How to Invest in Bitcoin

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Buying bitcoin or other cryptocurrencies can be a fun way to explore an experimental new investment. But it’s also true that any investment in cryptocurrency should carry a warning label like cigarettes: “This product may be harmful to the health of your finances. Never buy more than you can afford to lose.”

The value of bitcoin — the world’s first and most popular cryptocurrency — has risen from recent lows but is still trading far below 2017 highs. Like all cryptocurrencies, bitcoin is experimental and subject to much more volatility than many tried-and-true investments, such as stocks, bonds and mutual funds.

NerdWallet advises investing no more than 10% of your portfolio in individual stocks or risky assets like bitcoin. If you’re new to investing, find out more about how to invest money.

Buying bitcoin and other cryptocurrency in 4 steps

  1. Decide where to buy bitcoin. Cryptocurrency exchanges like Coinbase and a few traditional brokers like Robinhood can get you started investing in bitcoin.
  2. Think about how to store your cryptocurrency. Are you going to keep your bitcoin in a hot wallet or a cold wallet?
  3. Make your purchase. Figure out how much you want to invest in bitcoin.
  4. Manage your investment. Determine your long-term plan for this asset.

1. Decide where to buy bitcoin

There are a few different ways to buy bitcoin and other cryptocurrencies, including exchanges and traditional brokers.

Cryptocurrency exchanges

You can purchase bitcoin from several cryptocurrency exchanges. Many charge a percentage of the purchase price. Do your due diligence to find the right one for you. Some of the more popular exchanges include:

  • Coinbase: This is a popular choice for U.S. bitcoin buyers, in part because you can…

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