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How to buy bitcoin and other digital currencies

Updated December 11, 2017 - 7:42 pm

You can buy bitcoin — or other digital currencies — almost as easily as you buy stocks and bonds.

To get started, an individual must first open a digital currency account with a platform that offers such brokerage services.

One of the most popular in the U.S. is Coinbase, which has more than 13 million users. An account can be created in a few minutes by filing out a standard online form that includes name and contact details.

Next, a user must connect a bank account or credit card to the account or make a cash transfer. The user can only buy $100 worth of digital currencies a week using a credit card and $2,000 a week using a linked-bank account through Coinbase. Cash transfers don’t have such limitations.

To make a transaction, a user must simply click on the buy/sell page in the drop-down menu and enter either a cash amount to buy, say, $1,000, or a fixed amount of bitcoin to purchase, say 0.5.

Once the user clicks buy, the transaction is carried out by Coinbase on its own bitcoin exchange called Global Digital Asset Exchange. The exchange had a turnover of nearly $1 billion over a 24-hour period ending Monday at noon.

Like a brokerage, Coinbase takes a spread for each transaction ranging from 0.25 percent to 1 percent as well as a fee to convert your dollars into bitcoin and vice versa.

The transfer of bitcoin to your Coinbase digital wallet can take a few days and as long as a week if you pay via your linked bank account. Purchases with a credit card are carried out instantly. Coinbase stores your digital currency in its “vault” much like a brokerage maintains electronic records of your stock holdings in their books.

You can also buy Ethereum and Litecoin, two other popular digital currencies, on Coinbase. You can pay for goods or services using these cryptocurrencies by sending them to a merchant’s digital wallet. If that merchant has an account on Coinbase, you can make the transfer for free.

A user can log on at anytime to Coinbase to check the current price of the three digital currencies as well as the current value of their account.

If creating an account seems like a hassle or scary, investors can simply buy shares of Bitcoin Investment Trust, a publicly traded fund whose only asset are bitcoins. The fund’s stock ticker is GBTC.

Contact Todd Prince at 702 383-0386 or tprince@reviewjournal.com. Follow @toddprincetv on Twitter.

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