I have been in the financial world for many years, writing on everything from credit cards and loans to budgeting and retirement. But, although I have written a lot on the subject of cryptocurrency, I only recently took the plunge and bought my first Bitcoin.
Ok – given the current price per piece, I didn’t buy a full Bitcoin. I bought a small fraction of a coin. My goal is not to get rich in crypto – although that would certainly be lovely – but to better understand how crypto trading works.
The whole process, while simple, was educational. I learned several things that I wouldn’t necessarily have discovered without going through the process. Here are three surprising things I learned about buying Bitcoin.
1. You need a separate account for your crypto
In retrospect, this one seems pretty obvious. But before I started trading crypto myself, it never really went down.
When you trade in stocks, you deal with two types of accounts: retirement accounts – think IRA and 401 (k) – and standard investment accounts. But none of these account types can trade crypto.
Basically, it’s because crypto is not part of the regular stock exchange. So, to trade crypto, you open a dedicated account with a cryptocurrency broker. In my case, I used SoFi to complete my Bitcoin purchase. I opened a SoFi Invest account, then a SoFi Crypto account.
2. You can get free Bitcoin with a new account bonus
Credit cards have offered signup bonuses for years, just like bank accounts. Even regular investment accounts can come with signup bonuses. So that should have been my first thought when I opened a crypto account. Instead, it was a happy surprise.
My new SoFi Crypto account came with $ 10 in free Bitcoin when I invested at least $ 10 for myself. This appears to be their standard offering. The free Bitcoin didn’t reach my account immediately, but I received it the same day I made my first purchase. Of course, your mileage may vary.
Other crypto brokers also tend to offer new account bonuses. However, some exchanges have higher minimum order amounts to get free Bitcoin, so read the fine print.
3. Commission-free trading does not include crypto
Another thing that I haven’t thought about much before is that crypto brokers charge fees for trading Bitcoin and other cryptocurrencies. Even the best brokers who trade commission-free for stocks and ETFs generally charge fees for crypto transactions.
With that in mind, it makes sense to look for a broker with the lowest fees if you plan on doing a lot of trading. Robinhood announces a $ 0 crypto trading fee, but you can find more options.
Perhaps the best way to get around trading fees is to use one of the many credit cards that offer rewards that you can redeem for crypto with no trading fees. Several crypto brokers now offer these cards. For example, the SoFi credit card earns 2% when you trade it for crypto. And the Coinbase Debit Cardstyle = “text-decoration: underline”> earn 4% in crypto rewards.
Ride the Bitcoin Train
As a financial expert, I always blame myself for not buying Bitcoin years ago. But I’m on the bandwagon now – and I don’t regret it.
Do I think I will retire on my Bitcoin earnings? Barely. This is a very volatile type of investing, and you should only invest the money that you can afford to lose. Do I have fun watching the market move and trying to guess how it’s going to move? Absoutely.