The Best Stocks To Invest In Bitcoin

Bitcoin is a cryptocurrency that was first introduced in 2009. Cryptocurrencies are digital assets that are usually created using blockchain technology, which allows for the exchange of decentralised digital currencies without the need for a central authority like a bank. Bitcoin's value comes from its finite supply, as well as its store of value and payment system.

There are several ways to invest in Bitcoin, including through Bitcoin wallets, cryptocurrency exchanges, traditional brokers, money transfer apps, Bitcoin ATMs, and Bitcoin exchange-traded funds (ETFs). When investing in Bitcoin, it is important to consider the associated risks, regulatory environment, and tax implications.

Some popular Bitcoin stocks include PayPal Holdings, Inc. (PYPL), Block, Inc. (SQ), and CME Group Inc. (CME). These companies offer exposure to Bitcoin prices and are worth considering for investors interested in gaining indirect exposure to the cryptocurrency market.

Bitcoin wallets and cryptocurrency exchanges

A crypto wallet is a device or program that stores your private crypto keys and allows you to access your coins. It is similar to a physical wallet that holds cash and cards, except that it stores the passkeys you use to sign for your crypto transactions.

There are two main types of crypto wallets: custodial and non-custodial. Custodial wallets are hosted by a third party that stores your keys for you, whereas with non-custodial wallets, you take responsibility for securing your keys.

A hot wallet is connected to the internet or to a device with an internet connection. A cold wallet has no connection. Hot wallets are more susceptible to hacks, whereas cold wallets are harder to access and, therefore, more secure.

Examples of hot wallets include software wallets (e.g. desktop or mobile applications) and online wallets hosted by crypto exchanges. Software wallets include applications for desktops and mobile devices, such as Trezor, Electrum, and Mycelium.

Examples of cold wallets include hardware wallets (e.g. Ledger, Trezor) and paper wallets, which are less common nowadays due to the risk of damage or loss.

A crypto exchange is a marketplace where you can buy and sell cryptocurrencies. There are around 500 exchanges to choose from, and they can be either centralized (managed by a corporate authority) or decentralized (responsibility for facilitating and verifying crypto trades is distributed).

Some of the largest and most popular crypto exchanges include Binance, Coinbase, and Bybit. Forbes Advisor has also compiled a list of the best crypto exchanges of August 2024, including Kraken, Gemini, and Crypto.com.

When choosing a crypto wallet or exchange, consider the level of security, fees, the range of cryptocurrencies supported, user-friendliness, and educational resources available. It is also essential to research reviews and the history of the wallet or exchange to ensure that your crypto assets remain safe.

Traditional stockbrokers

Robinhood was the first mainstream investment broker to offer Bitcoin trading (Robinhood Crypto is available in most U.S. states). Like its stock-trading platform, Robinhood charges no fees for Bitcoin trades. Other online brokers that offer access to Bitcoin or other cryptocurrencies include Webull, TradeStation, Fidelity, eToro, Interactive Brokers, and Charles Schwab.

It is important to note that investing in Bitcoin through traditional stockbrokers may have some disadvantages, such as higher fees and limited investment options. Additionally, some brokers may not allow users to transfer their Bitcoin to an external wallet, restricting them to buying and selling on the platform.

Money transfer apps

• Wise: Best for international and large transfers. It has low international fees and high transfer limits.
• Venmo: Best for domestic transfers with friends and family. It has instant transfers and 0% fees when sending from a bank account, debit card, or Venmo wallet.
• WorldRemit: Also great for international transfers. It has low fixed fees for international bank transfers.
• Zelle: Best for low fees/domestic bank-to-bank transfers. It is free to use and works with many US banking apps. However, it does not support multiple currencies or credit card payments.
• Cash App: Also great for low fees. It offers free domestic transfers and additional banking and investing services. It also allows users to buy, sell, send, and receive Bitcoin.
• PayPal: Also great for large transfers. It allows for free domestic transfers and has a high transfer limit of $60,000 for verified accounts. However, it is not ideal for international transfers due to unfavourable exchange rates and fees.
• Meta Pay: Best for Facebook Messenger transfers. It is convenient for sending and receiving money through Facebook Messenger and, in some cases, WhatsApp. However, it has relatively low maximum transfer amounts.
• Apple Cash: Best for customer satisfaction (iOS only). It is built into the iPhone as part of Apple Wallet and allows for instant, free transfers to other Apple Cash users. However, it can only be used for domestic transfers and does not support credit card transfers.

When choosing a money transfer app, it is important to consider factors such as receiver validation, security features, speed of transfer, transaction limits, transfer fees, supported countries/currencies, and social features.

Bitcoin ATMs

To use a Bitcoin ATM, you will first need to get a Bitcoin wallet, which is a digital tool that allows users to store, send, and receive Bitcoin securely. Then, you can find a Bitcoin ATM near you and enter the amount you want to purchase. Depending on local regulations and the amount you are purchasing, you may need to verify your identity. You will then provide your Bitcoin wallet address by scanning the QR code of your wallet address with the ATM's camera. After paying, you will receive the Bitcoin in your wallet, which typically takes a few minutes.

When selling Bitcoin through an ATM, you will enter the amount you want to sell, and verify your identity if necessary. You will then send Bitcoin to the provided address by scanning the QR code and sending the Bitcoin from your wallet. Once the ATM receives the Bitcoin, it will dispense your cash, which also generally takes a few minutes.

There are tens of thousands of Bitcoin ATMs worldwide, and they offer a convenient way to buy and sell Bitcoin with cash. However, it is important to be aware of security and regulatory concerns. For example, German authorities recently seized nearly $28 million from 13 cryptocurrency ATMs, as the operators allegedly did not have the right permits.

Bitcoin exchange-traded funds

ETFs are traded on stock exchanges, providing investors with diversified exposure to various asset classes and the flexibility to buy or sell shares throughout the trading day at market prices. Instead of holding a bunch of different stocks, an investor can simply own shares of one ETF that is invested in those companies.

A Bitcoin futures ETF issues publicly traded securities that offer exposure to the price movements of Bitcoin futures contracts. Fund managers purchase these contracts and bundle them into a fund. The funds are created by purchasing futures contracts and bundling them into a fund, which then offers shares of the fund to investors. The futures contracts in the fund are actively managed while the shares are trading.

The first Bitcoin-linked ETF was the Proshares Bitcoin Strategy ETF (BITO), which mainly uses futures contracts. It was approved by the SEC in October 2021 and is listed on the New York Stock Exchange.

A spot Bitcoin ETF, on the other hand, is an exchange-traded fund that directly tracks the price of Bitcoin, primarily by holding a large amount of the cryptocurrency itself. The first spot Bitcoin ETFs were approved by the SEC in January 2024.

• Proshares Bitcoin Strategy ETF (BITO)
• Valkyrie Bitcoin and Ether Strategy ETF (BTF)
• VanEck Bitcoin Strategy ETF (XBTF)
• Global X Blockchain & Bitcoin Strategy ETF (BITS)
• 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