The Best Places To Invest In Bitcoin Revealed

Bitcoin has seen meteoric growth in recent years, with a single Bitcoin hovering around $40,000 in January 2024, up from around $500 in May 2016. This represents a growth of approximately 7,900%.

If you're looking to invest in Bitcoin, you'll need to open an exchange or platform that allows Bitcoin trading. Here are some of the best places to buy Bitcoin:

- Coinbase: One of the largest selections of cryptocurrencies in the US, Coinbase is versatile but not the cheapest place to buy and sell.

- Gemini Exchange: A simple-to-use app that's popular with beginner investors, Gemini prides itself on its security and is available in all 50 US states.

- Robinhood: You can buy and sell Bitcoin, other cryptocurrencies, stocks, and options with no transaction fee.

- eToro: The versatile trading platform is a standout, as is the CopyTrader feature that lets you copy your favourite investors.

- Cash App: One of the most user-friendly ways for beginners to trade Bitcoin. There's no separate account needed — if you use the Cash App to send money, you can already buy Bitcoin and stocks.

When choosing a crypto exchange, there are several things to consider, including security, fees, the cryptocurrencies offered, and whether you prefer a centralised or decentralised exchange.

Crypto exchanges

Centralized exchanges are managed by a corporate authority and make it easy to get started with crypto by letting users convert fiat currency into crypto. Decentralized exchanges distribute responsibility for facilitating and verifying crypto trades among those willing to join a network and certify transactions.

Kraken

One of the oldest crypto exchanges, Kraken offers a solid range of coins with competitive trading fees. It is one of the few US exchanges to offer margin trading and other advanced trading tools. Kraken offers two trading platforms: Kraken and Kraken Pro. The basic Kraken platform doesn't offer the cheapest fees, but advanced users can get volume discounts on Kraken Pro. Kraken is not available in all 50 US states and does not offer crypto staking to US customers.

Gemini

Gemini is a user-friendly platform packed with features like its Gemini Earn program for earning interest on crypto holdings and the Gemini Credit Card. It is available in all 50 US states and has a strong commitment to meeting US regulatory compliance requirements. Gemini has a convoluted fee structure when not spot trading and does not offer some popular coins like Cardano.

Crypto.com

Crypto.com provides a good selection of over 250 cryptocurrencies and unique perks and rewards for Crypto.com Visa Card users. Crypto.com users can take advantage of the platform's utility token Cronos to pay fees and earn other benefits. Trading fee discounts are available for users who hold high balances in Cronos. Crypto.com previously had a huge selection of high-earning staking and rewards options, but this is no longer available to US customers.

KuCoin

KuCoin provides access to a wide library of altcoins at low fees. The platform is headquartered in Seychelles and has a growing number of users in Asia, Europe, the Middle East, and Africa. While US users can access and use the trading platform, KuCoin is not licensed in the US. KuCoin is not insured and suffered a major hacking incident in 2020.

Coinbase

Coinbase offers more than 200 tradable cryptocurrencies and an easy-to-use interface for one-time or recurring crypto transactions. Coinbase's Advanced Trade product offers in-depth technical analysis but comes with high fees. Coinbase is not available in all 50 US states and has relatively poor user feedback. The company has also been charged by the SEC for allegedly operating as an unregistered securities exchange.

BYDFi

BYDFi (formerly BitYard) is available in all 50 US states and accepts more than 50 fiat currencies. The platform offers low trading fees and a decent selection of popular cryptocurrencies but does not offer much in terms of advanced trading features. BYDFi does not offer staking or lending, and funds are not insured.

Robinhood Crypto

Robinhood Crypto is a solid choice for those looking for an app that features crypto and stocks all in one. While Robinhood has improved its crypto offering, it still can't compete with pure-play crypto platforms. The crypto offering available in the Robinhood brokerage app has limitations—for example, users can't trade crypto-to-crypto directly and need to set up a separate Robinhood Wallet for that.

Crypto wallets

There are two main types of crypto wallets: hot wallets and cold wallets. Hot wallets are always connected to the internet, while cold wallets are kept offline.

Hot Wallets

Hot wallets are digital tools that are usually accessed via a phone or desktop computer. They are highly convenient as they can be accessed from anywhere with an internet connection. They are also easier to recover access to if you lose the private key. However, they are less secure than cold wallets and are vulnerable to a wider variety of attacks. Examples of hot wallets include:

• Coinbase Wallet
• MetaMask
• TrustWallet
• Electrum
• BlueWallet
• Exodus
• Crypto.com

Cold Wallets

Cold wallets store your digital keys offline, either on a piece of hardware or a sheet of paper. They are deliberately designed to be hard to hack and are considered the most secure way to store your bitcoin or other cryptocurrencies. Examples of cold wallets include:

• KeepKey
• Ledger Nano S Plus
• SafePal

Choosing a Crypto Wallet

When choosing a crypto wallet, consider the following:

• How often you trade
• What you want to trade
• How much you are willing to spend
• What functionality you need in a wallet

Other factors to consider include the number of supported currencies, the accessibility of the interface, the availability of customer support, and hardware wallet compatibility.

Payment methods

There are several ways to pay for your Bitcoin, and the method you choose will depend on the exchange you use, the device you're accessing it from, and the level of security you require.

Bank Account

You can connect your bank account directly to the exchange and pay via a bank transfer. This is usually the cheapest way to fund your account. However, it can take a few days for the transaction to complete, and you will get the exchange rate at the time of purchase, not the time you started the transaction.

Debit Card

You can link a debit card to your account and use this to pay for your Bitcoin. This method is faster than a bank transfer but may come with higher fees.

Credit Card

Some exchanges allow you to buy Bitcoin with a credit card, but this is not recommended. Credit card transaction fees on crypto exchanges are often high, and using a credit card to buy crypto will generally count as a cash advance, subject to a higher interest rate.

PayPal

You can buy Bitcoin through a payment processor like PayPal. There are two ways to do this: by connecting your PayPal account to a debit card or bank account or by using your PayPal balance to purchase crypto from a third-party provider. However, if you buy Bitcoin directly through PayPal, you won't be able to move your Bitcoin to another wallet.

Cash

You can buy Bitcoin with cash by using a Bitcoin ATM or a peer-to-peer exchange service. Bitcoin ATMs are available at some retailers and allow you to insert cash and use it to purchase Bitcoin, which is then transferred to an online wallet. Peer-to-peer exchanges like LocalBitcoins allow users to post requests to buy or sell Bitcoin and include information about payment methods and prices.

Security and insurance

Cold Storage and Hot Wallets

When selecting a platform to invest in Bitcoin, it is essential to prioritise security. Reputable exchanges will store the majority of their customers' crypto assets in "cold storage", typically on servers that are not connected to the internet. This makes the assets less susceptible to hackers. Cold wallets or hardware wallets, such as Ledger or Tezor, are physical devices kept offline and are considered much safer than hot wallets. However, it is crucial to keep them in a secure location, as losing the device or the security codes could result in losing your Bitcoin.

Insurance

While crypto assets are not covered by SIPC insurance or FDIC insurance, some platforms do offer external insurance to protect against theft. For example, Coinbase has a $255 million policy for coins stored in hot wallets, and BitGo offers up to $250 million in coverage for assets in its custody. It is important to research the details of the insurance, such as the firm providing it, the amount insured, and the circumstances under which you would be compensated.

Third-Party Audits

Before investing, it is advisable to check if the platform conducts third-party audits and offers proof-of-reserves. This demonstrates that the platform has enough assets to cover client deposits. Additionally, look for exchanges that have an independent board and carry out external audits of their accounts.

User-Level Security

It is also essential to activate user-level security features, such as two-factor authentication, to protect your account from unauthorised access. Strong passwords and safe internet browsing practices are also crucial to keeping your Bitcoin secure.

Regulatory and Legal Considerations

Before investing in Bitcoin, it is important to understand the legal, regulatory, and tax status of purchasing it in your location. While Bitcoin is legal in the US, some banks may question or even stop deposits to crypto-related sites or exchanges.

Choosing a Reputable Platform

When deciding where to invest in Bitcoin, it is essential to choose a reputable and secure platform. Popular exchanges in the US include Coinbase, Kraken, Gemini, and Binance. These platforms offer a range of security features and are widely trusted in the crypto community.

In summary, when considering the best place to invest in Bitcoin, always prioritise security and insurance to protect your investment. Conduct thorough research, enable security features, and choose platforms that are well-established and trusted by crypto investors.

Bitcoin ATMs

To sell Bitcoin, you send Bitcoin to the address provided by the ATM and then collect your cash.

Where can I find a Bitcoin ATM?

Yes, Bitcoin ATMs can be a target for scams and fraud. In 2021, the FBI reported an increase in scammers directing victims to send money through Bitcoin ATMs. It is also important to note that Bitcoin and other cryptocurrencies are not regulated by the federal government and are not insured by the Federal Deposit Insurance Corporation (FDIC).

Frequently asked questions