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Bitcoin and similar cryptocurrencies behave like the stock market.
The more people who buy shares of Bitcoin, the higher the currency's price. The fewer people who buy Bitcoin, the lower its price.
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However, the source of Bitcoin's value -- and how you buy into it -- is very different than an investment in the shares of a public company.
What Is Bitcoin?
Bitcoin (often denoted "₿") is a digital currency that allows you to conduct business and exchange resources securely, but without going through a bank or central payment entity to perform the transaction. Bitcoin can be sold, traded for a product, or bought into like a stock (which this article will teach you how to do).
Think of Bitcoin like a bartering token, only there's a limited supply of these digital tokens worldwide. Banks and national economies don't generate Bitcoin -- software mines it using a technology called blockchain. Learn more about this concept in the video below.
With Bitcoin being a limited resource, you'd think its value would always be off the charts, but this cryptocurrency is extremely volatile. People can adopt Bitcoin as a means of exchange for many reasons, and as Bitcoin's usage evolves, so will the reasons people choose to buy into it. Just this week, Bitcoin's price increased by more than $1000, reaching $7,450 per ₿1 at the time of writing this article (yikes).
How to Buy Bitcoin Stock
Whether you're looking to invest in Bitcoin for a big sell later, or spend it on various items and assets, there's a universal process you'll have to go through to buy stock in it. Let's dive into that process.
1. Download a Wallet
By "wallet," we don't mean the leather one in your pocket, or even credit card reader apps like Google Wallet. A Bitcoin wallet is an online storage place for all your digital currency. It doesn't just hold your Bitcoin, though. Bitcoin wallets also store your personal "key" -- a unique identifier assigned to every Bitcoin owner, consisting of a long string of letters and numbers that keeps your Bitcoin secure. This is essentially your Bitcoin password.
Your first step in buying Bitcoin is to download a Bitcoin wallet and connect your credit or debit card to it. There are more than a dozen Bitcoin wallets you can download, both to your desktop and as an app on your mobile device. Here are the wallets that work with the most devices and operating systems: