or cold wallets (offline). Hot wallets are more convenient for active trading but carry higher security risks. Cold wallets, such as hardware or paper wallets, provide better security but may require technical knowledge to set up.

Make Your First Bitcoin Purchase

Once your account is set up, funded, and secured, you're ready to make your first Bitcoin purchase! The process will vary depending on the exchange, but you'll typically need to navigate to the market or trading section, select Bitcoin, and input the amount you wish to buy. Remember to consider the fees and pricing before finalising your purchase.

Connecting your exchange to a payment option

Depending on the exchange, you may be required to provide personal identification information, such as a picture of your driver's license or Social Security card, as well as details about your employer and source of funds. The process is similar to setting up a standard brokerage account.

At most exchanges, you can connect your bank account directly, or you can link it to a debit or credit card. Although you can use a credit card to purchase cryptocurrency, the volatility of cryptocurrency prices could increase the overall cost of purchasing a token when combined with a credit card's interest charges. While some banks may question or even stop deposits to crypto-related sites or exchanges, Bitcoin is legal in the U.S.

Fees vary for deposits via a bank account, debit, or credit card, and exchanges also charge fees per transaction.

If you're using cash in one of these apps, you may wind up using a third-party service such as MoonPay to fill your order. Such services can cost a bit more than regular exchanges but offer some advantages in the form of quick, relatively painless transactions.

Payment methods

Valid methods of Bitcoin payment include bank accounts, debit cards, and credit cards. It's also possible to get bitcoin at specialized ATMs and via peer-to-peer (P2P) exchanges.

Choosing a crypto exchange

There are many types of cryptocurrency exchanges. Some allow users to remain anonymous and are decentralized and don't require users to enter personal information. Popular exchanges in the U.S. that aren't decentralized and follow laws that require users to submit identifying documentation include Coinbase, Kraken, Gemini, and Binance. They offer bitcoin and a growing number of altcoins.

When creating a cryptocurrency exchange account, use two-factor authentication and a long, unique password that includes a variety of letters—lowercased and capitalized—special characters, and numbers.

Placing an order

Once you have chosen an exchange, set up an account, and connected your bank account, you can place your first order to buy Bitcoin. Depending on the platform you are using, you may be able to purchase Bitcoin by tapping a button, or you may have to enter Bitcoin's ticker symbol: BTC. Next, input the amount you want to invest. If Bitcoin's current price is around $40,000, you would need to invest that much to buy 1 BTC. If you invested less, say $1,000 when 1 BTC equals $40,000, you would get a percentage of a Bitcoin equal to about 0.025 BTC.

Most crypto exchanges offer both market and limit orders, and some also provide stop-loss orders. A market order will get you the next available price after your trade is placed. With a limit order, you set a specified price for selling or buying crypto so you receive the limit price or better. If your limit price isn't met, your order is canceled. A stop-loss order is a pending order that becomes a market order once your desired price is met. You may receive a final price that is above or below your limit price.

Some exchanges also offer ways to set up recurring investments, allowing clients to dollar-cost average into their investments of choice. For example, Coinbase lets users set recurring purchases for every day, week, or month.

Safe storage

There are two main types of wallets: hot wallets and cold wallets. A hot wallet is connected to the internet, while a cold wallet is not. Hot wallets are more convenient, but they are also more vulnerable to hacking. Cold wallets are considered much more secure, but they require technical knowledge to set up.

Examples of hot wallets include online wallets (accessed through an app or computer browser), desktop wallets, and mobile wallets. Examples of cold wallets include hardware wallets (such as a USB drive) and paper wallets (printing out your private and public keys on paper).

You can also use a combination of hot and cold wallets. For example, you could use a hardware wallet for long-term cold storage and a mobile wallet for spending and transacting with crypto.

When choosing a storage option, consider your level of technical expertise, the amount of crypto you want to store, and how often you will want to access it. Additionally, always use two-factor authentication and a strong password for your wallet.

Frequently asked questions