If you're looking for a different way to possibly invest your coronavirus stimulus check and are willing to take on a bit of financial risk, you may be interested in using the funds to purchase Bitcoin, the popular cryptocurrency that first came on the scene in 2009. But how does someone who is new to the cryptocurrency realm turn their money into Bitcoin? And is it a smart choice?
With the economic and financial devastation brought about by the coronavirus over the last few months, Bitcoin proponents say now is the time to buy in. "This is the time for bitcoin," former hedge fund billionaire and chief executive of Galaxy Digital Holdings Mike Novogratz told Bloomberg in April. "In the last year it has become a macro weapon and investment choice."
"The risk on any store of value, if it's gold, is that enough people believe in it. It's still a question of adoption. I'm just seeing more adoption here in the U.S. and in Europe than I have literally since I started this," he added.
For people looking to take their first steps into Bitcoin, Investopedia recommends you first download a Bitcoin "wallet," which is an encrypted digital space where you can store Bitcoins for future spending or trading. Experts recommend not storing a large amount of Bitcoins in one wallet for an extended time period of safety purposes.
Once you have your wallet set up and have verified your identity using your Social Security Number, you can use traditional payment methods such as a credit card, bank transfer, or debit cards to buy Bitcoins on exchanges that you can then send to your wallet. Bitcoin exchanges are marketplaces that allow you to purchase cryptocurrency from businesses as well as other singular sellers and include Coinbase, Coinmama, CEX.IO and Gemini.
Depending on the exchange, there can be benefits and disadvantages to paying with cash, credit or debit cards or bank account transfers. While credit and debit cards are user-friendly, they also tend to require identification and can impose higher fees. Bank transfers, meanwhile, have low fees typically, but hey may take longer than other payment methods. Bitcoin ATMs are also an option and operate like a normal ATM, except they allow you to deposit and withdrawal money so that you can buy and sell Bitcoin. Coin ATM Radar has an interactive map to help you find the closest bitcoin ATM near you.