Nyse Bitcoin Trading: A Beginner's Guide

Bitcoin is a digital cryptocurrency that can be purchased through cryptocurrency exchanges, traditional stockbrokers, money transfer apps, Bitcoin ATMs, and Bitcoin exchange-traded funds (ETFs). Before investing in Bitcoin, it is important to understand the risks and potential rewards associated with this volatile asset class.

To invest in Bitcoin through the NYSE, investors can consider purchasing individual stocks within the NYSE Bitcoin index (NYXBT) or investing in exchange-traded funds (ETFs) that track the index. It is important to conduct thorough research and carefully evaluate the various options available before making any investment decisions.

Bitcoin wallets

Once you've learned how to invest in Bitcoin, you'll need to store your Bitcoin in a hot wallet or a cold wallet.

Hot Wallets

Hot wallets are on devices that are connected to the internet. They are often free to use, offering add-on services such as trading or staking in exchange for fees. Transactions are relatively easy to carry out using crypto in a hot wallet, but it may be more vulnerable to hackers who could theoretically reach your crypto over the internet.

Cold Wallets

Cold wallets are on devices that are disconnected from the internet. They tend to cost money because you have to buy a piece of actual hardware that's set up to store your crypto. Because they are not connected to the internet, they may be harder for other users to reach. But if you lose the actual device, recovery could be very difficult.

There are many types of Bitcoin wallets, including:

• Trust Wallet: This is a self-custody wallet that allows you to take complete control of your crypto assets. It supports 10+ million digital assets, non-fungible tokens (NFTs), 100+ blockchains, and allows you to connect safely to thousands of Web3 dApps.
• Coinbase Wallet: Coinbase operates the largest U.S.-based crypto exchange. The Coinbase Wallet is a separate product that allows users to store cryptocurrency themselves rather than keeping it in the custody of Coinbase.
• Crypto.com Defi Wallet: This wallet is created by a company mostly known for its crypto exchanges. It’s specifically tailored for use in what is known as decentralized finance (DeFi), which is a sector of the crypto world focused on lending, saving, and other financial products that don’t rely on a central broker.
• Exodus: Exodus offers a solid set of software tools, including a mobile app, a desktop app, and a browser extension. Its products allow users to buy, trade, or stake cryptocurrency directly from their wallets, and it has an integration with the Trezor cold wallet intended to help people easily move crypto from hot to cold storage.
• MetaMask: MetaMask is free and open-source, and can store any digital asset that’s built on Ethereum. MetaMask also integrates with many of the “Web3” applications that exist on the Internet and require crypto transactions to work.
• Zengo Wallet: Zengo uses a form of cryptography known as multi-party computation (MPC) to secure assets and perform transactions.
• Guarda: Guarda is a free, all-purpose crypto wallet whose users can access their crypto via mobile, desktop, or browser extension. It says it supports more than 400,000 digital assets.
• Ledger: Ledger is one of the best-known names in crypto wallets. Its prices range from around $79 to $149, and it can integrate with many popular software wallets. Ledger has a highly-rated mobile app, plus a dedicated desktop app, and its developers are in the process of rolling out a browser extension.
• Trezor: Trezor offers some of the highest-end hardware available in crypto storage. While its entry-level model (the Tezor Model One) costs around $60, it also has a more expensive model (priced at $179) with a touch screen. Trezor has integrations with other crypto firms such as Exodus.

Cryptocurrency exchanges

When choosing a cryptocurrency exchange, it is important to consider factors such as security, fees, the range of cryptocurrencies offered, and whether the exchange is centralized or decentralized. Some popular centralized exchanges include Coinbase, Gemini, Kraken, and Crypto.com, while examples of decentralized exchanges include Bisq, Uniswap, and dYdX.

It is also worth noting that exchanges may charge different types of fees, such as trading fees and withdrawal fees. Additionally, some exchanges may offer features like margin trading, futures trading, and crypto staking.

Before investing in Bitcoin through a cryptocurrency exchange, it is crucial to do your research and understand the risks involved. Bitcoin and other cryptocurrencies are subject to high volatility and are not subject to the same regulations as traditional investment products.

Traditional stockbrokers

To buy Bitcoin through a traditional stockbroker, you will need to follow these steps:

• Sign up for an account with your chosen broker.
• Provide personal identification documents, such as a driver's license or Social Security card, as well as information about your employer and source of funds.
• Connect your bank account to your brokerage account. Most exchanges allow you to connect your bank account directly, or you can link it to a debit or credit card.
• Place your Bitcoin order. You can buy fractions of a single coin, so your initial investment could be as low as $25.

It is important to keep in mind that investing in Bitcoin is very risky. Bitcoin is a volatile asset, and its value may rise or fall dramatically in a very short period.

Bitcoin ATMs

• Get a Bitcoin wallet: When you purchase Bitcoin, you need a place to store it. A Bitcoin wallet is a digital tool that allows users to store, send, and receive Bitcoin securely. You can create a Bitcoin wallet by installing an app on your mobile device or computer.
• Find a Bitcoin ATM near you: There are tens of thousands of Bitcoin ATMs globally, with most of them located in the United States. You can use an online map to find the nearest Bitcoin ATM.
• Buy Bitcoin from the ATM: Enter the amount you want to purchase. Depending on local regulations and the amount, you may need to verify your identity. Provide your Bitcoin wallet address by scanning the QR code using the ATM's camera. Pay using cash, credit card, or payment app. The Bitcoin will then be sent to your wallet, which usually takes a few minutes.

It is important to note that Bitcoin ATMs typically charge higher fees compared to other options. The worldwide average purchase fee at Bitcoin ATMs is 8.4% of the purchase amount.

Before buying Bitcoin, it is essential to understand the legal, regulatory, and tax implications associated with it. Additionally, as Bitcoin and other cryptocurrency investments are not insured in the same way as traditional investments, it is crucial to take necessary security measures to protect your investments.

Bitcoin ETFs

A spot Bitcoin exchange-traded fund (ETF) is an investment that gives mainstream investors a regulated way to invest in Bitcoin through their brokerage accounts. The Securities and Exchange Commission (SEC) approved the first spot Bitcoin ETFs in January 2024.

Spot Bitcoin ETFs are exchange-traded products (ETPs) that hold Bitcoins in a secure digital vault, managed by registered custodians. This kind of ETF mirrors the price of Bitcoins in the crypto market. The ETF buys Bitcoins from other holders or through authorized cryptocurrency exchanges, and then stores the tokens in a digital wallet, often using several layers of security, including cold or offline storage, which reduces the risk of hacking.

The ETF then issues shares corresponding to the number of Bitcoins it holds. These shares are available on traditional stock exchanges, with the share price generally reflecting the currency's prevailing market price. Shares track the price of Bitcoin as closely as possible, and the ETF occasionally rebalances its holdings by buying or selling tokens.

Advantages of Bitcoin ETFs

• Convenience: Spot Bitcoin ETFs are more accessible to a broader range of investors, lowering the barriers to entry into the crypto market.
• Liquidity: They make buying and selling Bitcoins easier through familiar brokerage accounts, mirroring the process of trading traditional stocks or ETFs.
• Regulatory oversight: Spot Bitcoin ETFs are subject to rules that ensure transparency and protect investors.
• Tax implications: In certain jurisdictions, spot Bitcoin ETFs may have tax benefits compared with holding cryptocurrencies directly.

Disadvantages of Bitcoin ETFs

• Crypto volatility: The most obvious is the market volatility of Bitcoin prices, which could lead to significant financial loss.
• Regulatory uncertainty: There is a lack of a clear regulatory framework to protect investors, and future regulations could affect the performance of Bitcoin ETFs.
• Security risks: The number of coins that spot Bitcoin ETFs hold would make them attractive targets for cybercriminals. While ETF managers use multilayered security protections, no system is impenetrable.
• Management fees: Spot Bitcoin ETFs charge management fees or expense ratios to cover operational costs, which can diminish returns over time. These fees can be higher than those of traditional equity ETFs because the ETF must also pay fees for exchanging and securing Bitcoins.
• Tracking error: While spot Bitcoin ETFs try to mirror the performance of Bitcoin closely, tracking errors can occur due to liquidity in the market, delayed rebalancing of the fund’s holdings, and management fees.

Examples of Bitcoin ETFs

• Franklin Templeton Digital Holdings Trust (EZBC)
• Bitwise Bitcoin ETF (BITB)
• VanEck Bitcoin Trust (HODL)
• Ark 21Shares Bitcoin ETF (ARKB)
• IShares Bitcoin Trust (IBIT)
• Fidelity Wise Origin Bitcoin Fund (FBTC)
• WisdomTree Bitcoin Fund (BTCW)
• Invesco Galaxy Bitcoin ETF (BTCO)
• Valkyrie Bitcoin Fund (BRRR)
• Hashdex Bitcoin ETF (DEFI)
• Grayscale Bitcoin Trust (GBTC)

Frequently asked questions