Cryptocurrencies have become more and more successful as time passes, continuing beyond just Bitcoin to become an entire body of investments. Some have speculated that it will continue to evolve into a new form of currency, while others will suspect that it will be a specialized asset class for a limited set of commercial interactions.
However, you don’t need to know the higher-order theories to invest in cryptocurrencies, the same way that you don’t need to know high-level economics to invest in other asset classes.
8 Best Bitcoin and Cryptocurrency Investing Sites
Early 2021 has had record-breaking levels of volatility in the cryptocurrency markets. With more people getting involved in investing, picking the right exchange for your particular situation is key. As with most things in life, there is no one-size-fits-all solution, and it makes sense to determine what fits best for you.
With everything under the sun from cryptocurrencies to exchange-traded funds (ETFs), stocks, options, and countless other investment assets, TradeStation has promise as an all-in-one investment platform. With a pile of awards and a 99.999% uptime for their platform, they seem to be poised to be a contender into 2021 and beyond.
- Affordable Without Compromise: TradeStation has a large number of available asset classes beyond just cryptocurrency, with incredibly competitive rates. Deposits and withdrawals are free, as are many stock purchases, and average interest rates of 0.5% on cryptocurrency account balances make the option incredibly affordable.
- Low Minimums: TradeStation gives you access to nearly everything they have for a minimum deposit of $2,000. Access to their cryptocurrency offerings comes with no minimum deposit.
- Award-Winning Offerings: TradeStation has been lauded with countless awards including Best New Product at the 2020 Benzinga Global Fintech Awards, and eight consecutive years of #1 Platform Technology in StockBrokers.com.
Between an award-winning set of software and competitive prices, TradeStation is a powerful option. With their relatively recent entrance into cryptocurrency exchanges, it may easily be your all-in-one option for investing and managing your finances.
Soon to be listed on the Nasdaq, Coinbase provides an advanced trading platform and a set of secure tools to aid in your investing. It is an all-around solid option. Many newcomers turn to Coinbase as the onramp to investing in cryptocurrencies because it provides some robust tools while also letting you learn and develop your understanding of the market.
- A Solid One-Stop Wallet and Exchange: Although most cryptocurrency exchanges now have wallets tied to them, Coinbase has retained much of its allure based on a simple and easy-to-understand interface that allows you to cut through the complexities and get to work.
- High Liquidity: With many users in the exchange, you do not have to worry as much about a lack of market liquidity slowing you down or preventing you from a particular set of trades that you want to make.
- Wallet Keys MIA: As is the case with so many cryptocurrency exchanges who run their own wallets, you do not gain access to your wallet keys, meaning that you lack complete control over your coins.
- Altcoin Options: With over 25 coins other than Bitcoin available, Coinbase provides multiple options outside of the cryptocurrency mainstream. This includes their own coin pegged to the U.S. dollar, which will continue to retain value among market fluctuations. While other platforms may include a wider variety of alternative currencies, Coinbase balances access and understandability for newcomers.
For those just starting out and looking to get into the world of cryptocurrency, Coinbase is there for you. Although somewhat limited for traders who move heavily into the world of alternative currencies, Coinbase continues to add to their offerings. The company also has a track record that supports its solid reputation among the larger cryptocurrency community.
The beginner-focused access is not the end of what Coinbase offers. Transitioning to Coinbase Pro gives you more to play with underneath the hood. It lowers the fees users pay to Coinbase for their trades, but in doing so takes off the training wheels. There are a lot of fancy charts and complicated tools you can play with once you go pro, including trading on margin.
Serving as a nonbank lender, BlockFi weds the investment options of cryptocurrency with the ability to take out loans using cryptocurrency as assets.
- Effective Savings Account Rates: BlockFi allows individuals to earn up to 8.6% annually on their held cryptocurrencies, highly outperforming many other savings options.
- Loan Options: BlockFi allows you to leverage your held coins into loans. This can be highly helpful, but sudden shifts in cryptocurrency prices can put you in violation of loan threshold agreements.
- Lack of Insurance: Despite offering loans and effectively having savings account rates through held cryptocurrency, these accounts do not have insurance through the Federal Deposit Insurance Corporation (FDIC) or Securities Investor Protection Corporation (SIPC). These insure you against a bank or brokerage firm’s failure and certain forms of malfeasance on the part of the company you are operating through.
- Rates Are Subject to Change: BlockFi currently offers interest rates for holding your cryptocurrency, but they’re free to change their rates at any time.
BlockFi has all the pluses and minuses of any nonbank lender and is associated with an above-average cryptocurrency exchange. There is a lack of the insurance and other safety nets that exist with banks, brokerages, and the like. If, for example, your bank is robbed, they have insurance that covers your deposit. BlockFi does not have the same level of insurance that covers banks. To compensate, BlockFi is based off of Gemini, a major cryptocurrency exchange that does have insurance to cover many things that can go wrong.
If you are looking for a lot of cryptocurrency investment options and are leaning toward a day-trading approach to your investments, Binance may be the platform for you. They provide access to a lot of data and many different coins. This can help you avoid having to sit out because your exchange does not have access to the coins that are making major moves.
- So Many Options: Binance has tons of cryptocurrency options, including a large number of altcoins — alternatives to the more widely known and traded coins. There are more than 100 different coins available to choose from.
- Basic or Advanced: Out of the box, Binance has options for beginner and advanced traders, giving you as much information as you can handle. Whether you’re engaging in large numbers of trades or just getting started, Binance has what you need.
- On the Ball with Initial Offerings: Whenever a new coin launches, there are initial offerings to the wider public of the already-mined coins. Binance is quick to put those up, often allowing investors to pick up new coins on the cheap before their valuations stabilize.
- Trustpilot Warnings: Despite being a bit of a darling of reviewers and commentators, Binance has a relatively low rating from customers on a few different websites. Most complaints seem to be around customer service and other concerns. Many complaints may not be legitimate, but it may be a warning given their prevalence.
With extremely fast growth over the series of a few years, Binance gives you lots of power and options but is not always around to hold your hand. Perennial complaints for the past few years have been around customer service concerns, which Binance has been working to improve. The site’s explosive growth rate has no doubt made this difficult, but it seems as though Binance is making strides.
In 2018, Binance experienced an attempted hack into their system. It looked like it would make major news given that Binance accounts lack insurance through accredited institutions that would cover losses due to theft. However, the exchange’s internal systems caught the irregularities, and no one other than the hackers ended up losing any money. The funds seized from the hackers, who were attempting a pump-and-dump scheme, were donated to charity.
Founded in 2011, Kraken is one of the longer-lasting beasts of the cryptocurrency world.
- Advanced Contracts: The Kraken exchange offers types of contracts that are relatively uncommon in the cryptocurrency space. You can buy not only different currencies, but also options and futures contracts that are more akin to what’s available in classical exchanges.
- Geographic Limitations: To date, Kraken is not available for residents of New York or Washington state in the U.S. or in a handful of other nations, the most notable of which is Japan. Japan is historically a country friendly to cryptocurrencies, making this an interesting limitation.
- Unlimited Deposits Before Verification: In order to comply with certain regulations, as well as basic security concerns, Kraken requires personal identification verification before you can withdraw your earnings without any limitations. Prior to this, however, you are able to put in unlimited deposits, allowing you to start earning almost immediately.
- Leverage Without Derivatives: Some derivative trading platforms like BitMEX and Bitfinex are not available in many places due to regulatory restrictions. Kraken allows you to circumvent this partially by allowing you to trade the aforementioned advanced contracts while also being able to trade on margin.
With 100% reserves and nearly a decade of existence, Kraken has been able to demonstrate a measure of security and staying power without some of the options that are available to traditional institutions. They have provided verification of their coin reserves and claim you can withdraw on demand because they aren’t trading away your coins.
Gemini is run by the Winklevoss twins, who claimed the founder of Facebook stole their idea for the business while the three were classmates at Harvard. They have since become billionaires as early investors in cryptocurrency.
Gemini began 2021 by announcing a credit card and adding new currencies, including several DeFi (decentralized finance) tokens, amid rumors of going public. With high interest holding rates available across all 50 states, Gemini looks poised to make some big news in the years to come.
- Aiming to Go Pro: Since its inception, Gemini has been run with an obvious intention for it to become the go-to option for institutions and investors dealing in the millions of dollars. They avoid the Wild West style branding that many other exchanges may search for. They use Nasdaq-based technology to oversee their exchange and have partnered with Samsung wallet, allowing everyone from institutional investors to the average person to use their technology.
- Like a Bank, But Not: The company’s new Gemini Earn — a service that lets you deposit your coins with Gemini for them to lend out to others — promises high interest rates in exchange for letting the company operate much like a traditional bank. Where this raises eyebrows is the lack of FDIC insurance to safeguard your deposits should the account provider fail, which raises your risk.
- Brand-New Interest Rates: Depending on the size and nature of your holdings with Gemini, they are currently offering 3.05% interest on all deposits with them in Bitcoin or as high as 7.4% for Filecoin. These rates pay out better than nearly all bank accounts and even some fixed-income investment options.
Paired with these new moves for 2021 is the promise of a set of tools to seamlessly transfer your positions from other exchanges to Gemini. With digital asset insurance brokered by Aon, this exchange has a level of insurance that is uncommon among other crypto exchanges. In many ways, Gemini is an exchange looking for legitimacy among legacy institutions.
Although Gemini Earning provides a new and interesting way to interact with the cryptocurrency space, it’s worth noting that it does little to offset the extreme volatility we’ve seen thus far in 2021. A tumble in Bitcoin prices can more than wipe out any return you have made from the interest rates on your deposits.
Although Gemini is advertised as being functionally a bank account, consumers need to realize this simply is not the case. Still, if you are in for the long haul, this might make sense for you.
The “social trading and investment” network, eToro has a number of offerings that make it different from other exchanges. Originally it was a foreign exchange (forex) platform before adding cryptocurrency to their offerings. It is graphically heavy and provides a lot of information in an easy-to-view format, but it’s somewhat geared toward day traders as a result.
- Come for the Trades, Stay for Community: Unlike most exchanges, eToro has a social media and community aspect baked into the offering. There is a community of other traders available 24/7 to trade tips, insights, and war stories if you are interested. With the recent growth in these communities, such as the WallStreetsBets explosion, this could be your secret weapon in figuring out trades.
- Copy Trading: One of the unique features of eToro is their copy trading, an option that allows you to follow and automatically execute the trades of your favorite financial personality on their platform, making scaled trades based on your own account size.
- Spreads and Minimums: Users have reported that eToro still has wide spreads in many of their cryptocurrencies, suggesting less liquidity in their market. Tied to this are relatively high minimums for buying in or copy trading someone else.
If you’re looking for a community to learn from while you start your trading adventure, eToro has a lot of options that are good for you. Whether you want to follow the investment moves of someone you trust or engage in day trading, eToro can serve you. It does assume some familiarity with both forex and cryptocurrency, though, so if you’re an absolute beginner it’s likely not for you.
As of December 2020, eToro is still being rolled out across the United States, with several states still waiting for access. Outside of the U.S., the platform offers a number of other asset classes beyond cryptocurrencies, but that doesn’t mean they’ll be available for American users eventually. Another oddity is that, at the time of writing, Americans appear to be unable to use stop-loss settings for their positions.
Robinhood was on this list — and among the top choices — before the GameStop and Dogecoin fiascos of early 2021, during which the platform temporarily restricted trading on certain stocks and cryptocurrencies that were experiencing extreme volatility. The episode created a major public relations hit and put the company’s CEO in the hot seat at the congressional hearing that followed, but Robinhood was able to raise money from investors to get through the incident and may yet be able to recover.
- Commission-Free Investing: The promise of Robinhood has long been the advantages of affordable investing that just works. For cryptocurrencies, trades are made with 0% commission.
- All the Greatest Hits: With available coins including Bitcoin, Dogecoin, Ethereum, and Litecoin, the Robinhood platform has access to some of the most popular and most heavily traded cryptocurrencies. For most investors, this is more than enough. Plus, Robinhood is continuing to add more coins to its platform.
- That Halting Question: With the cessation of trading of certain cryptocurrencies earlier in 2021, many started wondering whether Robinhood is right for them. The question has brought attention to the inability to transfer positions from Robinhood to another platform. In order to leave the Robinhood cryptocurrency ecosystem, you have to sell all your positions. This creates a taxable event and is generally a frustration.
With a bad start to 2021, Robinhood is looking a little worse for wear as a cryptocurrency option. Limitations on trades left many with effective losses because they were unable to interact with the market the way they wanted.
Even so, the company has a long history and has been able to secure additional funding, suggesting they will be around for some time yet. If they can shake off this scandal and rebuild their customers’ trust, they may yet be right for you.
Even with the bizarre changes and upsets in the world of cryptocurrency, there are still plenty of options for your investments. The new presidential administration has signaled intentions for more oversight into the cryptocurrency space, suggesting that sticking with the major players may be the best way for you to stay on the safe side.
Whether you are hoping to buy and hold your cryptocurrency of choice or to take part in initial coin offerings, making sure your investments fit your goals remains key. With changing regulatory regimes and even reputable companies making major missteps, your own expertise is the best protection for your investments.