Why is Bitcoin getting harder to buy
Exchange, app, security: this is how you buy Bitcoin
At the latest since the all-time high in April 2021 - a Bitcoin cost more than 54,000 euros - trading in the cryptocurrency has picked up speed. And more and more private investors want to take part in the next potential price rally.
In the end, buying Bitcoin is speculation - the cryptocurrency is not suitable for long-term retirement provision. See also our article "What is Bitcoin?" But if you have money left over, want to join in and have a say, you should know the three ways of getting into Bitcoin.
- The simplest option is to buy the digital currency directly at a trading venue - online or via an app.
- Alternatively, you can only speculate on the price development and buy corresponding securities.
- In theory, you can also mine Bitcoin yourself.
In the article we look at the variants one after the other. Among other things, we explain the Bitcoin purchase using the example of the Bison app in five steps and compare different trading venues. If you are interested in cryptocurrencies, also read our article on Dogecoin.
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Where and how can you buy Bitcoin directly?
If you want to call yourself the owner of digital coins, all you need is an internet connection: Bitcoins can now be bought and sold at numerous online trading venues. With some providers, you can even trade the cryptocurrency directly on your smartphone via an app.
Well-known stock exchanges are Kraken, Coinbase, Binance, Bitcoin.de or bison. Unlike the Frankfurt Stock Exchange, the Bitcoin exchanges are Around the clock open. The crypto trading venues, however, rely on different concepts.
Behind the popular in Germany Bison app For example, the Stuttgart Stock Exchange is there. A subsidiary of the exchange sells cryptocurrencies to you or buys them from you again. The company does not charge any fees, but earns money on every purchase from the difference between the purchase and sale price. This so-called spread is 0.75 percent.
The situation is similar with the German provider Bitwala off, here the Berlin Solarisbank takes over the trading in the background. However, the fintech charges a general trading fee of a percentage.
It does it differently Bitcoin.de: Here, users can offer their crypto currency at a certain price and negotiate with one another, just like in a marketplace. The media like to compare the stock exchange with the online marketplace Ebay, where users buy directly from the retailer. The Bitcoin Group behind the marketplace receives 0.5 percent of the transaction from each trading party.
Important: No matter where you trade Bitcoin, make sure that it is an established provider. Fraudsters are still in the crypto world. Take a look at the imprint and see whether established media have reported on the company. If you have guaranteed returns or big promises, you should pay attention and choose a different platform.
Buy Bitcoin on Bison: This is how it works in five steps
Although the business models of the trading venues differ slightly, the buying process itself is relatively the same. In the following, we will describe how you can get digital money using the Bison app.
- Log in and verify your account: To register, the platform needs a valid email address and your full name. In a second step, Bison asks you to prove your identity and your current place of residence using a video identification process with proof of identity such as your identity card. The providers are obliged by the German legislator to check and save the identity of the user. The process is designed to help prevent money laundering.
- Deposit money into your account at the trading platform: Depending on the platform, you can deposit money into your account in different ways, with Bison the whole thing works via SEPA transfer. You can find the appropriate IBAN in the account settings; it is individual for each user. The statutory deposit protection of 100,000 euros applies here. According to the company, this transaction usually takes one working day. The provider checks whether the owner of the bank account and the Bison account are the same. It is best to always have a little money in the Bison account so that you can buy at the lowest price. Note that other providers may charge additional fees depending on the payment method.
- Buy Bitcoin: You can already invest in the crypto currency with a minimum contribution of 20 euros. The trading partner is a subsidiary of the Stuttgart Stock Exchange with the name EUWAX; for prices, Bison claims to use references from other trading platforms. With most providers, the buying and selling process only takes a few seconds and is possible 24 hours a day. It is best to compare beforehand on a site like Coinmarketcap.com whether the price corresponds to the average market price.
- It is best to transfer your Bitcoins to your own wallet: Usually another company of the Stuttgart Stock Exchange will keep your Bitcoins for you. This means that you do not have to keep your access to the wallet, the private keys, yourself. If you leave your digital coins with the provider, there is always the risk of a hacker attack. In addition, you are again not in direct possession of your coins, which contradicts the original idea of the crypto currency. Therefore, consider whether you can have your own wallet created by another provider, cold wallets such as a ledger are best. These wallets are similar to a USB stick, so they are not connected to the internet and do not belong to any third party. With Bison and most other providers, you can withdraw your cryptos to another wallet for free. Be aware that you are then responsible for your private key yourself. If you lose your access data, you will no longer be able to get your bitcoins.
- Sell your bitcoins whenever you want: Conversely, you can also send your Bitcoins back to Bison, sell them and transfer the euros back to your bank account. However, note the fees and taxes, if applicable. You can find more about taxes on cryptocurrencies in our overview of Bitcoin.
This is how different crypto trading venues differ
The following table once again illustrates the different concepts of the exchange platforms. The selected providers are representative of a number of other platforms with a similar business model.
Crypto trading venues in comparison
Prefer to buy Bitcoin at home or abroad?
In principle, nothing speaks against it if you prefer to buy your coins on a foreign rather than a German stock exchange. Perhaps you are tempted by a particularly low fee. However, there are a few things you should be aware of when deciding on a foreign exchange. There is usually no German-speaking support and sometimes not even the entire website is available in German. So you should speak English very well and want to deal with the provider in detail.
In addition, the majority of providers are not regulated in Germany, and the rules in other countries are not always comparable with those in Germany. Since there are also dubious players on the market, regulation in this country can offer you a certain degree of security. It is also easier to enforce your own rights in an emergency if the company is based in the same country as you.
Some providers also officially exclude German customers in their general terms and conditions, but still tolerate them unofficially. There is still a lot of uncertainty about how Germany and the European Union intend to deal with foreign stock exchanges in the future.
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Buy Bitcoin with Paypal?
Since the end of 2020, US customers have been able to trade Bitcoin and three other cryptocurrencies directly through the payment service provider (exception: Hawaii). Here, too, customers have to verify themselves in advance. The fees depend on how much US dollars the customer wants to invest. For example, between $ 1 and $ 24.99 there is an additional $ 0.5 per transaction. Also included is a so-called spread - a kind of margin on the purchase price that the provider keeps. PayPal plans to offer the corresponding services in other countries as well. When exactly this will happen and which countries will be included is still unclear.
With some trading platforms you can also pay with PayPal instead of bank transfer. This works, for example, with the providers eToro, Libertex and Plus500. However, you may be charged additional fees for this payment method. In addition, the transaction can take longer. The provider eToro based in Cyprus, for example, writes on its website that such a deposit via PayPal can take up to seven working days.
What Bitcoin securities are there?
There are two ways to participate indirectly in Bitcoin via securities: Certificates or so-called Exchange Traded Notes (ETN).
- Certificates can be used to track the course of Bitcoin or other cryptocurrencies bet. If the desired price development does not occur or if the issuer of the certificate (usually a bank) goes bankrupt, your money is gone. Certificates have a fixed price and are not traded on the stock exchange.
- ETNs are based on the actual bitcoin rate, similar to an exchange-traded index fund (ETF). The securities are traded on the stock exchange; supply and demand determine the price. In contrast to ETFs, your stake is not protected as a special fund. This means that if the publisher of the ETN goes bankrupt, your investor money will flow into the bankruptcy estate and you can only hope to get something back. If you choose an issuer who deposits real bitcoins, you can reduce this risk.
To invest in an ETN that reflects the Bitcoin rate, you need to know the paper's International Securities Identification Number (ISIN) and have a securities account with a broker or bank. During the regular trading hours of the stock exchanges (preferably between 9 a.m. and 5.30 p.m.) you can buy Bitcoin ETNs via the order mask.
In contrast to the direct purchase of Bitcoin, you don't have to register anywhere and you don't need your own wallet, i.e. a digital wallet for cryptocurrencies. You can find selected depository providers in our article "Buying stocks and equity funds yourself: This is how it works".
The table shows you which Bitcoin ETNs were particularly in demand on the electronic Frankfurt Stock Exchange (XETRA) in February 2021. All three papers are fully secured by Bitcoin, so the providers buy Bitcoin and store them offline in so-called cold storages.
If such a security is an option for you, you should consider the following points:
- The annual total expense ratio: This number indicates the ongoing annual cost of owning the ETN. In addition, there may be other fees, for example if the provider charges performance fees.
- Physical deposit: You should make sure that the publisher of the ETN really buys Bitcoin and stores it physically. Best in cold storages to avoid the risk of a hacker attack.
- Trading volume: Make sure that not just a handful of ETNs go over the market every day. Because then your security is not particularly liquid, you may find it difficult to get rid of it and the exchange traders usually charge higher premiums.
Investing in Bitcoin via an ETN contradicts the original goal of the cryptocurrency. The digital currency was originally intended as a payment system that did not rely on the established banks.
Also note: Problems can even arise with an ETN that physically stores Bitcoin. If the publisher goes bankrupt, you must first assert your delivery claim. It is not said how quickly you can really get Bitcoin.
Buy bitcoin without registration?
It is a myth that trading cryptocurrencies like Bitcoin is anonymous. If anything, he's a pseudonym. Because every transaction is stored transparently and irrevocably on the blockchain. That is, in theory, every single transfer can be tracked exactly via the wallet addresses. But it is not publicly visible to whom the respective wallet address belongs.
It used to be possible to invest in Bitcoin and Co. via various trading platforms without registration and verification. In the meantime, however, the legislature has improved. Online providers are obliged to verify the identity of the buyer and seller. At the latest when German users want to have the winnings paid out to their bank account, they must also be able to prove the origin of the money.
However, if you are really looking, you will still find ways to buy Bitcoin without registering. This can work, for example, via so-called Bitcoin machines, of which, according to coinatmradar, there are only 51 in Germany. In the past, the machines were repeatedly used by criminals to launder money. Not surprisingly, the fees are many times higher than for reputable online trading platforms and are therefore actually rather unattractive. In the past year, the financial supervisory authority BaFin also required machine operators to verify their own customers. Nevertheless, at least according to reports from the Handelsblatt, there were still functioning machines that users did not have to register.
There is also the possibility of meeting in internet forums and then exchanging bitcoins for cash at a personal meeting. However, since the whole scenario is more reminiscent of an illegal money transfer, this is also not advisable. After all, you can hardly be sure that your counterpart will keep the appointment and will actually send the bitcoins to your digital wallet.
So if you are seriously interested in buying Bitcoin, it is best to continue doing so directly via trading platforms on the Internet or, if necessary, indirectly via securities such as ETNs (see previous section).
Mining Bitcoin yourself
The sum of all bitcoins is limited to 21 million, the last bitcoin will probably be mined in 2140. In order to create a Bitcoin, complex arithmetic operations have to be solved. So new blocks are produced and then added to the blockchain, the whole thing is called "mining" in technical jargon. Anyone who digs Bitcoin themselves receives a reward in the form of digital money.
In order to be able to solve the complex computing tasks, expensive hardware including currently very rare graphics cards and a lot of electricity are required. The latter is comparatively expensive, especially in Germany. Cambridge University data suggests that the vast majority of all bitcoins are currently generated in China. Since a lot of climate-damaging coal is still used there, electricity costs are often cheaper than in western countries.
In the future, mining will probably be even less worthwhile in Germany, because the reward for the miners is halved every four years or every 210,000 blocks. Instead of investing your money in suitable equipment, you can invest right away.
You can take that with you from the article
There are several ways to invest in Bitcoin. You can buy the digital coins at numerous Trading venues buy and sell, among other things Kraken, Coinbase, Binance, Bitcoin.de or bison. It is worthwhile to open your own wallet to protect the coins from hacker attacks. Make sure that you write down the password carefully. The trading venues differ in terms of their trading costs and their prices. You can buy bitcoins from other investors or do business directly with a bank or stock exchange, for example.
Alternatively, you can use Securities participate in the bitcoin course. Certificates are bets on certain price developments. If you bet wrong, your stake is usually gone. So-called Exchange Traded Notes (ETN), similar to ETFs, simulate the course of Bitcoins. If the publisher goes bust, your money may be at risk. Some providers deposit real bitcoins. So far, however, there is no experience as to whether these coins would really be transferred to you quickly in the event of the publisher's bankruptcy.
Buying Bitcoin without registering is not entirely impossible, but it does involve a lot of uncertainties. Because of the high electricity costs and the increasing computing power required, it is becoming increasingly difficult to mine new Bitcoins. For the vast majority of private investors, this is not an option.
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