Bitcoin was roaring like never before. Although the original cryptocurrency fell slightly over the weekend, it moved from a few hundred dollars closer to $100,000 on Friday, setting another all-time high — a level that would have been unimaginable a decade ago or even in the early 1980s. The year 2023 is when Bitcoin was trading closer to the price. $20,000.
Bulls expect the momentum to continue as many expect Bitcoin to cross the six-figure mark before the end of the year.
When Bitcoin was created, there was only one way to get it: to mine it yourself. Today, there are many ways to buy it, allowing investors to choose how much control they want to have over their investments.
If you’re looking to get into the hype but don’t know how, here’s a guide to the three most practical ways to buy Bitcoin.
Crypto exchanges
One of the easiest ways to buy Bitcoin is through an exchange, the biggest and best of which is very similar to using a typical online bank or brokerage.
Exchanges make money through transaction fees that vary across platforms. Users can buy Bitcoin with fiat currencies or other digital assets, and the exchange will take a percentage of each transfer as a commission, storing your cryptocurrencies securely.
It is important to note that not all cryptocurrency exchanges are trustworthy. Some exchanges collapsed due to suspicious trading transactions and mismanagement of funds, such as the infamous FTX.
Popular cryptocurrency exchanges in the US include Coinbase, Robinhood, and Kraken. Customers can download the app to their phone, create an account, and start trading — after meeting KYC requirements such as providing valid ID.
Exchange-traded funds
Another way to invest in Bitcoin is through ETFs. ETFs are a financial instrument that allows investors to gain exposure to an underlying asset without actually holding that asset. Popular brokerages such as Schwab and Fidelity are among those that allow clients to buy shares in various Bitcoin ETFs.
Spot Bitcoin ETFs were approved by the Securities and Exchange Commission in January, allowing traditional financial institutions to offer investing in Bitcoin for the first time. These companies own a store of Bitcoin and offer shares of it to investors, closely tracking its price as it fluctuates.
These funds are useful for investors who do not want to deal with the complexities of owning Bitcoin directly. If you already have an investment portfolio, an ETF provides an easy way to gain exposure to the asset. The largest Bitcoin ETFs include IBIT from BlackRock, FBTC from Fidelity, and ARKB from Ark Invest.
Self-preservation wallets
If you want complete control over your digital assets, a self-managed wallet may be the perfect solution. These wallets generate and store your private and public keys, interact with the blockchain, and allow you to monitor your balance and transfer your assets freely.
The downside of a self-custodial wallet is that you are responsible for storing your sensitive information. Your private key is like a password, allowing anyone with it to access the funds in your wallet. However, unlike a password, if you lose your private key, there is no way to recover it and your digital assets will likely be lost forever, so it is important to find a safe place to store it.
Most self-custodial wallets can be downloaded to your phone. Popular wallets include Coinbase Wallet, Metamask, and Crypto.com’s DeFi wallet.
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