The process to purchase bitcoin consists of four steps: choosing a venue or exchange to place your order, selecting a payment method, and ensuring safe storage for your purchased cryptocurrency. Depending on the type of venue chosen in the first step, there might be additional steps involved in the process. For example, you might need to factor additional costs for an online wallet and custody of your bitcoin, if you purchase the cryptocurrency through Robinhood because it does not offer these services.
What Are the Most Popular Venues to Buy Bitcoin?
The most popular venues to buy bitcoins are cryptocurrency exchanges, brokerages (crypto and mainstream), and payment services like PayPal. You can also buy Bitcoin from peer-to-peer exchanges. For indirect ownership of bitcoin, you can invest in companies that hold the cryptocurrency on their balance sheet, such as Tesla, Inc. (TSLA) or MicroStrategy Incorporated (MSTR).
How Much Should I Expect to Pay to Purchase Bitcoin?
Typically, the price to purchase bitcoin consists of a fee per trade plus the cost to convert a fiat currency, generally dollars, to bitcoin. (Cryptocurrency exchanges and payment services make money off this conversion spread.) The fee per trade is a function of the dollar amount of the trade. A higher trade amount will carry higher fees. The overall purchase cost also depends on features offered at the venue. For example, Robinhood does not currently offer an online wallet to store bitcoin. Therefore, you will need to budget for online wallet costs for your purchase.
Besides Cryptocurrency Exchanges, Where Else Can I Buy Bitcoin?
You can also buy bitcoin at the following locations:
- Through Bitcoin ATMs
- Through online payment services like PayPal
- At mainstream brokerages like Robinhood
Is My Bitcoin Purchase Protected by SIPC?
No, your bitcoin purchase is not protected by SIPC. At certain exchanges, like Coinbase, fiat balances in individual accounts may be FDIC-insured to the tune of $250,000 per account.