Cryptocurrency is an unregulated and decentralized digital currency that can be used to buy goods and services. Bitcoin, the most popular crypto, has been around since 2018 and has just hit a price of $30,000 for the first time. In fact, the value increased by $5000 in the first few days of 2021. There are many people who think Bitcoin and cryptocurrency is a scam while others invest all of their money in Bitcoin. The truth is you can buy anything with Bitcoin. You can use your brokerage to sell your crypto for cash, then transfer the money to your bank account. You can buy goods from Facebook marketplace using Bitcoin if the seller has a crypto brokerage account. You can book a hotel with Expedia, buy gift cards with services like eGifter and Gift, and buy some games from Microsoft directly using Bitcoin. PayPal recently announced that they will accept Bitcoin and CashApp already accepts Bitcoin. It probably won’t be long before Bitcoin is accepted on Google Pay and Venmo.
With all of the interest in cryptocurrency and Bitcoin, I decided to write up a step by step guide on how to open, secure, and fund a crypto brokerage account so you can invest in Bitcoin and other cryptocurrencies. Though the process is almost identical with other crypto brokerages, this guide is based on Coinbase, a popular cryptocurrency brokerage where you can buy, sell, and manage your cryptocurrency portfolio. Coinbase is available on web, Android, and iOS. We both get $10 in free bitcoin when you sign up and buy or sell $100 worth of crypto using this referral link https://financethrottle.com/FreeBitcoin
Step 1: Sign up with a Cryptocurrency Brokerage
Create your first crypto “wallet” and store it in a blockchain (digital ledger) with a cryptocurrency brokerage. Due to anti-money laundering laws, you will be asked to provide your identification to any brokerage you go with. Expect to give them your full name, email address, phone number, physical address, last 4 digits of your social security number, and photo ID verification in the form of a drivers license or passport. If you have your ID on hand, this process should take no more than 5 minutes.
Step 2: Secure your Account
At the minimum, go into the security settings of the app and activate PIN and biometrics so that it can be required for login, buying, and selling crypto. To go a step further in securing your account, I recommend you get 2-factor authentication with a free app like Google Authenticate, Aegis Authenticator, and Twilio Authy 2-Factor Authentication available on Android and iOS. Once you download any one of these apps, you will need to add your Coinbase account (or whoever your brokerage is). For example, Twilio Authy will give you a 7 digit token number that periodically changes, asking you to verify ownership of the account.
Step 3: Fund your account
Once your account is verified and secured, they will ask how you would like to fund your account. Most crypto brokerages can only be funded through bank accounts, however Coinbase can also be funded through a debit and credit card. I don’t recommend using your debit or credit cards as the fee is high at 3.49%. You should never borrow money so that you can invest it. There are 2 ways to link your bank accounts.
- The hard way – They will send you two small deposits, each less than $1. Once you receive those deposits a couple of days later, you will need to go back to your brokerage and verify the two deposit amounts.
- The easy way – They will ask you to sign in your bank account using a safe and secure service like Plaid. With Plaid, brokerages will not have access to your bank accounts. Everything goes through Plaid and the link to your account is instant. You can immediately fund your account and start buying.
Once your bank account is connected to your brokerage, you can fund your account. When funding your account, they will ask you for the currency and funding method. With Coinbase, the maximum daily bank transfer limit is $25,000 USD and is available for trading immediately. Some other brokerages have a maximum of $15,000 daily. If you want to transfer more, you can choose the Wire Transfer option, which may incur a fee with your bank. If you live in Canada, you will need to use PayPal to withdraw and debit cards to buy.
Step 4: Buy Crypto
After you have funded your account, you have the option of buying from a list of cryptocurrencies including:
- Bitcoin (BTC)
- Ether (ETH)
- Bitcoin Cash (BCH)
- Litecoin (LTC)
- and at least 39 other crypto’s
While I am not an expert or certified financial advisor on cryptocurrency by any means, Bitcoin and Ethereum seem to have the brightest futures as they basically jump started the cryptocurrency space. These are the two crypto’s that I choose to invest in. Don’t copy me just because, do your research.
When you select the crypto you want to invest in, you have the option to set recurring investments. You can choose to invest $100 each week, or $500 per month in the crypto of your choosing. Once you complete this you have officially bought cryptocurrency.
Step 5: Monitor your investment and understand the limits
Limits and fees vary from brokerage to brokerage. All of them daily withdrawal and purchase limits that you need to understand. Limits for a bank funded account may differ from a credit or debit funded account. In the United States, you will need to claim your earnings on your Federal Income Tax Return. Never give your accountant or ANYONE access to your account. You can print out a statement sheet to give to your accountant come tax time. If you want to use Bitcoin to buy things, do your research. There are plenty of online and offline services that accept Bitcoin directly.
Step 6: Decide what to do with your crypto
If you leave your crypto in the account, you have liquidity, allowing you to send, buy, or sell Bitcoin with ease. You can even earn up to 8.6% interest on your crypto with BlockFi and get up to $250 in bitcoins with a deposit of $25 or more using this link: https://financethrottle.com/BlockFi. When you setup BlockFi, you will be given a public wallet address. Copy this code and past it in your brokerage account when sending money. MAKE SURE YOUR PUBLIC WALLET ADDRESS WAS COPIED ACCURATELY. This will allow you to transfer your money to BlockFi from Coinbase. You can also store your crypto offline in a blockchain. This is one of the most popular offline cold storage devices for Bitcoin and Ethereum – Ledger Nano S – The Best Crypto Hardware Wallet – Secure and Manage Your Bitcoin, Ethereum, ERC20 and Many Other Coins.
In Conclusion
I watched as Bitcoin climbed from $10,000 to an all record high of $34,544.94 within the past 6 months. I even had friends who paid for home renovations by cashing in their Bitcoin investments. While any investment is risky, cryptocurrency seems like it will be the next revolution in the way we buy, sell, and save. I suggest you do your research and choose what brokerage and crypto is best for you. You don’t have to sign up with Coinbase because I recommended it, though it will support the blog.
Below is a list of cryptocurrency brokers
- Coinbase: Best for new investors
- eToro: Best for social trading
- Gemini: Best for ease of use
- Altrady: Best for accessibility
- Voyager: Best for multiple exchanges
- Other ways to buy crypto include using Webull and Robinhood, however you can only buy and sell crypto’s. You can’t transfer your crypto offline or to an interest earning account like BlockFi.
Affiliate Link Notice: This post contains affiliate links, which means I may earn a small commission, at no additional cost to you, if you decide to purchase or sign up for a product through my referral links. While you can sign up through any other means, it would help support the blog if you sign up through my links. Thanks.
