As I write this, Bitcoin trades for about $60,000, roughly 10 times where it was a year ago.
Many exchanges have minimum trade amounts, but it’s usually in the $5 to $10 range, not the $60,000-ish price tag of a full Bitcoin.
Buying Bitcoin isn’t free, even when you see “no transaction fee.” Most places that sell Bitcoin profit from something called a “spread” — the difference in the price they sell it for and the price they pay for Bitcoin.
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For example, if someone steals your password or uses your phone to authenticate a transaction, there’s no way to get stolen funds back, like you can with a credit card or bank account.
On a similar note, it’s important to realize that keeping your Bitcoin in the same place you bought it is only one option.
If you’re a casual Bitcoin buyer, such a precaution might not be necessary, but if you’re planning to put thousands of dollars into Bitcoin, it could be smart.
The former can be a good supplement to a well-diversified investment portfolio, while the latter should be approached with extreme caution — it’s generally a losing battle to try to time the pricing of any investment, and since buying and selling Bitcoin isn’t free, the fees can really add up if you frequently buy and sell.
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Matt is a Certified Financial Planner® and investment advisor based in Columbia, South Carolina.
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