How can you invest in Bitcoin as an investor, where can you buy Bitcoin and why can Bitcoin trading be interesting for both investors and speculators? We outline how to buy Bitcoin with steps and explanation for several methods, plus what to beware of.
- The most important cryptocurrency
- How to buy Bitcoin: Different methods explained
- Quick guide
The Bitcoin price has risen sharply since the Corona crisis. The most important crypto currency has multiplied its value since March 2020 and reached a new record high of over $60,000 – this price development is reminiscent of the Bitcoin hype a few years ago: Anyone who bought Bitcoins for a few hundred dollars is now a millionaire.
The most important cryptocurrency
Bitcoin (BTC) is the best-known cryptocurrency and still by far the most important. In terms of market capitalization, Bitcoin is well ahead of the competition, and in terms of value development, no other digital currency can hold a candle to Bitcoin: At almost 160 billion US dollars, the market capitalization of Bitcoin in June 2020 is far ahead of that of Ethereum (24 billion), Tether (8 , 2 billion) and Ripple (8 billion).
The price development of the most important crypto currency is also unique: in 2016 alone the Bitcoin price climbed by more than 125 percent, in 2017 the Bitcoin reached highs of almost 20,000 US dollars. Anyone who trades Bitcoins and has a close eye on the Bitcoin rate can, with a little luck, make a fortune. In the past, the most successful cryptocurrency made one or the other investor millionaires, and has far exceeding investing in the stock market.
Some analysts predict that Bitcoin will rise in price to $500,000 and more. More and more professional asset managers and institutional advisors want to recommend blockchain and cryptocurrencies as an investment . Bitcoins are also gaining acceptance at more and more financial institutions. For example, the US investment bank JPMorgan started its own crypto currency and many customers can already shop with crypto currencies in Swiss online trading.
Bitcoins are no longer just nameless online coins that computer nerds use to make anonymous purchases on the Internet. Bitcoin trading is popular with both private investors and speculators, and the potential still seems great. The recent major price movements are proof of this.
Around the Bitcoin hype at the end of 2017, some critics saw Bitcoin as a risky investment and described the most important crypto currency as “hot air”.
Ultimately, the Bitcoin price is regulated by supply and demand. And the demand for anonymous money such as Bitcoin, Ethereum, Ripple, Bitcoin Cash, Litecoin & Co. continues to rise sharply. Reasons for this are, for example, the pioneering blockchain technology, the investment in Bitcoin and capital controls, which can be successfully circumvented with the help of crypto money.
How to buy Bitcoin: Different methods explained
Given the performance and the technical possibilities of online currencies, many investors are becoming more and more interested in Bitcoin. If you want to buy Bitcoin and participate in the performance of the most important Internet currency, then there are several options for you – we have examined the advantages and disadvantages of the individual ways.
Using a CFD broker
Investors who are primarily interested in participating in the performance of Bitcoin can trade Bitcoins relatively easily via a contract for difference (CFD) broker. The account opening is particularly quick, you can pay with credit card, PayPal or bank transfer.
You can think of a Bitcoin CFD as a security that reflects the Bitcoin exchange rate. As an investor, you participate directly in the development of the Bitcoin price, but you do not physically own the Bitcoin. If you want, you can add leverage to the Bitcoin CFD.
A 1: 1 participation without leverage is of course also possible. The biggest advantage of a Bitcoin CFD is that if you sell, you can always get your money back immediately and in full. This cannot be taken for granted: Different Bitcoin exchanges have daily payout limits, so a payout of your capital can sometimes take several days.
Using a cryptocurrency broker
Buying at the exchange office of a crypto broker basically works like obtaining foreign currency from your house bank. The future crypto owner first sets up an online account with the provider. There he has various wallets, i.e. sub-accounts in which the currencies are stored. The deposited dollars or other currencies also have a wallet.
With them, the user can select one of the currencies offered and buy it from the provider at the communicated rate. He determines the amount either in fiat currency or in crypto currency. Once the purchase has been made, the user has two options. Either he leaves the coins in the wallet for the time being. Or he pays it to a wallet of your choice (usually your own).
Exchange offices usually offer only a few, but the “big” crypto currencies for purchase. Major currencies are those with a high trading volume and top position in the list of market capitalizations, such as Bitcoin, Ethereum, Bitcoin Cash, Litecoin or XRP.
How does the purchase at the crypto broker exchange office work?
- Registration and creation of the account by email and password
- Verification by ID
- Deposit euros or dollars (bank transfer, credit card, PayPal, instant transfer, etc.)
- Select the desired cryptocurrency
- Enter the desired amount in the purchase form and confirm
- The broker asks for ID to prevent fraud. He thus fulfills the requirements of the Money Laundering Act.
Using a certificate
Another very convenient way to take part in the Bitcoin course is to buy Bitcoin certificates. The choice on the market is currently still relatively limited, but the Swiss bank Vontobel has an attractive offer.
With the Open End Participation Certificate on Bitcoin, you can easily invest in the price development of the most important digital currency. The Vontobel certificate replicates the performance of Bitcoin, but is not a “real” Bitcoin, but a derivative of the cryptocurrency. The product enables participation of almost 1: 1 in price gains and losses of Bitcoin against the US dollar – without a predefined repayment date.
If you want to buy Bitcoin, then in addition to the Bitcoin CFD, a certificate and an ETP on the crypto currency are also a very convenient option; you only need a securities account as a prerequisite.
By the way, you can also invest in Bitcoin Cash, the little bitcoin brother, with a certificate . With the purchase of the Open End Participation Certificate on Bitcoin Cash from Vontobel, you participate in the performance of the Bitcoin Cash price almost 1: 1.
Using the alternative of an ETP
What is a Bitcoin ETP?
ETCs and ETNs are generally grouped under the product class Exchange Traded Products (ETPs). Bitcoin ETPs, however, are, strictly speaking, always ETNs, i.e. Exchange Traded Notes. ETNs are exchange-traded debt securities that track the performance of underlying benchmarks. In contrast to ETCs (Exchange Traded Commodities), ETNs are based on indices outside the commodities sector. ETNs offer investors the opportunity to invest in a new asset class such as Bitcoin at low cost.
How does a Bitcoin ETP work?
With the product, investors can easily participate in the performance of Bitcoin without having to switch to unregulated crypto trading venues. Separate infrastructures such as crypto wallets are also not required for trading. Bitcoin is thus traded and owned by a regulated security.
Purchasing ‘real’ Bitcoins
If, in addition to the performance, your anonymity when trading Bitcoin is important to you, nothing can get past buying “real” Bitcoins, that is, buying Bitcoins in the form of “digital money” or in the form of data. Owning a wallet is a basic requirement for this. This electronic wallet is comparable to a personal checking account in your pocket; you can use it to make transfers and receive or send Bitcoins.
The transfer of Bitcoins is basically no different from a bank transfer: Instead of an account number, only a receiving address is used. Because the digital currency is sent directly from person to person without an intermediary, the fees incurred are lower than for transactions via banks.
If bitcoins are bought on several portals, all bitcoins can be combined in a single bitcoin wallet. A Bitcoin wallet on the smartphone is suitable for everyday use, but a wallet only for online payments on the PC or tablet is also possible. After downloading and installing a Bitcoin wallet, it should be secured with a strong password, a so-called passphrase. This access code must then be given before each transaction in future.
Using a marketplace
If you want to trade the cryptocurrency Bitcoin, you can also do so online on a so-called Bitcoin marketplace, for example. Here the users trade directly with each other, so that the price for the real Bitcoins is determined by supply and demand.
In detail, it works like this: The registered users post their offers to buy or sell Bitcoins with a different currency on marketplaces. Buyers can see how many Bitcoins a seller is offering at what price. A deal comes about as soon as an offer is accepted by another user, the potential buyer. The purchase price for the purchased bitcoins is transferred to the seller’s bank account and the buyer receives the purchased bitcoins as digital data for his wallet.
Depending on the marketplace, the operators charge a small fee for the exchange , for the deposit and / or for the withdrawal of the money. Usually this fee is relatively low. Buyer and seller each bear half of the Bitcoin fees.
Using an exchange
Bitcoin exchanges are another way to buy “real” Bitcoins. The best-known trading exchanges for cryptocurrencies include Bitfinex, CEX.IO, Kraken, Bitstamp and Paymium. Here, too, you should note that the account opening or verification can take a few days.
Attention: The Bitcoin rates on the various trading platforms can vary widely. While Bitcoin trading on crypto exchanges is automated, trades are processed manually on a marketplace. As an investor, you must therefore look for a suitable sales offer yourself.
If you really want to buy bitcoins, you only have to specify how many coins you want to buy at which rate (classic currencies such as US dollars or euros can be exchanged for bitcoins at any time). If the Bitcoin exchange finds a suitable offer, it buys the Bitcoins on behalf of the customer and then credits them to the customer account. Processing is particularly easy, especially since credit cards such as VISA and MasterCard are available as payment methods.
If you want to sell your Bitcoins on Bitcoin exchanges, it works according to the same principle as when buying Bitcoins: within a few minutes you have placed your offer for sale on a Bitcoin exchange. If someone buys your bitcoins, the amount will be credited to your bank account.
How to buy Bitcoin on Cash App
Cash App is a mobile payments application owned by Square Inc. It offers an easy way to save, spend, send or receive money safely and quickly. The mobile money service was launched by Square in 2015 as Square Cash and enables businesses, organizations and individuals to send or receive money using a unique username called $ cashtag.
The $ cashtag is a name that users can easily share with other Cash app users to send them funds within the same country. Payment is either made from one cash app to another or is received by email. The Ethereum Code recipient can choose to withdraw the cash using a customizable debit card called a cash card, or they can transfer the money to a local bank account. However, this service is currently only available in the US and UK.
Square decided to add Bitcoin support as an option to the app in January 2018. Since then, the demand for Bitcoin in the app has increased significantly. Square’s May 2020 first quarter report shows that Bitcoin’s revenue from the app exceeded Fiat’s.
The mentioned report is due to increased demand this quarter due to the lower Bitcoin price. Revenue increased 367% to $ 306 million while Fiat revenue was $ 222 million. These bitcoin revenues will potentially be higher as the asset continues to gain acceptance. If you are one of those people who are considering using the application to buy, send, or receive bitcoin, this article is definitely for you.
How to Buy Bitcoin on Cash App: Step-by-Step Instructions
- To use the free Cash app to buy Bitcoin, you need to first download the app from your Apple Store or Google Play and then simply log in.
- Signing up can easily be done using your email address or phone number by following the steps below.
- Select the “Sign Up” option and enter your email address or phone number. A verification code will be sent to the option you have chosen; check it and enter it in the space provided.
- You will need to provide your debit card information in order to link a bank account to your Cash App account. You’ll need to choose an account, either a personal (for simply sending and receiving cash) or a business (for buying goods and services).
- Choose a $ cashtag, which should be a unique username that you can use to receive payments.
Now that you’ve set up a Cash App account, let’s move on to how to buy Bitcoin on Cash App. Follow the instructions below:
- You need to make a deposit into the account. This is a requirement before a user is allowed to buy Bitcoin. Other KYC requirements may need to be met before you can proceed.
- Then tap on the “Cash & Bitcoin” button. At the top right, tap the “Bitcoin” button.
- Tap Buy and enter the amount you want to buy by dragging it up. You can also use the slider and drag it to the amount you want, which is easier. Then tap on “Buy Bitcoin”.
- Next, confirm that you are the owner of the app by entering your Cash-PIN or using your fingerprint and tapping on “Confirm”. You will temporarily have Bitcoin in your balance.
You should know that the app only allows a maximum purchase of Bitcoin worth $ 10,000 per transaction.
How to Sell Bitcoin on Cash App: Step-by-Step Instructions
To know how to sell Bitcoin using Cash App, the steps are exactly the opposite of those for buying Bitcoin. The steps below will help you do this.
- Open your Cash app and tap the “Invest” tab on the home screen.
- Tap on “Bitcoin” and then select “Sell”.
- There are a number of options for the amount. Choose one that suits your purpose or tap the three dots to enter a custom amount.
- Finally, you need to enter your Cash App PIN or use your fingerprint for verification and then tap on “Confirm”.
- Congratulations! Now you know how to sell Bitcoin on Cash App.
Are there any fees?
Yes! Cash App charges fees for both buying and selling Bitcoin. These fees vary due to the ever-changing price of Bitcoin. However, as you’d expect, the fees for selling Bitcoin may be different than buying Bitcoin through the app.
How to buy Bitcoin with PayPal
Step 1: Decide between broker and exchange. Choose a reputable provider who offers PayPal as a deposit method
Step 2: Open an account and verify yourself
Step 3: Pay in your desired amount via PayPal
- Navigate to the “Trade” menu item in your broker or exchange account. There you will find the options for depositing and withdrawing:
- Via “Deposit” you get to the page for your capital management. In addition to the account balance, you can also view your past transactions here at any time.
- Enter your desired deposit amount and your PayPal email address. The rest of the process then works as you are used to with PayPal.
- In order to trade Bitcoin CFDs with your deposited PayPal balance, navigate back to “Trade” and select Bitcoin from the list of cryptocurrencies.
- Now click on “Buy” (or “Sell”) and enter the number of Bitcoins that you want to buy (or sell).
- After successful execution you will receive a short confirmation message and can continue trading with the new asset. And that’s it! You have successfully made your first Bitcoin investment with PayPal.
Tip: With a Bitcoin calculator you can quickly convert your available credit into the current Bitcoin price.
How to buy Bitcoin offline
Although cryptocurrencies are also known as internet currencies, bitcoins do not necessarily have to be bought over the internet. There are different ways in which the cryptocurrency can also be purchased offline for cash. The cheapest and fastest way to buy bitcoins is to buy them from a private individual. Various platforms, for example Bitcoin-Treff.de, arrange private meetings with traders in the area.
Caution: Please note that trading is very anonymous and unregulated. So you should choose your swap partner very carefully.
In the meantime, there are also regular meetings and forums where Bitcoin fans discuss the latest developments in the field of digital currencies. Such a direct exchange is probably the easiest way to find out about bitcoins, blockchain – the security technology for bitcoin transactions on the Internet – and other topics related to cryptocurrencies. Often these so-called meetups also offer a good opportunity to buy and sell bitcoins.
In addition, there are other exchange points where you can buy the crypto currency Bitcoin. Occasionally there are even Bitcoin machines where you can buy Bitcoins on site. Depending on the manufacturer, the use differs in detail, but the principle is similar: The machine is fed with cash, then the wallet is scanned in order to then save the bitcoins in this virtual wallet on the smartphone.
- You should first decide in which way you want to benefit from the performance of Bitcoin.
- If you want to trade Bitcoin as a CFD, you should compare offers and providers. Our CFD broker comparison helps here .
- If you want to trade the crypto currency on Bitcoin exchanges, it is worth taking a look at a crypto broker comparison.
- With the help of certificates, you can participate in the Bitcoin price development with particularly little effort.
- Don’t forget: To own real bitcoins you need a bitcoin wallet with a strong password.
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