How to Buy Bitcoin Stock: 3 Easy Ways to Do It

Owning bitcoin stock is not the same thing as owning Bitcoin. The phrase “no keys, no crypto” reflects the idea that when investors buy cryptocurrencies on one of these exchanges, they don’t possess the cryptocurrencies.

Before we explain how to buy bitcoin stock, we’ll explain what bitcoin is, how to purchase and sell it, and why it may or may not be the right choice for your portfolio. 

Key Takeaway

Bitcoin is not a traditional asset due to the inherently decentralized nature of the blockchain. This makes it impossible to buy bitcoin stock in the same way that you might buy stock in a company like Tesla. 

However, you can purchase Bitcoin itself or a fraction of a Bitcoin to profit from potential price changes. You can also invest in a publicly traded company like Coinbase, making it possible for investors to purchase cryptocurrencies like Bitcoin more easily.

Understanding Bitcoin

Before learning more about how to buy Bitcoin, it’s important to understand what Bitcoin is and how it functions. Largely considered the first cryptocurrency, Bitcoin laid the framework for future crypto expansions by developing and implementing a framework of inalterable, anonymous transfers of value. 

Bitcoin is a digital currency that operates on a decentralized network, meaning there is no central authority like a bank overseeing it. Instead, it relies on a vast network of computers, called nodes, spread across the globe. These nodes work together to maintain a public ledger called the “blockchain.”

Think of the blockchain as a secure and transparent digital record book that keeps track of all Bitcoin transactions. Each “block” in this chain contains a list of transactions — and once a block is filled, it is linked to the previous one, forming an unalterable and time-stamped history of transactions. The blockchain’s decentralized and tamper-resistant nature ensures trust and transparency in the Bitcoin system.

Nodes play a crucial role in this network by independently verifying and validating transactions. When someone initiates a Bitcoin transaction, a series of decentralized computers that maintain the Bitcoin network (called “nodes”) check its validity to ensure that the sender has the necessary funds and that the transaction adheres to the system’s rules. Once verified, the transaction gets added to a new block, which then gets added to the existing blockchain. This decentralized validation process makes it extremely difficult for any single entity to manipulate or control the Bitcoin network, providing security and trust in the digital currency.

Released in 2009, Bitcoin was envisioned as a decentralized digital currency, aiming to provide an alternative to traditional government-issued currencies. Its groundbreaking feature was blockchain technology, which solved the double-spending problem inherent in previous digital currency attempts. Bitcoin was infamously created by an anonymous individual or group of individuals using the pseudonym “Satoshi Nakamoto.” This decentralized, anonymous nature means we’re unlikely to see Bitcoin listed on a stock exchange anytime soon. 

While you can’t publicly trade Bitcoin and you cannot buy bitcoin stock, more exchanges now offer options. You can even purchase cryptocurrency using a money transfer app like CashApp. However, there are a few common misconceptions you’ll need to consider before investing in this largely unregulated asset. 

One common misconception is the idea that Bitcoin is entirely anonymous. While transactions are pseudonymous, meaning they use cryptographic addresses rather than personal information, this level of privacy is not absolute. Researchers and authorities can potentially trace transactions back to individuals, highlighting the importance of additional privacy measures for those seeking enhanced anonymity. This also means you’ll need to track your profits and transactions and report them for tax purposes. 

Another common misconception is that Bitcoin (or cryptocurrency generally) is a route to getting rich quickly. While some overnight success stories related to various cryptocurrency bull runs have occurred throughout time, these are outliers. 

Cryptocurrency remains a largely unregulated industry, meaning that scams are more common than in stock investing. This means there are no return guarantees, and you could lose all your money. Never invest more money than you can afford to lose in Bitcoin, and use cryptocurrency as a small complement to an otherwise fully diversified portfolio. 

3 Methods to Buy Bitcoin

Bitcoin is one type of cryptocurrency. Remember, all bitcoin is a cryptocurrency, but not all cryptocurrencies are bitcoin. Nevertheless, the answer to the questions, “How do I buy bitcoin?” and “How do I buy cryptocurrencies?” is essentially the same.

If you’re specifically looking to buy bitcoin, you can query “how do buy bitcoin” to find a website that will allow you to use your credit card to buy bitcoin. 

Buy Bitcoin with a Credit/Debit Card

Are you looking for how to get bitcoins fast and don’t want to store them yourself? Use a credit/debit card. Many websites (e.g., Coinbase) allow you to purchase with a credit card. 

Once you’re on the site, follow a few simple steps: 

1. Set up an account.
2. Go through the process to verify your identity (this will take a few minutes).
3. Use your credit/debit card to fund your account.
4. Once you fund your account, navigate the site to buy bitcoin. Most sites allow you to purchase fractional bitcoin in amounts as low as $5. 

Buy Bitcoin from an Exchange

As we noted above, consider buying bitcoin from an exchange. It’s another way to buy bitcoin without taking custody of your coins. This method is nearly identical to purchasing with a credit/debit card, except you’ll have to deposit funds from a bank account. 

Buy from a Bitcoin ATM

Yes, Bitcoin ATMs do exist. The process of using a bitcoin ATM can differ depending on the type of machine and your country. Learn from this helpful tutorial if you want to know how to get bitcoins from an ATM. 

How to Buy Bitcoin Stock 

Now that we’ve covered how to buy Bitcoin itself, let’s review how to purchase shares of stock associated with the cryptocurrency industry. While Bitcoin does not have a stock or stock-buying process, you can use the following steps to buy shares of a company associated with Bitcoin and its trading. 

Choose the Right Exchange

If you don’t already have a brokerage account, you’ll need to open one before you can purchase shares of stocks associated with the cryptocurrency industry. Some of the characteristics you might want to consider when selecting a brokerage include: 

• Cryptocurrency buying availability: While all brokerage accounts will allow you to buy and sell shares of stocks traded on major exchanges, not every broker supports cryptocurrency buying. If you’re looking for a one-stop shop to buy stocks and crypto, search for a broker offering this access. It can be helpful to list the cryptocurrencies you’re interested in investing in before selecting where to open an account. Review your broker’s list of supported currencies before opening an account to ensure all your desired holdings are supported. While most crypto trading brokers support Bitcoin and Ethereum as the most popular cryptocurrencies, altcoins may not be widely available. 

• Fees and commissions: Monthly and annual fees are essential considerations before opening a brokerage account, especially if you plan to maintain a lower balance. While higher-value traders may be eligible to waive account maintenance fees, those looking to invest only a bit of money may be subject to fees. Review each broker’s fee structure before deciding where to open an account. 
• Available exchanges: When investing in cryptocurrency, defining assets you want to purchase before investing can be a good idea. This will help you determine which exchanges you’ll need access to, which will limit the brokers you’ll be able to open an account with. 

For example, assets that trade on the New York Stock Exchange or NASDAQ, like the iShares Bitcoin Trust NASDAQ: IBIT, will be purchasable through almost any U.S.-based exchange. However, assets that trade on off-market exchanges like the Bitcoin Group OTC: BTGGF may require a specialized trading account. 

Set Up Your Account

You’ll open an account once you select a broker. While the steps you’ll need to go through might vary depending on the broker you’re working through, most use the following general steps:

• Begin the enrollment process: Start by initiating the enrollment process using the company’s website. You’ll need to submit some personal information, including your full legal name, address and information on your trading experience and history. 
• Upload identity documents: Brokerages must legally submit tax information and verify your identity before allowing you to trade. You may need to take a photo of your passport, driver’s license or other identity document to allow your broker to confirm your info. Depending on the broker, you may also need to verify your identity via phone or by uploading a selfie to a facial recognition tool. 
• Explore tools: After verifying your account, you can explore your broker’s platform. It’s usually a good idea to test out the specific order process you’ll use by placing a smaller value order before making a major order. 
• Link a payment method: Most brokerages allow you to link multiple payment methods that you can use to buy shares of stock. While direct bank transfers are the most commonly used method, some brokers also allow you to buy stock using a wire transfer or debit card. 

Depending on the broker you’re working with, the full personal and verification process might take up to a week or more, especially if you’re outside the United States. It’s best to begin opening an account before you’re ready to make a crypto purchase to ensure you can lock in the price you need.  

Buy Bitcoin Stock

After your account is open and funded, you can begin placing buy and sell orders on each of the exchanges your broker offers access to. Some stocks associated with Bitcoin and cryptocurrency you may want to explore, include the following:

• Coinbase Global: As one of the largest cryptocurrency exchanges, Coinbase Global Inc. NASDAQ: COIN provides a platform for buying, selling, and storing various cryptocurrencies, including Bitcoin. Investing in Coinbase stock allows exposure to the overall growth and adoption of cryptocurrencies, making buying smaller altcoins like Bitcoin SV, Ripple and dozens of others possible. 
• Canaan: Canaan Inc. NASDAQ: CAN specializes in designing and manufacturing Bitcoin mining hardware. As such, its stock performance is often influenced by the demand for Bitcoin mining equipment and the overall health of the cryptocurrency mining industry, making it a strong firmware-based option for investors. 
• HIVE Digital Technologies: HIVE Digital Technologies Ltd. NASDAQ: HIVE is a blockchain infrastructure company involved in cryptocurrency mining. It operates data centers that mine various cryptocurrencies, including Bitcoin and Ethereum. HIVE’s stock performance is closely tied to the profitability of its mining operations and the broader cryptocurrency market, making it an ideal choice for investors interested in purchasing a more regulated asset closely tied to crypto price changes. 
• Grayscale Bitcoin Trust: Grayscale Bitcoin Trust NYSE: GBTC is a trust holding Bitcoin on behalf of investors and other crypto-adjacent assets. Structured as a traditional investment vehicle, it allows investors to participate in the cryptocurrency market without directly owning or managing Bitcoin while incorporating mining asset investments. The fund has over $23 billion in assets under management as of February 2024. 

After placing your buy order, your broker will execute the transaction on your behalf. If the broker can purchase the shares according to your instructions, you’ll see them in your portfolio.

Secure Your Investment

Like cryptocurrency investments, investments in Bitcoin and associated assets may be more volatile than comparative tech investments. Keep up with cryptocurrency news by following a source like MarketBeat’s crypto feed and monitor how market movements and state and federal laws affect your portfolio value. If you decide to invest in Bitcoin, you may want to move your investment to an off-exchange private wallet. 

Alternative Ways to Buy Bitcoin

One of the most common ways to invest in bitcoin without owning the digital currency is through a mutual fund or exchange-traded fund (ETF) tied to bitcoin’s price. There are also several stocks for companies associated with blockchain technology. For example, you can buy stock in Coinbase Global Inc. NASDAQ: COIN, a popular cryptocurrency exchange. This is an indirect way to buy bitcoin, but it may appeal to less risk-tolerant investors. 

It’s also possible for investors to buy bitcoin from a peer-to-peer payment site. PayPal Holdings Inc. NASDAQ: PYPL allows individuals to purchase bitcoin along with Ethereum, Litecoin or Bitcoin Cash. 

How to Store Bitcoin

How you buy bitcoin will depend in part on how you plan to store the bitcoin you own. Because bitcoin doesn’t exist physically, there is nothing to “hold” in a physical form. 

So how do investors store bitcoin? Remember that bitcoin is, at its core, a piece of code. Furthermore, it’s a piece of code protected by encryption. That means bitcoin transactions require both a public key and a private key. These keys serve as your unique identifiers and allow bitcoin transactions to be decentralized.

• Public key: A public key encrypts a transaction before it occurs and signs it after it is verified. You cannot add a transaction to the blockchain until it is verified with the public key. Anyone can see your public key, and sharing it does not make your bitcoin vulnerable. Public keys are similar to a mailbox at the post office. It’s an address to which individuals or organizations can send you bitcoin. 
• Private key: A private key is your unique “password” to sign a bitcoin transaction digitally. A private key generally is a code with a lot of characters. You mustn’t share your private key with anyone and back up the storage of your private key. This is your mailbox key. Simply put, nobody can access your bitcoin without those keys. Unfortunately, this also means you can’t access your bitcoin without these keys. Many bitcoin investors cannot access their bitcoin for just that reason. 

So, where do you store your key? If you buy bitcoin stock, an exchange holds it.

However, as we’ve said, owning bitcoin stock differs from owning bitcoin. As investors have seen with the collapse of some large cryptocurrency exchanges, holding bitcoin on an exchange can limit your access to your bitcoin when you want to sell. 

For most crypto owners, the answer is a digital wallet. These take two forms that we’ll discuss below. 

Hot Wallets vs. Cold Wallets 

Private keys can be stored and password-protected in a digital wallet. The two main types of crypto wallets are hot wallets and cold wallets.

• Hot wallets: Hot wallets connect to the internet, which makes them useful for quickly trading or spending bitcoin. Hot wallets can take many forms, including web, mobile or desktop wallets. 
• Cold wallets: Cold wallets are physical devices similar to USB devices that generally cost between $50 and $150. Cold wallets do not connect to the internet. It’s a better option for holding more bitcoin to build wealth. Cold wallets are an extremely secure way to store your private keys. Even if the device is stolen or misplaced, nobody can access your bitcoin without knowing your private key. Cold wallets can take the form of hardware wallets or paper wallets.  

How to Sell Bitcoin

If you’re investing in bitcoin through a cryptocurrency exchange or brokerage, selling is as simple as buying. You can usually sell your bitcoin in a few simple steps. In many cases, you can get the funds immediately. You can also sell bitcoin using a bitcoin ATM or debit card. 

Remember that you’ll incur fees when selling from an exchange or platform. However, for many investors, the convenience of buying and selling their bitcoin quickly and easily offsets the nominal fees. 

Still in its Infancy

Although it’s existed since 2009, bitcoin is still in its infancy. And like any new asset class, both sides have polarizing opinions. For some investors, bitcoin represents the future of money, and they are making a massive investment in bitcoin and cryptocurrencies. 

On the other hand, some investors view bitcoin as a collectible at best and a fad that will eventually be worthless at worst. These investors acknowledge the benefits of blockchain technology but don’t see bitcoin as a viable asset class.

Still others fall somewhere in between. The good news is that you can gain exposure to bitcoin without investing a fortune. Whether you’re a true believer or just someone curious enough to invest a small amount in bitcoin, you can start with baby steps. 

FAQs

Still learning how to invest in cryptocurrencies? The following are a few common questions you may still have about crypto investing.