The price of the bitcoin again hit a new all-time high on Dec. 3, edging close to $12,000. It’s up more than 1,300% in 2017.
Bitcoin’s market cap is up to $193 billion. For some perspective on how fast it’s flying: bitcoin’s market cap was less than a quarter of that as recently as June.
So, you want to get in?
Even though you may be wishing you bought sooner, it still may not be too late: big believers like Mike Novogratz are predicting $40,000 per coin by the end of 2018.
(Caveat: bitcoin is extremely volatile, with big swings up and down, week in and week out; Yahoo Finance is not dispensing investing advice, just giving you instructions on how to buy if you wish.)
Download a wallet
First, you’ll need a bitcoin wallet.
To be clear, this digital wallet doesn’t hold actual coins (since bitcoins are intangible) and it doesn’t even hold any files. What it stores are your private keys, which are strings of numbers and letters that allow you to access your coins. A bitcoin key looks like this: 01TK23tktk4t5tk678TK9tk.
For extra security, you’ll want to save your keys somewhere that isn’t connected to the internet; cryptocurrency people call this “cold storage.” There are a number of companies now that make hardware wallets for your keys (like a fob, with changing digits every 30 seconds), or you can simply write your key down on a piece of paper stashed somewhere secure in your home. (Just don’t forget where.)
A company called Blockchain (not to be confused with the bitcoin blockchain) offers a free bitcoin wallet you can download, or you can get one from Coinapult, BitGo, BitPay, or any number of wallet providers. Not all wallet providers allow you to buy bitcoins on their site; there are wallets, exchanges, and some businesses that are both. (Coinbase CEO Brian Armstrong examines this confusion here.)
Choose where to buy
The simplest place for a newbie to buy some bitcoins is Coinbase, which was an early leader in bitcoin-buying and remains the most popular mainstream option. The site has more than 13 million registered users (more customers than Charles Schwab) with more than 30 million wallets. Coinbase has raised $217 million in funding and is bitcoin’s first “unicorn,” with a $1.6 billion valuation.
When you register for Coinbase, you can get a wallet and buy bitcoins, all in one place, though you don’t have to get your wallet from Coinbase. (Another good crypto site for a first-timer is Uphold, which calls itself a “cloud bank.” The peer-to-peer payments app Circle, which launched in 2013, originally enabled bitcoin-buying but has moved away from that.) Coinbase also allows for buying of ethereum and litecoin.
There are a number of security questions Coinbase makes you answer to get set up with an account, but once you’re approved, you buy bitcoins (or ether, or litecoins) using US dollars.
Coinbase, as the leading US bitcoin brokerage, also has connectivity to a number of third-party apps and developers. To give just one example, Lawnmower is an app that gives pricing charts and data and allows you to set a monthly amount of bitcoin you want it to buy for you. (The app recently sold to the bitcoin news site Coindesk, and will shut down its bitcoin-purchasing feature soon.)
One thing to keep in mind about bitcoins: you own your coins, regardless of what site you used to buy them; that is, they don’t live on Coinbase. You can go to another bitcoin exchange site and sell bitcoins, from your wallet, by entering in your key.
And there are many bitcoin exchange sites these days, though some are only for institutional investors: Bitfinex, Bitstamp, BTCC, itBit, Kraken, and OKcoin are some of the biggest. The Winklevoss brothers launched a bitcoin exchange called Gemini.
These are fast-paced platforms where you can trade bitcoin, but they aren’t typically the best, easiest-to-use place to buy for first time buyers.
What can you do once you own bitcoin?
You could use it as payment at a growing list of online retailers, but for now its biggest appeal is as a speculative investment. The so-called “killer app” for bitcoin—a use case that would make it relevant and crucial to the average person on the street—still hasn’t come. (Wall Street and financial institutions, meanwhile, have warmed to other uses of blockchain, the technology that underlies bitcoin.)
Just remember, if you do buy some coins: cold storage. Do not lose your keys.
Disclosure: The author owns less than 1 bitcoin, purchased in 2015 for reporting purposes.
Daniel Roberts covers bitcoin and blockchain at Yahoo Finance. Follow him on Twitter at @readDanwrite.