So Bitcoin’s price action has you interested – Or my constant drum beating is finally making you listen, and you want to know more…

Here's Why I Won't Buy Bitcoin, and You Shouldn't, Either | The Motley Fool

So as I write this blog posting, it’s the Sunday evening before Christmas, 2020 and Bitcoin is at a new all-time high. The price has been bouncing around $23,000 – $24,000 for the last couple of days and the expectation that we haven’t seen anything yet is shared by many Bitcoiners. If you are reading this, you are probably a no coiner and are interested in how you can get rid of that status and become a cool hip Bitcoiner like 2.5% of the world’s population currently is.

I’m not going to use this article to explain what Bitcoin is or why I feel you should really allocate some of your savings into this asset. I’ve posted plenty about that on Facebook and I’ll probably create another blog posting or two just on that topic. In this post, I want to focus on the things you can do to finally own some bitcoin. I’m going to touch on the topic of self custody, what that means, and in general, give you several avenues to own some Bitcoin. What I do need to touch on right now before we go any further is that Bitcoin does NOT need to be owned in full coins. You can own fractions of a coin. Bitcoin uses 8 decimal places, and the smallest unit of a bitcoin is called a Satoshi. A single satoshi is 0.00000001 of a full bitcoin! The only thing you should be worrying about right now is I want to spend X USD on Bitcoin! Simple math will end up translating that dollar amount into Bitcoin amount.

I’m going to drop some links as I write this to various institutions you can / will need to transact with. They will all have my referrals in the links. I am more concerned with you getting some exposure to Bitcoin and if you want to remove the referral, by all means, do so. You might get a bonus at some of these places using my referral links though. 🙂

First, let’s talk about a very important saying in crypto land. Not your keys, not your crypto! What does this saying mean? Well, in order to actually own your crypto, you MUST have control over the security mechanism that protects it. This is where the issue of self custody comes into play. To make this simple, I’ll use this analogy. Is your cash in your wallet or is it with the bank? There are many services out there that will hold your crypto just like a bank will hold your cash. However, if something were to happen to them, there is no FDIC insurance!

Virtual wallets that are created to store our digital coins are protected by a few different mechanisms. They can have either private keys or a private mnemonic which is a series of words that are used to generate your account. If you do not control the keys / mnemonic, you do not control your crypto. You can control these keys using software wallets like the Electrum wallet or by using a hardware wallet like the Ledger Nano S. However getting further into this is outside the scope of this article, we are trying to help you get Bitcoin and securing it can be saved for another post.

The hands-down easiest way to buy Bitcoin is to open an account with Coinbase. They are going to do some KYC (Know Your Customer) and you can link your bank account with them. ACH transfers are instant and you can immediately buy the crypto of your choice but you can’t withdraw it to a self-hosted (self custody) wallet for 5 days to allow the ACH transfer to clear. You can send $25,000 via ACH daily. If you buy or sell $100 worth of crypto through regular Coinbase, both you and I will get a $10 bonus! Once you’ve completed that $100 minimum, I would recommend that you then create an account with Coinbase Pro as the trading fees there are less expensive than just regular Coinbase. (Note that any transactions done through the Pro side will not count for the $100 required for the referral bonus to pay out for either of us!)

Dollar-cost averaging is your friend. Please refer to this awesome series of tweets by Sahil Bloom about the benefits of dollar-cost averaging. Coinbase DOES give you the option to make regular purchases of the crypto(s) of your choice via your bank account or credit card. Check the image below to see where you click to set that up.

An alternative to Coinbase is BlockFi. There are some differences, most notably there is an ACH daily limit of $1,000 with BlockFi, but BlockFi will pay you 6% interest in Bitcoin on the Bitcoin you allow them to custody and hold for you. 6% interest is pretty nice when you compare that to what your typical bank will pay you (LESS THAN 1%!!!), it’s even nicer when you realize it’s in Bitcoin and not dollars, which means if the value of Bitcoin grows, so did the value of that interest! I currently do have some of my Bitcoin in BlockFi’s custody as 6% interest is very hard to ignore! To better understand the amazing effects compounding interest can do to your money, please read another series of tweets by Sahil Bloom. Compounding interest is your friend! However, please be aware that there is NO FDIC insurance, and if something were to happen to BlockFi, like them becoming illiquid or filing for bankruptcy, your Bitcoin will probably be gone!

Another method to acquire Bitcoin is to use the Celsius Network service. You will need to install their app but you can buy crypto with your bank account or credit card and you can also earn interest if you hold your crypto with them. I currently use all three of these methods to buy and earn interest on my crypto. I also self custody some of my other Bitcoin because well, not your keys, not your crypto! It is important to understand the risks and decide what your risk / reward acceptance level is. I really like 6% interest on my Bitcoin so I take a slightly looser stance on not having full control over all of my crypto.

Another service you can use to give yourself some exposure is Roundly X. With Roundly X, you can link your debit or credit cards and they will round up each transaction you process to a whole dollar amount. When you hit the minimum thresholds, the app will automatically buy your crypto of choice from the exchanges you have setup with it for use. This is an easy way to not even have to think about it and get exposure.

These are the easiest ways I know of to get exposure. Lastly, I’ll toss out the Fold app. You can use the Fold app to buy gift cards to stores you already shop at and earn rewards in Bitcoin. They also have a daily spin thing where you can win small amounts of Bitcoin. It’s not a lot now, but if Bitcoin does a 100x, it would be worth something! I have an alarm set on my phone and I spin once a day. (You get a bonus for 7 consecutive daily spins). You best believe I’m doing everything I can to get any free Bitcoin I can! You’ll get 20,000 Satoshis (0.0002 BTC) for free for signing up using my referral!

You can always hit me up for some help if you need to!

Leave a Reply

Your email address will not be published. Required fields are marked *