How To Invest In Bitcoin

Investing in BTC is similar to investing in stocks, except far more volatile because of the daily swings in BTC. Here are the steps to invest in stocks from the beginning:

1. Open a brokerage account at a firm that allows crypto investments
2. Deposit funds from your bank into the brokerage account.
3. Buy a stock using deposited funds (cash balance).
4. Later sell the stock for a gain or loss. Funds are returned to your cash balance.

The main difference with BTC is for step three; you buy BTC or another cryptocurrency instead of stock.

With BTC, the above flow is similar in most cases but it depends on the exchange or trading platform. In some cases, you can buy BTC using your credit card or by transferring funds from your bank account.

For other platforms, you must transfer BTC directly. This is known as a direct deposit of BTC.

We’ll discuss how to invest in BTC for US citizens. The methods vary across countries because of differences in laws and regulations. Some countries require more private information than others to verify you are legitimate.

How To Deposit USD To Buy Bitcoin And Crytpo

Coinbase is one of the most popular platforms and has a straightforward process. Some of the mentioned websites below will follow this same process. We love Coinbase because you get $10 if you invest $100.

With Coinbase, you open a Coinbase account and link your bank account or credit card. Then transfer funds from your bank account to purchase BTC or purchase using your credit card. Credit card purchases of BTC are the most expensive.

The mechanics of purchasing BTC involve entering a USD amount or a BTC amount. The website will then convert the other currency.

For example, if you enter in 500 USD, the website will fill in the BTC side with 0.0357 (or what ever the current BTC exchange rate is).

Once you have the amount filled in, click to purchase your BTC. While credit card transactions cost the most, they are also the fastest to complete BTC transactions. 

Bank accounts can take up to a few days. Keep in mind that you will get the exchange rate at the time you purchased BTC. 

If BTC goes up 1000 by the time your transaction completes three days later, you’ll miss out on the rise.

Where exactly does the BTC you’ve purchased go? After all, you haven’t invested it yet. Your BTC sits in what’s called a digital wallet. Most all exchanges have their own wallet that you use to contain 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.

What about your USD?

Your wallet has a space for BTC and USD. If you deposit 10,000 USD and buy 5,000 USD of BTC, your wallet will look like this:

5,000 USD

0.34    BTC

Wallets are a big topic of discussion when talking about cryptocurrencies. We won’t go into depth with them but you can use a stand-alone wallet if you don’t want to use the exchange’s wallet. Electrum.org is one example of a stand-alone wallet. This can be desktop, mobile or website based.

You can even use a hardware wallet such as LedgerWallet.com.

Once you’ve deposited funds with the exchange of choice and purchased BTC, you’re ready to invest. Trading platforms on the exchanges look very similar to brokerage platforms.

You’ll have a chart and buy/sell buttons with the amount of BTC to trade.

When trading in BTC, you can exchange into other cryptocurrencies, which is another method for selling BTC. Or you can exchange out of another cryptocurrency and into BTC, which is the same as buying BTC.

Direct Deposit Of BTC

In the case that the exchange doesn’t allow purchasing BTC by transferring funds or using a credit card, you can deposit BTC from another exchange.

This is done by getting your wallet address from the target exchange. Then enter it on the source exchange along with the amount of BTC to transfer to the new exchange.

The transaction takes a few minutes for the exchanged BTC to appear in the target wallet.

Top 10 Most Popular Bitcoin And Crypto Investing Sites

Here is our list of the 10 most popular Bitcoin and Crypto sties.

1. eToro

eToro has been around for a while in the UK and throughout Europe, but they are now allowing traders in the United States. They offer a huge variety of digital assets to buy and sell on their platform, and even better, they have a practice trading account so you can give it a try before you actually use real funds.

Read our full eToro review here.

Check out eToro here and get started >>

2. Coinbase

As we mentioned above, Coinbase is by far the most popular because you can invest directly with USD. However, you can only currently purchase Bitcoin, Ethereum, and Litecoin on the plaform.

Read our full Coinbase Review here.

Get started with Coinbase here >>

3. Robinhood 

Robinhood offers free crypto trades on their platform. They are starting in just a few states, and with just Bitcoin and Ethereum, but they plan on expanding this quickly. There are limitations, but it's free!

Read our full Robinhood review here.

Get started with Robinhood here >>

4. Gemini

Gemini is a popular platform to invest in crypto because of its focus on security and transparency. Unlike some exchanges that appear vulnerable, Gemini makes it a focus to protect its customers. 

Read our full Gemini review here.

Get started with Gemini here >>

5. BitStamp.net 

Allows direct deposit of Bitcoin. Not as easy to use as some of the top platforms on this list.Try BitStamp here.

6. Bitfinex.com 

Multiple cryptocurrencies. Trade on margin. Not as easy to use as some of the top platforms on this list.Try Bitfinex here.

7. Hitbtc.com 

Advertised as the most advanced Bitcoin exchange. Not as easy to use as some of the top platforms on this list.Try Hitbtc here.

8. Binance 

A great platform for getting into some currencies like Cardano or Neo. Not as easy to use as some of the top platforms on this list.Try Binance here.

9. Kraken.com 

Allows margin trading. Not as easy to use as some of the top platforms on this list. Try Kraken here.

10. Coinmama.com

Bitcoin and Ether. Buy with a credit card, Bitcoin or Ether. Not as easy to use as some of the top platforms on this list. Try Coinmama here.

Final Thoughts

Investing in BTC isn’t much different from investing in stocks. With BTC, you need to open an account with an exchange. With stocks, you open an account with a brokerage. Then you deposit funds. 

The only difference with investing in BTC is that you have to purchase BTC, first using deposited funds, before you can trade BTC. Although, your initial purchase of BTC is your first opening trade.

Have you ever used any of these sites?