Cryptocurrencies like Bitcoin and digital assets like NFTs are new ways to invest. Learn how cryptocurrencies work and what you need to invest in them.

Frequently Asked Questions

  • How to buy cryptocurrency?

    Once you’ve decided to buy cryptocurrency, you need an account with an exchange, such as Coinbase, that supports that token. The next step is to verify your account and connect it to a payment method like cash, Paypal or even credit cards. You’ll need a crypto wallet, a storage for your keys or crypto passwords, compatible with the token you’re buying. Once you have all those, just place an order.

  • How to invest in bitcoin?

    There are many ways to invest in Bitcoin (BTC). You could buy the cryptocurrency on an exchange. You could consider bitcoin mining to earn BTC as a reward. While no Bitcoin ETFs exist you could consider investing indirectly through ETF-like funds such as the Grayscale Bitcoin Trust and the Bitwise 10 Crypto Index Fund. These may require investment minimums as high as $25,000.

  • How does bitcoin work?

    Bitcoin (BTC) is powered by blockchain technology, which is a ledger that records every transaction. To transact BTC, you need a wallet that has an address. You can send, receive or buy BTC using this address. Every time a Bitcoin transaction occurs, the transaction is verified by miners and recorded. This prevents fraud and double use of the same BTCs.

  • What is bitcoin mining?

    Every bitcoin (BTC) transaction is broadcast on the network and is required to be verified. Computers around the world compete to verify BTC transactions by solving, in the simplest terms, complex mathematical problems. This process is called mining. Miners first to verify a group of transactions are rewarded with BTC. But bitcoin mining requires specialized equipment and consumes a lot of energy.

  • How much is bitcoin worth?

    Just like stocks Bitcoin’s price fluctuates on exchanges based on supply and demand. BTC price is highly volatile and is partly also driven by a limited supply of 21 million BTC. However, there is some debate if BTC, despite high prices, has value. Skeptics believe it doesn’t as it does not meet value requirements that other currencies or assets do, while BTC supporters disagree.

  • How is cryptocurrency taxed?

    For tax purposes, the IRS has ruled that Bitcoin and other virtual currencies be treated as property not currency. That means, not only will you be liable to pay capital gains tax on any profit from the sale of cryptocurrency, but also if you use your crypto to buy goods and services. You will also need to report it as income if you receive crypto in exchange for goods or services. If you meet the threshold, you may also face a 3.8% net investment income tax

  • Which cryptocurrency should I invest in?

    There are more than 9,500 cryptocurrencies. Bitcoin is the oldest cryptocurrency and has the highest market cap. While the market cap may give you some idea of the reputation of the crypto, it may see big swings with price volatility. It also tells you nothing of the underlying technology or governance. Start by reading the crypto’s whitepaper to understand how it works better and watch out for executive or regulatory actions.

  • What can you buy with cryptocurrency?

    Adoption of cryptocurrency as a medium exchange is picking up. A number of retailers such as Overstock and Newegg accept Bitcoin as payment, and so do many stores on Etsy. You could also use payment networks such as PayPal, Flexa. PayPal converts your crypto to U.S. dollars so it may be used at merchants who don’t otherwise accept crypto. Shopping with crypto may not be that hard but remember spending cryptocurrency can trigger a tax liability.

Key Terms

A stablecoin owner makes a trade.
What Is a Stablecoin?
Young man sitting on living room floor working on laptop
What You Need To Know About Litecoin (LTC)
How Does a Blockchain Work?
What Is Blockchain?
Professional busy working on laptop computer at office.
How Is Bitcoin Valued?
An investor makes a crypto purchase.
What Are the Laws for Cryptocurrency?
Image shows a woman putting bitcoins in her wallet. Next to her is her computer  where she is making a purchase; indicating she was online shopping with bitcoins. Above the computer are the logos for Coinbase, Trezor, and Robinhood
Best Bitcoin Wallets of 2022
Young woman wearing spectacles working on her laptop
What Are Non-Fungible Tokens (NFTs)?
Close-Up Of Bitcoin On Laptop
Best Bitcoin Mining Software of 2022
Coinbase Review
Coinbase Review
Man with laptop uses earbuds and cellphone in cafe
Monero (XMR) Explained
KuCoin Review
A man looks at his cryptocurrency wallet
What Is Proof of Stake (PoS)?
Man talking on phone with a laptop in his lap
What You Need to Know About Zcash
Largest Professional Bitcoin Exchange is Coinbase Pro
Woman reading folder at desk in living room
The Best Bitcoin IRA Companies of 2022
Person using mobile device in front of a tall building
What Is a Cryptocurrency Wallet?
Person working on a laptop
What You Need To Know About DigiByte
Woman working on laptop
What You Need To Know About Hedera (HBAR)
Couple sitting on couch using laptop
What You Need To Know About Cardano (ADA)
Woman working on laptop
What You Need to Know About Chainlink (LINK)
Woman sitting on couch with laptop open
Which Cryptocurrency Should You Invest In?
Kraken Review
Kraken Review
A woman looks at her phone.
What You Need To Know About Neo Coin
Person looking at data on a large computer monitor
What Are Smart Contracts?
Woman working on laptop.
What Is Gwei?
Young Asian businesswoman checking financial stock market analysis with mobile app on smartphone
Trezor vs. Ledger: How Do They Compare?
An investor looks over her bitcoin portfolio.
How to Invest in Bitcoin
Woman sitting on couch with dog, working on laptop
What You Need To Know About USD Coin (USDC)
Bittrex Review
Young Woman Using Stock Trading App On Smart Phone At Cafe
Coinbase vs. Coinbase Pro: How do they compare? Review
Man and woman sitting on a sofa working on a laptop
What You Need to Know About Dash Coin
Person using smartphone by a pool
How to Use Bitcoin
Person wearing headphones using multiple computers
How Does Bitcoin Work?
OKEx Review
OKEx Review
Woman working on laptop
What You Need To Know About Tether
Man working on his laptop
Investing in NFTs: Is It Worth It?
An young investor looks over her portfolio.
Should You Invest in Stocks or Bitcoin?
Woman typing on laptop at desk.
What You Need To Know About EOS
what to know about bitcoin mining profitability
Is Bitcoin Mining Profitable?
Man talking on phone while working on laptop
What You Need to Know About Stellar Lumens (XLM)
Person working on a laptop
What Is a 51% Attack?
Person with glasses working with wires and computer hardware
How To Mine Bitcoin
Woman at a cafe checking altcoin value on her phone
What Are Altcoins?
Coinbase Pro Review
Coinbase Pro Review
Man sitting on couch in living room with laptop and credit card
How Do Bitcoin Credit and Debit Cards Work?
cryptocurrency market cap
Comparing Cryptocurrencies by Market Cap
Smiling woman working on a tablet
How to Invest in Blockchain
Woman looking at phone while walking across a bridge
What You Need To Know About Dai
Rear view of businesswoman looking at stock exchange market display screen board in downtown financial district
Coinbase vs. Robinhood: How Do They Compare?
Businesswoman checking financial trading data on smartphone by the stock exchange market display screen board
Gemini vs. Coinbase: How Do They Compare?
Father multi-tasking with young son at kitchen table
Binance vs. Coinbase: How Do They Compare?
People casting ballots at a voting station
Can Blockchain Technology Change How We Vote?
 Laughing man wearing headphones using laptop
What You Need to Know About Tron (TRX)
Young businesswoman reading emails on smartphone while riding on escalator
Kraken vs. Coinbase: How Do They compare?
Woman looking at social media at a cafe on her cell phone while having a cup of coffee
What Are Bitcoin Cash and Bitcoin Gold?
Manager buying cryptocurrency through mobile phone app
BlockFi vs. Coinbase: How Do They Compare?
Young man wearing glasses looks at tablet
What Is Gas (Ethereum)?
Man preparing a cryptocurrency data mining rig
What Are Bitcoin Forks?
Iceland—Time to Free Bitcoin!

More in Trading: