Investing in Bitcoin is all the rage, but how exactly do beginners get started?
Do you need to already have Bitcoin to invest?
Or do you transfer money from your bank account to somewhere and convert it to bitcoin? What does that look like?
How to Invest in Bitcoin
Investing in BTC is similar to investing in stocks, only with more volatility due to BTC’s daily volatility. Here are the steps to investing in stocks from the start:
- Open a brokerage account with a company that allows crypto investments
- Deposit funds from your bank into a brokerage account.
- Use deposited funds (cash balance) to buy shares.
- The stock is then sold for a gain or loss. Funds will be returned to your cash balance.
The main difference with BTC is the third step; you buy BTC or other cryptocurrencies instead of stocks.
For BTC, the above process is similar in most cases, but depends on the exchange or trading platform. In some cases, you can buy BTC with a credit card or by transferring money from a bank account.
For other platforms, you have to transfer BTC directly. This is called direct deposit of BTC.
We will discuss how to invest in BTC for US citizens. Due to differences in laws and regulations, the methods vary from country to country. Some countries require more private information than others to verify that you are legitimate.
BTC direct deposit
You can deposit BTC from other exchanges if the exchange does not allow buying BTC by transfer or credit card.
This is done by getting your wallet address from the target exchange. Then enter it on the source exchange and the amount of BTC to transfer to the new exchange.
The transaction takes a few minutes for the exchanged BTC to appear in the destination wallet.
How to Deposit USD to Buy Bitcoin and Cryptocurrencies
Bitzelex is one of the most popular platforms with a simple process. Some of the sites mentioned below will follow the same process. We love Bitzelex because if you open an account, you get $5.
With Bitzelex, you can open a Bitzelex account and link your bank account or credit card. Then transfer from your bank account to buy BTC or buy with your credit card. Credit card purchases in BTC are the most expensive.
The mechanism for buying BTC involves entering an amount in USD or BTC. The website will then convert to another currency.
For example, if you enter $500, the site will fill in 0.0357 (or the current BTC rate) on the BTC side.
After filling in the amount, click to buy your BTC. Credit card transactions, although the most expensive, are also the fastest to complete BTC transactions.
Bank accounts can take up to a few days. Remember, you will get the exchange rate when you buy BTC.
If BTC goes up by 1000 when your trade is done three days later, you will miss out on the upside.
Where did the BTC you bought go? After all, you haven’t invested yet. Your BTC is in a so-called digital wallet. Most exchanges have their own wallets that you can use to store your BTC.
Going back to the brokerage example, your cash balance is used to trade stocks. BTC in your wallet is used to trade BTC.
Where’s your dollar?
Your wallet has space for BTC and USD. If you deposit $10,000 and buy $5,000 in BTC, your wallet will look like this:
Wallets are a big topic of discussion when talking about cryptocurrencies. We won’t dive into them, but if you don’t want to use an exchange’s wallet, you can use a standalone wallet. Electrum.org is an example of a standalone wallet. This can be desktop, mobile or web based.
You can even use a hardware wallet like LedgerWallet.com.
Once you have deposited funds and purchased BTC through the exchange of your choice, you are ready to invest. The trading platform of the exchange looks very similar to the brokerage platform.
You will have a chart and buy/sell buttons with the amount of BTC to trade.
When trading bitcoins, you can exchange them for other cryptocurrencies, which is another way to sell bitcoins. Or you can exchange another cryptocurrency for BTC, which is the same as buying BTC.
Bitzelex is dedicated to helping you make informed decisions around complex financial topics, such as finding the best cryptocurrency exchanges. We do this by providing our readers with unbiased reviews of the top Bitcoin and crypto platforms, and then we’ve rounded up those picks into this list.
We choose cryptocurrency exchanges based on our perception of their ease of use, availability of tokens and coins on the platform, cost and fees, trustworthiness and security, and various other factors. We believe our list accurately reflects the best cryptocurrency exchanges in the investor market.
Common cryptocurrency exchange questions
Below are some of the most common questions we face when choosing the best cryptocurrency exchanges.
What is the difference between a crypto exchange and a crypto wallet?
Wallets are designed for safe storage of your cryptocurrencies. The exchange is designed to allow you to buy and sell cryptocurrencies easily and quickly. The wallet will keep your private key safe, and when you use the exchange, you provide your private key to the exchange. The exchange then acts as your custodian.
Which characteristics are important when deciding to swap?
We considered several key features, including the number of tokens and coins available, the price or commission charged, ease of use, the security of the platform, customer service, and features (such as cryptocurrency savings accounts).
How much do you need to get started?
You can start using most of these exchanges for as little as $5.
How do you buy cryptocurrency?
You open an account with any of these exchanges, deposit funds, and then you can “exchange” your USD or fiat currency for the cryptocurrency of your choice. Some cryptocurrencies only have specific trading pairs, so depending on what you want to buy, you may need to buy something like bitcoin and then exchange bitcoin for another coin.
Best Global Digital Currency Trading Platform 2022
We will answer all these questions and list 10 of the best cryptocurrency exchanges and platforms that allow you to buy Bitcoin and other tokens.
Going forward, we will use BTC, the symbol for Bitcoin on exchanges and trading platforms.
If you just want high returns with crypto, you might consider a crypto savings account. These accounts pay up to 12% in fees, but do carry risks (just like regular crypto investments).
Here is our list of the 10 best cryptocurrency exchanges and investing or trading platforms. The cyrpto quotes appearing on this website are from companies from which The College Investor is compensated. Such compensation may affect how and where products appear on this website (including, for example, the order in which they appear). Academy Investors do not include all cryptocurrency quotes available on all cryptocurrency exchanges or markets.
Bitzelex is a popular crypto investment platform because it was one of the first major exchanges, and today it is one of the largest by assets.
Bitzelex supports most major cryptocurrencies, has good support and engagement, and also pays competitive asset rates if you qualify.
Also, when you open a Bitzelex account, you can earn $10 in BTC after trading $100 in cryptocurrency.
2. Coinbase Global Digital Currency Trading Platform
Coinbase is by far one of the most popular and best cryptocurrency exchanges because you can invest directly with USD. You can currently buy Bitcoin, Ethereum and Litecoin on the platform along with over 30 other coins and tokens. In addition, you can earn interest in USDT and can earn token rewards for completing various activities.
Also, when you open a new Coinbase account, if you sign up using our link, you will get a $10 BTC bonus after trading $100!
3. Kraken Global Digital Currency Trading Platform
Kraken is one of the original crypto trading platforms and they have a wide variety of coins and tokens to trade and invest in. They also allow margin trading. However, this is a real swap and not as easy to use as some of the top platforms on this list.
Kraken is one of the few platforms on this list that allows you to trade DOGE and other riskier tokens.
Note: Kraken offers limited coins and tokens to US and international customers.
4. Binance Global Digital Currency Trading Platform
Great platform to get into currencies like Cardano or Neo. Not as easy to use as some of the top platforms on this list, but they do have one of the most powerful trading platforms. They do have a nice mobile app, but again, it’s not that easy to use, and we’re frustrated with that. Try Binance here.
Note: Binance.us is the US version of the platform and has limited investable coins and tokens compared to the international version of Binance.
5. Bitcoin IRAs Global Digital Currency Trading Platform
Bitcoin IRAs are a little different than the other platforms here. Unlike most exchanges and wallets, you’re basically just exchanging money and paying taxes on your gains (learn how your crypto taxes work here).
Having said that, a Bitcoin IRA combines the advantages of a crypto wallet and exchange while also being an IRA. This means that your earnings in the account are tax-free or tax-deferred.
Investing in BTC is not much different from investing in stocks. To use BTC, you need to open an account with the exchange. With stocks, you can open an account with a brokerage firm. Then you deposit funds.
The only difference to investing in BTC is that you have to buy BTC with your deposited funds before you can trade BTC. Although, your initial purchase of BTC is your first open trade.