A Beginner's Guide: Investing In Bitcoin Via Cash App

Cash App is a peer-to-peer money transfer app that allows users to buy, sell, send, and receive Bitcoin. It is a straightforward alternative to using a crypto exchange, but it is limited to Bitcoin transactions only. To buy Bitcoin on Cash App, you need to install the app, create an account, and link it to your bank account. Once you have added funds to your Cash App account, you can navigate to the Bitcoin or Investing section and select the Buy Bitcoin option. Enter the amount you wish to purchase, confirm the transaction, and review the fees. It is important to note that Cash App may impose fees for Bitcoin transactions, and investing balances are not insured by the FDIC or FSCS.

Navigating the app

To start investing in Bitcoin using the Cash App, you will first need to download the app and create an account. The app will guide you through the sign-up process, where you will create a username and password. You will then need to link your Cash App account to your bank account. Once your bank account is linked to the app, you will be able to make purchases.

To purchase Bitcoin, tap “USD” or the Bitcoin tab on the Cash App home screen. A menu will pop up from which you should select the "Buy Bitcoin" option. You can then enter the dollar amount you would like to purchase. You will then need to enter your PIN and confirm the transaction. At the final confirmation screen, you will see how much of your purchase will go towards fees.

Cash App fees vary based on transaction size and are built into your purchase price. For example, if you enter that you want to purchase $200 in Bitcoin, you'll get about $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 for slightly below market value. Additional fees also apply for withdrawals with expedited settlements.

You can also use the Auto Invest feature to schedule recurring Bitcoin purchases. This feature allows you to allocate a portion of your paycheck to Bitcoin consistently and spread out Bitcoin purchases to mitigate price fluctuations. To set up Auto Invest, access the “Bitcoin Investing” screen, tap “Buy”, and then choose a frequency (daily, weekly, or every two weeks). You can opt for a preset amount or customise the amount to your preference.

To sell Bitcoin using the app, go to the Bitcoin tab on the application, select “Sell”, and enter the amount you wish to sell. You will then need to enter your PIN or use Touch ID to confirm the transaction.

Buying bitcoin

To buy Bitcoin using Cash App, you'll first need to download the application and create an account. You'll need to set up a username and password, and then link your Cash App account to your bank account. Once your bank account is linked to the app, you'll be able to make purchases.

Next, tap the "USD" button on the Cash App home screen. A menu will pop up at the bottom. From here, select the "Buy Bitcoin" option.

Enter the dollar amount you'd like to purchase, then enter your PIN and confirm the transaction. At the final confirmation screen, you'll see how much of your purchase will go towards fees.

Cash App fees vary based on transaction size and are built into your purchase price. For example, if you enter that you want to purchase $200 worth of Bitcoin, you'll get about $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 for slightly below market value. Additional fees also apply for withdrawals with expedited settlements.

You can also turn your spare change into Bitcoin. When you spend your Cash App balance on everyday purchases, you can round up your change to the nearest dollar to buy Bitcoin. You can also set up direct deposit with Cash App and choose the percentage you want to invest in Bitcoin automatically. You can change the amount at any time and skip the fees.

Security

Cash App helps keep your Bitcoin safe by using a secure, cold storage solution. Cash App uses cutting-edge encryption and fraud detection technology to make sure your data and money are secure. Any information you submit is encrypted and sent to their servers securely, regardless of whether you're using a public or private Wi-Fi connection or data service.

To further protect your account, consider implementing two-factor authentication (2FA), using a strong and unique password, enabling alerts for account activity, and requiring a PIN to transfer cash.

Sending and receiving bitcoin

You can also send bitcoin using the Lightning Network or the Bitcoin Network. To do this, tap the Money tab on the Cash App home screen, followed by the Bitcoin tile, and then the Airplane button. Here, you can enter the amount and the recipient's details.

It's important to be aware of certain limits when sending bitcoin. These limits are rolling and accumulate over seven and 30-day periods, and they are tracked down to the minute of payment. When you send bitcoin using your Cash balance or a linked card, the recipient will receive a transfer of USD that can be used to purchase bitcoin.

When you receive a bitcoin gift, you have two options: accept or decline. By accepting, you use the funds to buy bitcoin. If you haven't already, you will be asked to verify your identity with Cash App. After receiving your bitcoin, you can hold, sell, or withdraw it at any time. Declining the bitcoin gift adds the funds as USD to your Cash balance. Remember that bitcoin gifts will expire after three weeks, and if not accepted, the funds will return to the sender's Cash balance.

Security and safety measures

Security and safety are crucial considerations when investing in Bitcoin through the Cash App. Here are some essential measures to ensure the protection of your investments and personal information:

Secure Transactions: Cash App employs advanced security features to safeguard your transactions. The platform utilizes cutting-edge encryption technology to protect your data and money. Any information you submit, including payment details, is securely encrypted and transmitted to their servers. This encryption safeguards your information, regardless of whether you're using public or private Wi-Fi or data services like 3G, 4G, or EDGE.

Fraud Detection and Prevention: The Cash App is vigilant in fighting fraud. It employs fraud detection technology to monitor and identify suspicious activities. Additionally, the app requires you to confirm payments before sending money, especially when transacting with someone new or not in your contacts. You will also be notified if there are any changes to your PIN or security settings, ensuring that you're always aware of any account activity.

Account Verification and Notifications: Cash App prioritizes account security by implementing a verification process. You will be asked to verify your identity to protect your account and prevent unauthorized access. Additionally, when sending money internationally or logging in from a new device, the app will request that you confirm details only you would know, adding an extra layer of security.

PCI Data Security Standard Compliance: The Cash App is PCI Data Security Standard (PCI-DSS) Level 1 compliant. This compliance ensures that your payment information remains secure and encrypted during transmission to their servers, regardless of the network you're using.

Cold Storage Solution: Cash App employs a cold storage solution to keep your Bitcoin investments secure. This means that your Bitcoin is stored offline, in a secure location, further protecting it from potential online threats.

FDIC Insurance: While Bitcoin balances are not covered by FDIC insurance, if you have a Cash App Card, your funds in your Cash App account balance are FDIC-insured through their partner banks. This insurance covers up to $250,000 per person in the event of bank failure.

Drawbacks of using Cash App

While Cash App is a popular and user-friendly platform for buying, selling, and storing Bitcoin, it does have some drawbacks. Here are some of the potential disadvantages to consider:

Fees

Cash App charges fees for buying and selling Bitcoin, but the fee structure lacks transparency. There is no published fee schedule, and users are only informed of the fees at the time of confirming the transaction. This makes it challenging to predict and plan for the costs associated with using the platform.

Bitcoin Only

Currently, Cash App only supports Bitcoin. Other app-based platforms typically offer a wider range of cryptocurrencies, providing users with more options and the ability to diversify their investments.

Simple Platform

The Cash App platform is designed to be user-friendly, which can be advantageous for beginners. However, it may not offer extensive educational resources and tools for those who want to delve deeper into the world of cryptocurrencies. Other platforms often provide comprehensive educational content, which can be valuable for those who want to learn more about Bitcoin and other digital assets.

Limited Cryptocurrency Access

Cash App only offers Bitcoin, which means you cannot use the platform to access other cryptocurrencies. If you're interested in investing in a broader range of digital assets, you would need to explore other platforms or exchanges.

Internet Dependency

Like other Bitcoin transactions, using Cash App to buy, sell, or access Bitcoin requires an internet connection. This dependency on the internet may be a drawback if you anticipate situations where internet access is unreliable or unavailable.

Frequently asked questions