How to Buy and Sell Bitcoin Using Your Smartphone

published on: December 18, 2020 last updated on: May 17, 2024
Buy and Sell Bitcoin

Bitcoin is rallying in December, hitting all-time highs following news in November that Paypal would allow its users to exchange the cryptocurrency. In an interview, Dan Schulman said that he believes that digital currencies soon be entering the mainstream and become a simple payment tool. Paypal and competitor Square allow users to transfer capital and make payments using cryptocurrency. For many consumers, this is a revelation. For those involved in cryptocurrency trading, this was a signal that interest in bitcoin could explode.

There are three common ways to trade cryptocurrency, and all three can be accomplished using your smartphone. If you are looking to trade cryptocurrency and use a payment mechanism to buy and sell goods and services, you will need to access an exchange. If you are interested in trading cryptocurrency as an investment vehicle, you can trade it through a forex broker as a contract for differences. Additionally, if you have a stock account, you can trade cryptocurrency as part of a fund.

Trading Cryptocurrency on your Phone for Payments

Phone for Payments

For individuals looking to use bitcoin as a payment vehicle or investment, you need to open an account with a cryptocurrency exchange. There are several well-reputable exchanges, including Coinbase, Binance, and Bisq. You want to make sure that the business that you pick is legal in your country and is regulated by an authority. For example, Coinbase is a licensed and regulated entity that provides access to cryptocurrency trading in the United States.

Once you open your account and you are approved, you will have the option to deposit sovereign currencies, such as the dollar or Euro, or cryptocurrency. When you deposit your capital into an account, you will store your cryptocurrency in a digital wallet. The digital wallet is held in the cloud, using a secure specific address. If you don’t want to keep your cryptocurrency at an exchange, you can take it offline using your physical cryptocurrency address.

Several of the cryptocurrency exchanges offer a robust trading version of their products. For example, Coinbase Pro allows you to trade and provides you with portfolio analysis and technical analysis tools to trade cryptocurrency. These exchanges are the best choice for investors who are also planning to use their cryptocurrency for payments. If you are planning on strictly investing in cryptocurrency, these exchanges can be costly. For example, in some circumstances, Coinbase will generate a bid-offer spread as wide as 50-basis points. If you are looking to trade cryptocurrencies, this type of bid-offer spread can take a large portion of your profits.

Trading CFDs on your Smart Phone

Trading CFDs on your Smart Phone

An alternative to trading cryptocurrencies on your smartphone at an exchange is to trade them through a forex broker. Many forex brokers provide access to the contracts for differences (CFD) market. These products allow you to buy and sell cryptocurrencies without owning them. A CFD is a financial instrument that tracks the movements of an underlying asset. Several cryptocurrencies, including bitcoin, Litecoin, ethereum, and ripple, can be traded in the CFD market.

There are several benefits to using CFDs as an investment vehicle over trading via an exchange. Many forex brokers offer cryptocurrency bid-offer spreads that are half as wide as exchanges. Trading using a CFD will allow you to transact at a less expensive rate and give you a better chance of generating revenue through your trading activities. Additionally, many forex brokers will also offer their clients leverage on cryptocurrency CFDs. Leverage, using a margin account, allows an investor to post only a portion of the CFD value but control much more. While most of the leverage in cryptocurrencies is 2-1 some brokers will offer 5-1 leverage.

Trading Using a Fund

Another alternative to trading using an exchange for investment purposes is trading via an investment fund. For example, Grayscale is an investment trust company that offers investors opportunities to invest directly in the fund, which solely owns a specific cryptocurrency. The Grayscale Bitcoin Trust only owns Bitcoin, and its investment directive is to track the movements of bitcoin. Grayscale offers an Ethereum trust as well as Ripple trust and several other multi-cryptocurrency assets.

The Bottom Line

Technology has advanced significantly and allows users of cryptocurrencies to purchase and sell directly on their smartphones. You can have access to your exchange wallet and move and store your cryptocurrency seamlessly. If you are interested in trading cryptocurrency and do not need access to digital coins, you can get tighter bid-offer spreads using CFDs. Alternatively, if you are looking for an investment vehicle and only have access to a stock trading account, you can invest in several different cryptocurrency funds. You can trade all three different types of products via your smartphone, making cryptocurrency trading an investment vehicle that will likely continue to experience greater volume and popularity.

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Ariana Smith

Ariana Smith is an enthusiastic fashion blogger and freelancer content writer. She loves to write and share knowledge of the latest fashion trends, fashion, and shopping tips and tricks. She is the chief editor at FollowTheFashion.

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