What is bitcoin?
What is Bitcoin? Bitcoin is a type of cryptocurrency. Basically, this means it’s not a coin, but a piece of code, stored in a digital wallet, that connects to a specific transaction on a public transaction record called Blockchain.
This code represents the ownership of a part of Bitcoin and that part may be traded in whole or in part at the current market price against another cryptocurrency or currency via a cryptocurrency exchange, and goods and services using a portfolio cryptocurrency (eg a Bitcoin Portfolio).
All this is then encrypted in different ways via cryptography (hence the term “cryptocurrency”). You do not have to understand that to trade Bitcoin, so let’s not dwell on that.
How to buy, sell, trade and invest in Bitcoin explained:
Everything you need to know about investing in Bitcoin
To invest in Bitcoin, you must either:
1. Get a Bitcoin wallet, find an exchange or Bitcoin broker, and buy Bitcoin, or
2. Buy an action that contains Bitcoin
In the future, there may be other ways to invest in Bitcoin, but by the end of 2017, the two options above are essentially the only two. Fortunately, although there is essentially only one title holding Bitcoin (called GBTC), there are many stock exchanges and brokers to choose from.
Keeping these facts in mind, here are some simple and quick steps to go from not knowing cryptocurrency to holding bitcoins or bitcoin security actions.
The key to investing in Bitcoin
To invest in Bitcoin, do one or more of the following
(TIP: Each option below is listed in order or premiums paid ease of use, and flexibility.)
The GBTC Trust trades at the highest premium but is extremely simple and flexible. Coinbase charges higher fees than most stock markets, but it’s the easiest option to own a Bitcoin. Also the solution with the lowest fees
Offering a high premium, but has several advantages to balance it.
Learn more about the GBTC Bitcoin advantages and disadvantages.
TIP: Highly recommend Coinbase to get your feet wet. It’s simple, flexible and allows you to have real bitcoins. Many people who trade crypto-currencies will do the three options we list, so going out with Coinbase is not a bad thing.
1. Sign up for a wallet and an exchange,
For example the official Bitcoin Bitcoin Core wallet and a reputable exchange like Kraken that accepts US dollars (Kraken is one of the many choices available).
2. Wait until the registration process is complete.
The steps differ from one exchange to another, but you deposit mostly USD on your account, exchange USD in Bitcoin, then transfer Bitcoin from the exchange into your Bitcoin wallet. Or, when you want to sell, sell your BTC on the stock exchange and then transfer your US dollars to your bank account.
TIP: Different exchanges work differently, you will sometimes need a specific type of portfolio, others a portfolio. In any case, you should have a portfolio in which you can transfer funds.
NOTE: Some states (such as Washington State and New York) and some regions have strict rules on the trade that may occur. GBTC and Coinbase are good options.
TIP: If you have another cryptocurrency and just want to convert it to a Bitcoin, you can use a service like ShapeShift.
NOTE: There are also cryptocurrency IRA options. To take advantage of it, you need an IRA, which is not an option for all investors. Learn more about Cryptocurrency IRA options at Investopedia.
TIP: This page is part of a series on investing in cryptocurrency. See our page on how to trade cryptocurrency in general.