More mainstream investors are getting bullish on volatile digital currencies bitcoin and Ethereum. This week, investing icon Bill Miller and Ritholtz Wealth Management CEO Josh Brown both revealed they have made small investments in bitcoin.
But buying bitcoin and Ethereum isn’t as easy as buying shares of popular stocks.
First, investors need to choose a digital currency wallet. Bitcoin owners must store their digital currency in one of these downloadable wallets until they are ready to sell or spend. Coinbase Wallet is one of the most popular options for both bitcoin and Ethereum, but other digital currency wallets include Mycelium, Electrum, Exodus and Jaxx. Different wallets provide access to different exchanges and have different security features.
After choosing a wallet, investors must choose an exchange to buy and sell cryptocurrencies directly without the assistance of a broker. Coinbase, Poloniex and CEX are among popular exchanges. When choosing an exchange, investors should consider the fees the exchange charges, the regulatory compliance of the exchange and its security history. Several cryptocurrency exchanges have dealt with security breaches in the past.
Finally, investors must decide on a payment method. Different exchanges accept different payment methods, including direct bank account transfers, credit card payments, wire transfers and PayPal transfers. Coinbase accepts all of these payment methods.
An alternative method of buying bitcoin is by going to a physical bitcoin ATM. At the ATM, users can insert cash and receive bitcoin in return. Buyers get either a receipt with a code that can be used to stash the bitcoin in a digital wallet or the transaction is directly recorded in the wallet on a smartphone.
As of March, there were more than 1,000 cryptocurrency ATMs already installed around the world, but that number is growing rapidly on a weekly basis. At this point, the vast majority of these ATMs are bitcoin ATMs, but Ethereum and other cryptocurrency ATMs have started to pop up as well.
The biggest downside to using ATMs to buy cryptocurrency is the transaction fees, which are typically around 5 percent.
For new cryptocurrency buyers who want to keep things simple, Coinbase is…
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