How can I buy bitcoin

Comparison portal

the essentials in brief

  • There are many different trading venues on the Internet where investors can buy bitcoins
  • The respective crypto exchanges and trading venues for digital assets have advantages and disadvantages
  • Recommended brokers with crypto trading: etoro.com (your capital is at risk), justtrade.com

Crypto enthusiasts like to refer to Bitcoins as "digital gold". The fact that there are similarities between gold and bitcoins cannot be denied.

In contrast to state currencies, both are finite - gold is a raw material that is limited in its occurrence, bitcoins are limited in their quantity to 21 million pieces: the inventor of bitcoins, Satoshi Nakamoto, wanted to ensure their value stability. This, in turn, is particularly important in times of crisis.

At the beginning of the Corona crisis, however, the Bitcoin did not seem to be able to live up to its reputation as a crisis-proof currency: The price collapsed massively and fell to below 5,000 US dollars.

However, Bitcoin recovered relatively quickly and the curve has been steadily increasing since then. More than six months later, Bitcoin is back at over $ 15,000 and more and more investors are investing their money in the cryptocurrency leader.

Three ways to invest in Bitcoin

In the meantime, it is no longer just daring private individuals who buy coins; institutional investors have also discovered digital currencies for themselves. Many of them put their money in the two most famous crypto currencies Bitcoin and Ethereum. Taken together, their market capitalization corresponds to around 60 percent of all digital currencies. No wonder, then, that almost every trading platform for cyber currencies has Bitcoin and Ethereum in its repertoire.

Even if the two can actually be bought on every crypto platform, the differences between the trading venues are enormous. Some offer real Bitcoins, others Bitcoin ETPs on a stock exchange and still others rely on Bitcoin derivatives.

Real bitcoins

Investors can buy real Bitcoins on traditional exchanges and marketplaces such as Binance. Exchanges sell the coins directly to the customer - the price depends on supply and demand. Marketplaces, on the other hand, are intermediaries; they only provide the platform for a deal between buyer and seller. The price depends on the market there too, but the exact amount is determined by the seller.

Whoever buys real bitcoins is really in possession of the digital coins. It is up to him whether he leaves it on the respective crypto platform or transfers the crypto currency to an external wallet, for example to use it as a means of payment in an online shop.

Tip: Depending on the crypto exchange, the current rates for a Bitcoin differ. Websites like cryptowat.ch help to compare offers from different exchanges and to find the current best possible price.

High demand from online brokers

Investors can also buy real bitcoins from some online brokers. Young brokers like Justtrade or Trade Republic have added some cryptocurrencies to their product range - including Bitcoin.

But there is one catch: The cryptocurrencies can be traded easily and cheaply there, but it is not possible to pay out Bitcoin to an external wallet. The private key, which grants exclusive access to the storage location of the cryptocoins, remains in the hands of an external custodian.

This is usually sufficient for most investors, as the options for paying with Bitcoins are currently still limited. But if you want to keep this option open, you have to look for another provider.

By the way, investors do not have to buy a whole Bitcoin - with a value of more than 50,000 US dollars, many will find that difficult. Those who want to invest less money can only buy fragments.

Bitcoin ETPs

Another so-called neo broker, namely Scalable Capital, offers to trade Bitcoin in the form of ETPs. These securities are similar to stocks or ETFs. They are sold through an exchange and can even be saved. They are therefore suitable for investors who want to invest smaller amounts on a regular basis.

This type of investment also has an impact on the taxation of profits: This tax rate is usually lower and is automatically settled by the broker.

Those who invest in the securities rarely have access to coins. Only a few issuers pay out the crypto currencies.

Bitcoin derivatives

Bitcoin derivatives can be bought from different providers. For example, the CFD broker Plus500 and the online broker Etoro offer Bitcoin CFDs. But banks, such as the S-Broker der Sparkasse or Comdirect, also have warrants and futures on Bitcoin in their offer.

In the case of derivatives, investors do not purchase the cryptocurrency itself, but simply place a bet on its performance - this is possible on both profits and losses.

If you also use leverage, you have the opportunity to multiply your chance of winning, depending on the size of the leverage - but the leverage has the same effect on the loss.

Attention: Derivatives such as CFDs are particularly suitable for advanced traders. A large part of the private CFD accounts slide into the miserable.

The right offer

The respective crypto platform has a decisive influence on the way in which investors can trade Bitcoin. But there are other differences: some providers have more coins than others, charge different fees and are regulated differently. A comparison is worthwhile.

Exchanges such as Etoro, justtrade.com or the Stuttgart Digital Exchange (BSDEX) are considered reputable.

When it comes to the sheer number of coins, Binance is a good place to go - over 150 crypto currencies can be traded here. In addition to Bitcoin and Ethereum, there is also the popular Dogecoin there. The online broker Etoro has also included the popular coin with the dog meme in its range.

Exchanges such as Kraken or Coinbase also offer a wide range of cryptocurrencies, but charge higher fees than Binance. With German providers, it's usually the other way around. There are only a handful of digital coins here, but BSDEX, Bitcoin.de or Trade Republic are cheap. In addition to four cryptocurrencies, investors can also trade stocks and ETFs on the latter. The same applies to the online brokers Justtrade and Scalable Capital.

Bitwala offers a special feature - the platform combines crypto trading and banking. A bank account and a debit card are included here. Customers can convert Bitcoin and Ethereum directly into euros and withdraw them at Visa-supported ATMs.

  • 2 cryptocurrencies: Bitcoin, Ethereum
  • Trading fee: 1% of the transaction volume + € 1 network fee
  • iOS app & Android app
  • Bank account, debit card, wallet included

In addition to their online version, many crypto platforms also offer an app for buying and selling Bitcoin. This has the advantage that active investors can react flexibly to price fluctuations. There are good apps for Bitcoin trading from Bison, Coinbase or Trade Republic. Here users will find a simple structure and an intuitive interface.

Step by step to your own Bitcoin

Registration

Trading on a crypto exchange requires verification of the registered user in most cases. Individual providers use different methods for this - some even completely dispense with proof of their own person up to certain amounts.

Methods for identification are, for example, Post-Ident or Video-Ident. Other trading platforms expect you to upload an identification document, proof of account or confirmation of your home address.

  • 16 cryptocurrencies
  • Payment methods: including credit card, SEPA transfer, PayPal
  • Security: 2FA, SSL, deposit protection € 20,000
  • Important: Cryptoassets are highly volatile, unregulated investment products. No EU investor protection (your capital is at risk).

Deposit

After the user has successfully registered and, if necessary, verified, he can transfer money to his stock exchange account. Traders should make sure that crypto exchanges cooperate with reputable partner banks: They preferably also provide deposit protection.

The payment options are often limited - a standard transfer is almost always possible, but it usually takes a few days. A provider that allows many payment options is eToro, for example.

Note: Incidentally, Etoro is also one of the few crypto platforms in Germany where investors can use PayPal to top up their clearing accounts. In contrast, in the USA it is already possible to buy cryptocurrencies such as Bitcoin directly via PayPal. It is not yet known when this function will also be introduced in Germany.

Tip: It often makes sense to be active on several stock exchanges in order to benefit from individual advantages or favorable prices.

Investment options

Once the money is in the account, you can start. Traders can either purchase the actual coin or speculate on its performance - for example through CFD trading or certificates.

Note: Those who trade in derivatives such as CFDs often use leverage to increase the theoretical investment volume. This allows users to make high profits very quickly, but at the same time they can also lose a lot of money within a very short time.

However, in order to make long-term and practical use of Bitcoin, it is advisable to actually buy Bitcoins. Don't worry: investors can also buy cryptocurrencies proportionally and do not always have to buy a whole coin.

  • 4 cryptocurrencies: Bitcoin, Litecoin, Ethereum, Ripple
  • Taker order: 0.2%
  • Maker order: 0.35%
  • Storage of the coins by blocknox GmbH

The right offer

The actual purchase is then rather unspectacular: the buyer decides on the amount of the sum that he wants to invest and waits for the price that is right for him. After the purchase is complete, the coins are in his possession.

The amount and number of coins is fixed on marketplaces like bitcoin.de. After the trader has selected the purchase option, the site blocks the offer for other interested parties and the buyer only has to transfer the money to have the coins credited to his wallet.

Depending on the exchange or marketplace, fees vary. Most of the time this is a small percentage of the amount traded.

Transfer to a wallet

So that your own bitcoins are safely stowed away, it is advisable to create or purchase an external wallet. Wallets are available digitally, for example as an app, or in analog form as a hardware wallet (cold wallet).

Tip: The providers' online wallets are usually not recommended, as their own coins can be stolen in the event of a hacker attack.

The personal wallet contains a receiving address. The transfer is secured by means of this and a private key and the amount cannot be transferred to the wrong account.

The transfer from wallet to wallet takes a few minutes. In a purchase transaction through a marketplace, the buyer and seller must pay a small fee for the transfer.

Sell ​​and pay tax on bitcoins

If you want to sell your bitcoins, you can also do so on a crypto exchange or a marketplace like the BSDEX. Selling is just as easy as buying.

But be careful: Profits from the sale of Bitcoins must be taxed by traders above a certain amount. Cryptocurrencies are subject to the same tax requirements as other currencies. Such private sales transactions fall under the Income Tax Act.

An exemption limit exists up to a profit of 600 euros - with the exception of coins that have been in the trader's possession for more than twelve months - cryptocurrencies are tax-free from such a holding period.

Calculate capital gains

In most cases, the FiFo method is used to calculate the profit from the sale: First, you sell the bitcoins that you bought first. The difference in value then forms the profit or loss.

It is advisable to precisely document all Bitcoin transactions in order to be able to provide the tax office with information in case of doubt. In the tax return, such income falls under the item Other Income (SO) - even if the amount is below 600 euros: The tax office determines the tax exemption.

  • 16 cryptocurrencies
  • Payment methods: including credit card, SEPA transfer, PayPal
  • Security: 2FA, SSL, deposit protection € 20,000
  • Important: Cryptoassets are highly volatile, unregulated investment products. No EU investor protection (your capital is at risk).
  • EUR 0.00 custody account fees
  • 0.00 order costs
  • Minimum spread 0.3%
  • 5 cryptocurrencies

Frequently asked questions

What is a Bitcoin?

Bitcoins and other crypto currencies are digital means of payment - so far, however, you can only shop with them to a limited extent: for example at Rakuten, Subway or Microsoft.

The technology behind it is the so-called blockchain. It protects the new transfer system from manipulation. Due to the decentralized way of working, it is also beyond the control of states or banks - the legitimation of a transaction with Bitcoins is taken over by the users of the network.

How does the blockchain work?

The blockchain is also known as distributed ledger technology: This means a public and decentralized account book. A single block of such a chain consists of data, the hash - i.e. the unique fingerprint of the block - and the hash of the previous block.

The data on the block depends on the blockchain: In the case of a Bitcoin blockchain, the data contains information about the sender, recipient and the number of coins. If a third party changes the content of the block, its hash also changes and the chain of blocks collapses.

What is a peer-to-peer network?

The blockchain uses a peer-to-peer network that anyone can join. The computers of the individual members then check each block of the chain for the correctness of the hash. In this way, the system ensures that manipulations never go undetected.

How does the proof-of-work mechanism work?

In theory, particularly powerful computers are able to manipulate blocks and recalculate all subsequent blocks in order to disguise the forgery. The proof-of-work mechanism prevents this: it ensures that the construction of a new block takes at least a few minutes. During this time a fraud would have been exposed long ago.

What is the value of a bitcoin based on?

Bitcoin is the oldest and best-known cryptocurrency - its market capitalization is over 800 billion US dollars. For comparison: The market capitalization of Ethereum - the second largest digital currency - is just under 400 billion US dollars.
The price of cryptocurrencies like Bitcoin is regulated by the principle of supply and demand. There are many drivers that fuel demand: Blockchain technology is considered by many to be future-oriented and more and more companies are investing in technical solutions: These include the major banks BNP and HSBC.
Bitcoin as a means of payment is also becoming more and more popular. Shops and service providers are increasingly offering their customers to pay with Bitcoin. For example PayPal: The financial services provider enables its US customers to buy Bitcoin and use it to pay.
However, one of the main reasons for the consistently strong increases in value are investors who hope to generate a return on their investment.

Can I buy Bitcoin anonymously without registering?

Registration is required for the vast majority of crypto platforms. Should investors ever come across a trading venue where this is not the case, it could be a fraud site - it is therefore absolutely advisable to only buy Bitcoin on reputable crypto exchanges.
If you still want to trade Bitcoin anonymously, you can do so privately. This means that buyers and sellers get together outside of a platform and negotiate their bitcoin business. Such sales transactions must also be listed in the tax return.

Are there banks for buying Bitcoin?

Classic branch banks such as the Sparkasse or direct banks such as the Comdirect do not yet offer real crypto trading. Here, investors can only purchase Bitcoin derivatives such as futures and warrants. Bitwala has a special offer: Investors can open a bank account, use a debit card and trade and store cryptocurrencies at the same time. With it, Bitcoin and Ethereum can be bought and converted into euros at any time in order to pay with them if necessary.