Bitcoin is a well-known cryptocurrency that offers tech enthusiasts an alternative form of money. Cryptocurrencies like Bitcoin offer a relatively new method of tracking and verifying ownership of assets, allowing the Bitcoin network to function. In addition to functioning as a payment method, many people buy and hold Bitcoin as an investment, although it is important to note that investing in Bitcoin is extremely risky. Usually, the purchase price of bitcoin consists of a fee per transaction plus the cost of converting a fiat currency to bitcoin. (Cryptocurrency exchanges and payment services make money from this conversion spread.) The per-trade fee is a function of the dollar amount of the trade.

You will need a cryptocurrency wallet, included in most cryptocurrency exchange accounts, to store your digital assets. The fastest and cheapest way is usually with an online transfer from a connected bank account. Some cryptocurrency exchanges give you instant access to trading, while others may require you to wait for the money to be settled before buying.

You can legally own the assets, but someone still needs to protect them and your security needs to be strict. If they don’t believe that their cryptocurrency is properly secured, some traders choose to invest in a crypto wallet to keep their coins offline so that they are inaccessible to hackers or others. After the exchange verifies your identity, you’ll be asked to link a payment option. Most exchanges allow you to link your bank account directly or you can link a debit or credit card. While you can use a credit card to buy cryptocurrencies, it’s not a good idea because the volatility of cryptocurrency prices can drive up the total cost of buying a coin.

The value of cryptocurrency stems from a combination of scarcity and the perception that it is a store of value, an anonymous means of payment or a hedge against inflation. Cryptocurrency investors can buy or sell them directly on a spot market, or they can invest indirectly in a futures market or by using investment products that offer exposure to cryptocurrencies. Although cryptocurrencies exist digitally, you can still have a way to store them online and offline, through hot wallets and cold wallets. If you’re a beginner, the ease of accessing offline hot wallets will prove to be more useful and versatile.

While Coinbase gives investors the “keys” to their own Bitcoin holdings so they can transfer the assets to their own wallets, Robinhood doesn’t. As a result, investing in Bitcoin on Coinbase will allow investors to own the asset and treat it as a currency. On the other hand, Robinhood the best place to buy Bitcoins with credit card investors can only benefit from price movements in their accounts and cannot transfer holdings to an encrypted wallet. Investors who plan to buy independent Bitcoin should know the limitations of their trading platforms before allocating capital to a cryptocurrency.