How to Buy, Sell and Keep Track of Bitcoin
We're deep in the heart of bitcoin madness.
The original cryptocurrency's more than tenfold increase over the past year has thrust the blockchain-based digital currency into Wall Street's face. Notable investors like the Winklevii have been cashing in, as the finance sector wades into bitcoin futures trading. At the same time, consumers and everyday investors are trying to figure out what bitcoin actually is and how they can get in on the frenzied action.
Bitcoin isn't the only digital currency garnering mainstream attention. As the volatile but lucrative cryptocurrency has risen from hundreds to thousands to tens of thousands of dollars per digital coin, the rest of the landscape is riding its coattails. The Ethereum blockchain -- long viewed as a more viable mainstream platform -- and its Ether cryptocurrency have risen in value along with coins like Litecoin, Ripple and the forked Bitcoin Cash.
So how can you get some? You'll need to use an exchange to buy and sell the cryptocurrency, and a wallet app to store it securely. If you're in the U.S. and want to quickly buy some bitcoin, Ether or Litecoin, Coinbase is the most popular and easiest-to-use option. Here's how you get started.
Choose an exchange
Coinbase only supports bitcoin, Ethereum and Litecoin for the moment, so if you want to stick with those three cryptocurrencies you can simply download the Coinbase app.
However, there are plenty of other exchanges. Bitfinex and Kraken are popular options that support not only those primary three, but dozens of other cryptocurrencies including Bitcoin Cash, Dash, Iota, Zcash and more. Other options include Gemini, Bitstamp, Bitwage, to name just a few.
Download a wallet app
You'll also need a wallet app for each type of cryptocurrency you're looking to hold. Coinbase makes it easy. The app stores your coins in its private servers in individual wallets for bitcoin, Ether and Litecoin. So if you're using Coinbase, all you need to download is the single app.
Here's how it looks. Yes, I compulsively organize my apps into folders and name said folders with corresponding emoji. Don't @ me.
However, going with Coinbase puts you at the mercy of their system. If you want to mix and match your own exchange and wallet apps, there are countless options for bitcoin wallets using desktop and mobile apps, Ethereum wallets, and so on. From here on out we're walking you through the Coinbase experience, which all happens in the mobile app and can have you buying and selling coins in a matter of minutes.
Verify your identity
Complete account setup
Add your bank account
You're ready to buy some crypto
Check current prices
Congratulations, you're officially a cryptocurrency owner. We only bought a fraction of an amount for the purposes of this story (bitcoin is expensive, man) but you're eligible to buy as much as your bank will allow per week.
Same goes for selling: choose a coin in the Prices tab, and hit the Sell button instead. The limit differs depending on whether you're buying or selling, with Coinbase imposing a buying limit of $5,000 but a selling limit of $10,000 USD.
Buy some Ether, too
Don't forget the exchange fee
Diversify! Snag some Litecoin
Wow, look at all your virtual money
Exchanges take a few days to process
Create a price alert
There is plenty of inherent risk with investing in cryptocurrency. Coinbase will even tell you so. Price surges may incapacitate the exchange temporarily, transactions take time to process and if you're using the default Coinbase wallets, your encrypted coins are not under your control. Exchanges are also prime targets for hacking, and there are plenty of cautionary tales to prove it.
All the more reason for you to take advantage of as many built-in security and verification features as your exchange and wallet apps offer. The Settings tab in the Coinbase app lets you set advanced passcode settings or add additional identity documents.
There will always be a risk in using online cryptocurency exchanges and wallet apps. Unless you're using cold storage and holding your own private keys, that's simply the reality of dabbling in cryptocurrency. Whether you're serious about investing or simply want to have some fun and stash some bitcoin as a long-term holding, apps like Coinbase make it easy to get started. In minutes, you can begin wheeling and dealing bitcoin, Ether and Litecoin from the comfort of your smartphone.