You're ready to get in on the cryptocurrency revolution. But how? Let's talk about the basics of getting started and buying your first crypto asset.
One thing to get out of the way right off the bat, is the idea that your crypto will be anonymous. There are ways for advanced users to own crypto completely anonymously, but for the majority of us, our buying and selling is going to be done through an exchange. Exchanges basically operate under the same KYC (Know Your Customer) rules that banks do, unfortunately. This means your crypto is anything but anonymous. And as governments have caught up to what's happening in crypto they have quickly found ways to make money off of it while simultaneously vilifying it. In other words, not only is gov't going to know that you buy and sell crypto, they are also going to expect you to pay taxes on profits.
Now that we've put to bed the idea of hiding all your earnings to fund your illicit activities, we can move on to simply investing in crypto in much the same way you would invest in Apple stock.
Things are changing rapidly in the cryptocurrency brokerage arena. Until recently, crypto could only be purchased through dedicated crypto exchanges such as Coinbase, Kraken, Binance, and others. Lately, regular stock trading brokerages such as TastyWorks, Tradestation, and Robinhood, have begun offering their customers access to crypto trading as well.
There is one key difference to trading/investing via a traditional stock broker versus a dedicated cryptocurrency brokerage. When buying Bitcoin through Robinhood you don't actually own your bitcoin. You can't send that crypto to an offline wallet, and you can't use it to make purchases, or to trade other cryptocurrencies with it. Your Bitcoin purchase on Robinhood is nothing more than a dollar amount on a screen. It has no utility.
With a crypto account on a platform like Coinbase the money you use to purchase crypto actually purchases crypto. You own that Bitcoin, no differently than you own the dollar bills in the wallet in your pocket. The bitcoin is on a blockchain that you can easily transfer to a different wallet, send to others, and basically do whatever you please with.
My personal preference is to own my crypto. To be able to "put it in my wallet."
Coinbase is a solid place to get started. They offer trading in dozens of different cryptocurrencies, whereas Robinhood currently offers just four.
Opening an account on Coinbase is very much like opening a trading account with a traditional stock broker. You'll be asked to provide all the normal stuff, including a government issued i.d. and your social security number. This is to prove who you are, and for government tax reporting, as discussed earlier. You'll also want to link your bank account in order to make ACH deposits and withdrawals instantly, for free.
The process does take a couple of days, generally, so don't expect to be buying Bitcoin five minutes after opening up your computer. It's not complicated, and there are no "trick" questions like you sometimes run into with stock brokerage accounts, so I won't go into details here with regards to getting your account set up.
Once you have your Coinbase account up and running you can flip over to their Coinbase Pro platform. This is a more advanced trading platform than the basic Coinbase. The great thing about it, though, is that it uses the same account details, give you more trading options, and offers much lower trading fees.
One thing beginners to crypto trading often don't realize is that they have the ability to buy crypto in any amount. The minimum size trade in Bitcoin using Coinbase Pro, in fact, is just .001 Bitcoins. Currently that equals about $43 worth. On other platforms, that minimum is even lower, with Coinbase's normal platform allowing trades of just $2.00 worth of Bitcoin.
So, with that in mind we can go about making our first investment in Bitcoin.
In the above screenshot you can see that the trading fee is .5% (.50 cents on $100). While Robinhood says it is free, I'm not at all convinced (especially due to the total lack of transparency and totally basic platform) that the hidden fee you are paying isn't more than Coinbase's upfront fee. Remember, Robinhood makes money by selling your orders to market makers who then trade ahead of you at a better price before filling your order at a worse price, thus ensuring they book a profit. You don't see any of this happen, you are just told it's free.
Hopefully, that is enough information to get you started with buying your first cryptocurrency. It's really not nearly as hard as it looks.
It is important to remember, however, that crypto trading holds significant risk. Initially you should start out very small, trading maybe just 2-5% of your overall portfolio. You should consider the full amount at risk at all times. Crypto can make huge swings based on any number of outside interferences, like an Elon Musk tweet, a Federal Reserve Bank President's warnings, and especially government interference or outright bans.
We look forward to continuing to help you build a portion of your portfolio in crypto. To that end we now have our Crypto Chat, where Wanderers can gather to ask questions, share information, or just brag about their latest and greatest trade.
Note that while we discuss Coinbase in this article, we don't have any association to them and these are not affiliate links. There are other exchanges out there that offer similar services, and possibly even lower fees. However, we like Coinbase because it has been around for a long time now, is well respected, and is a public company which comes with added scrutiny.
I've been trading and traveling my entire adult life. As I write this, I'm trading from my boat in Bonaire. Over the years this has gotten easier and easier to do. Drop the anchor, tether your phone to your laptop, browse some charts, and trade. At Wanderer we first began investing in Bitcoin in 2017 when it was worth $2,500. Fortunately, we recognized its potential, unfortunately, we didn't realize it even earlier. Today it is worth about $50,000, and we believe it is here to stay. Bitcoin will have its ups and downs along the way, but years from now we expect it will be much higher, and we'll still be bopping around in the islands.
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