Cryptocurrency has become a popular form of digital investment in recent years. If you’re familiar with traditional investments like stocks, bonds, or mutual funds, you might be curious about how to buy cryptocurrency through platforms like Fidelity. While Fidelity is primarily known for offering traditional investment options, they’ve also made it possible for investors to get involved with the digital currency market.
This guide will explain, step by step, how to buy cryptocurrency with Fidelity, along with helpful insights into the process. We will cover everything from setting up your account to the best practices for buying and storing cryptocurrencies. If you’re looking to enter the world of cryptocurrency with Fidelity, this article will provide the knowledge you need to do so with confidence.
Understanding Fidelity’s Role in the Cryptocurrency Market
Fidelity is one of the largest and most respected investment firms in the world. For many years, it has provided services like retirement accounts, brokerage accounts, and wealth management. Recently, Fidelity has expanded its services to include cryptocurrency investments. They have made strides in offering cryptocurrency trading to both individual investors and institutional clients, particularly through their subsidiary, Fidelity Digital Assets.
Fidelity Digital Assets allows institutional clients to store and trade cryptocurrencies like Bitcoin and Ethereum. But for individual investors, Fidelity has partnered with other platforms to give you access to cryptocurrency without directly offering it through its own brokerage accounts.
What Cryptocurrencies Can You Buy on Fidelity?
At this time, Fidelity allows you to access and invest in popular cryptocurrencies such as:
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Bitcoin (BTC): The first and most well-known cryptocurrency, Bitcoin is often referred to as digital gold.
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Ethereum (ETH): Known for its smart contract capabilities, Ethereum is another major player in the cryptocurrency world.
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Bitcoin Cash (BCH): A fork of Bitcoin, designed to allow faster transactions and lower fees.
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Litecoin (LTC): Another cryptocurrency that is similar to Bitcoin but with quicker transaction times.
While Fidelity doesn’t offer a wide variety of cryptocurrencies at the moment, they provide the two most widely used and trusted digital currencies, Bitcoin and Ethereum.
How to Buy Cryptocurrency with Fidelity
Fidelity doesn’t offer direct cryptocurrency trading through their standard brokerage accounts. However, they have partnered with services that provide access to crypto. One of the simplest ways for an individual investor to buy cryptocurrency through Fidelity is by using third-party platforms like Fidelity’s integration with digital wallets or other partnerships. Here’s how you can go about it.
Step 1: Create a Fidelity Account
Before you can invest in cryptocurrencies, you’ll first need to set up a Fidelity account. If you don’t already have one, here’s what you need to do:
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Go to Fidelity’s website and click on the “Open an Account” button.
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Choose the type of account you want to open (individual, joint, or retirement accounts).
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Fill in the required personal information, including your name, contact information, and Social Security number.
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Complete identity verification by answering security questions.
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Fund your account using a bank transfer or check.
Once your account is set up and funded, you can start the process of buying cryptocurrency.
Step 2: Link Your Fidelity Account to a Cryptocurrency Exchange
Since Fidelity itself doesn’t directly allow the purchase of cryptocurrencies through its brokerage platform, you can use exchanges like Coinbase, Gemini, or eToro, which Fidelity may have partnerships with. These platforms allow you to buy, sell, and store cryptocurrencies.
Here’s how to do this:
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Sign up for an exchange account: Choose a trusted exchange that Fidelity partners with, such as Coinbase.
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Link your Fidelity account to the exchange: This can typically be done by connecting your bank or brokerage account to the cryptocurrency exchange using a secure API or similar connection.
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Transfer funds: Once your Fidelity account is linked to the exchange, you can transfer funds from your Fidelity account to your cryptocurrency exchange account. This might involve a few days of waiting for the transfer to complete.
Step 3: Buy Cryptocurrency
Now that you’ve linked your Fidelity account with the exchange and transferred funds, you can finally purchase cryptocurrency. Here’s how:
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Choose the cryptocurrency: On the exchange, select which cryptocurrency you want to buy—Bitcoin, Ethereum, or another supported digital asset.
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Decide how much to buy: You can choose to buy full coins or fractions of coins, depending on the price and your budget.
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Place an order: Once you’ve chosen your cryptocurrency and determined the amount, place your order. Depending on the exchange, you can either place a market order (buy at the current price) or a limit order (buy at a specified price).
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Review the order: Before confirming your purchase, review the details of your order, including the fees associated with the transaction.
Step 4: Secure Your Cryptocurrency
Once your purchase is complete, it’s essential to store your cryptocurrency securely. Exchanges often provide wallets to store your crypto, but for added security, many investors prefer to use external wallets.
There are two types of wallets you can use:
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Hot Wallets: These are digital wallets that are connected to the internet and are convenient for quick access and transactions. However, they are more vulnerable to hacks.
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Cold Wallets: These are offline wallets, often hardware devices, that store your cryptocurrency safely without internet access, making them much more secure.
It’s important to remember that you are responsible for the security of your crypto holdings, so be sure to use strong passwords and enable two-factor authentication.
Key Considerations When Buying Cryptocurrency through Fidelity
While Fidelity does not directly offer cryptocurrency trading, using third-party exchanges can be a good option for gaining exposure to the market. However, there are a few key points to keep in mind:
Fees and Charges
Each platform has its own set of fees when it comes to buying and selling cryptocurrencies. Fidelity’s exchange partners typically charge transaction fees, and those can vary based on the platform, the volume of your trade, and the cryptocurrency you’re buying.
Make sure to factor in the cost of fees when you are deciding how much cryptocurrency to buy. These fees can eat into your investment if not carefully managed.
Volatility of Cryptocurrency
Cryptocurrencies are highly volatile, and their prices can fluctuate dramatically in short periods. While this volatility can create opportunities for profits, it can also lead to significant losses. Therefore, it’s essential to invest only what you can afford to lose and maintain a long-term strategy.
Regulatory Risks
The regulatory landscape for cryptocurrency is still evolving. While cryptocurrencies have become more accepted, governments may still impose new regulations or taxes, which could affect the market. Stay informed about potential regulatory changes and how they may impact your investment.
Security Risks
Cryptocurrency investments are also vulnerable to security risks, such as hacking and fraud. It’s essential to use secure wallets and enable multi-factor authentication whenever possible. Be wary of phishing attacks and ensure your exchange is reputable.
Conclusion
Buying cryptocurrency with Fidelity isn’t as straightforward as purchasing stocks or mutual funds, but with the right tools, it can be a seamless process. By using third-party exchanges that partner with Fidelity, you can enter the cryptocurrency market and take advantage of potential investment opportunities. Remember to exercise caution and make informed decisions, especially considering the volatility and risks associated with cryptocurrency investments.
With Fidelity’s robust platform, you have access to a trusted environment for managing your investments, whether in stocks, mutual funds, or digital currencies. Take your time to research, choose the right exchange, and implement a secure storage solution for your cryptocurrency.
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