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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.
One rule of thumb is to invest 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.
1. Decide where to buy bitcoin
There are a few different ways to buy bitcoin and other cryptocurrencies, including exchanges and traditional brokers.
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 easily link your bank account. Coinbase also offers access to etherium, litecoin and other cryptocurrencies. On each transaction, Coinbase charges a spread (an adjustment in the purchase or sale price of an investment) of about 0.5%, plus a fee. The fee is the greater of a variable percentage based on region and payment type — for example, 1.49% for a purchase funded by a U.S. bank account — or a flat fee that ranges from $0.99 to $2.99, depending on the amount transferred.
- Binance: The world’s largest exchange by volume for all cryptocurrencies, Binance charges a 0.1% fee for all crypto trades (some discounts are available), plus a withdrawal fee. Generally, you can only make purchases using cryptocurrency, though Binance did recently add the option to pay by credit card for an additional fee (this option is unavailable in some U.S. states).
- Gemini: This U.S.-based crypto exchange trades bitcoin, ether, bitcoin cash, litecoin and zcash. Transaction fees…
Read more:How to Invest in Bitcoin – NerdWallet