Learn Crypto Basics with Fidelity’s Free Tools and Guides

Can You Buy Crypto on Fidelity

If you've been wondering whether you can invest in cryptocurrency through a platform you already trust, Fidelity might be on your radar. The short answer is yes - Fidelity offers cryptocurrency trading for U.S. individual investors through a service called Fidelity Crypto. You can buy, sell, and transfer crypto right inside the same app where you handle your stocks and ETFs. It's all managed under Fidelity Digital Assets, which operates as a national trust bank and provides custody and trading capabilities for digital assets.

For institutional clients, there's a separate platform - the Fidelity Digital Assets Custody and Trading Platform - designed for larger-scale crypto needs. And in a notable move, Fidelity partnered with Nexo to develop products that combine Nexo's credit lines with Fidelity's custodial solutions. This collaboration focuses on building institutional-grade storage, improving security, and creating tri-party lending agreements for big investors.

Learning Crypto Through Fidelity's Free Resources

One thing I really appreciate about Fidelity is that they don't just let you trade - they actually help you learn. Their Learn platform is packed with articles, videos, livestreams, and infographics that break down crypto concepts in plain language. Whether you're trying to understand how cryptocurrency works at a basic level or you're ready for more advanced topics, there's something there for you.

The educational content is organized into clear categories. You'll find sections on financial essentials like saving, budgeting, and taxes. There are life event guides for things like changing jobs or planning for college. And then there's the investing and trading section, which covers crypto basics, crypto beyond the basics, and alternative investing. They also cover investment products like ETFs, mutual funds, and stocks, plus advanced trading strategies and tools.

Fidelity also puts out a newsletter called Decode Crypto. It's a monthly roundup of insights from crypto thought leaders, and it's designed to help you build knowledge no matter where you're starting from. If you're looking for a free crypto trading course style experience, this newsletter combined with their Learn platform is a solid starting point.

Building Your Crypto Knowledge From Scratch

When you're just starting out, Fidelity recommends sticking with trustworthy, knowledgeable sources. Established crypto providers usually have articles, videos, and guides that explain how things work. YouTube can be helpful too - visual explanations make complex topics easier to grasp. But here's the thing: anyone can post on YouTube, so quality varies a lot. Always cross-check what you learn.

There are some foundational concepts you'll want to get comfortable with first. Blockchain and mining technologies are at the core. Understanding cryptocurrencies and decentralization helps you see why this whole space exists. And knowing how crypto differs from traditional currencies gives you a frame of reference that makes everything else click faster.

Key crypto concepts to learn first

Once you've got the basics down, you can start exploring more advanced territory. Smart contracts, NFTs, DeFi, stablecoins, staking, and layer 2 blockchains are all worth your time. Each one opens up a different corner of the crypto world.

Important Things to Know Before You Buy

Here's where I want to be straight with you. Unlike traditional assets, crypto may be more susceptible to market manipulation than securities. Crypto holders don't benefit from the same regulatory protections that apply to registered securities. And crypto is not insured by the FDIC or SIPC. That's not meant to scare you - it's just something you need to go in with your eyes open.

There are practical logistics to think about too. Keeping crypto secure through proper wallet management is essential. Choosing trustworthy custodians matters a lot. You should understand how to send crypto between wallets without making costly mistakes. And don't forget about tax implications - they can catch people off guard.

Crypto is not insured by the FDIC or SIPC. Investors do not benefit from the same regulatory protections applicable to registered securities.

Staying Informed Without Getting Overwhelmed

Crypto news moves fast, and it often breaks first on social media. Following crypto founders and thought leaders can keep you in the loop with project updates and industry insights. But maintain a critical perspective. Anyone can claim to be a crypto founder, and some people promote projects just to manipulate prices. Don't take everything at face value.

Monitoring crypto prices regularly helps you understand market volatility. Bitcoin, as the first and largest cryptocurrency, gives you a baseline for reading price movements. Smaller cryptocurrencies with market caps below $1 billion can be even more volatile - and some may lose all their value. That's the reality of certain crypto niches, and it's worth keeping in mind as you explore what cryptocurrency investment really means.

Bitcoin's Scaling Challenge

Bitcoin faces real scalability challenges as more people use it. The network can process up to seven transactions per second, with average confirmation times around 318 minutes and average transaction fees around $1.37 as of mid-2023. Compare that to Visa, which handles roughly 1,700 transactions per second on average. The gap is obvious.

There was a period known as the Blocksize Wars, running from August 2015 to November 2017, that ended with a hard fork creating Bitcoin Cash. But most of the Bitcoin community preferred to keep the original network's security and decentralization intact rather than adopt larger block sizes that could hurt decentralization.

Segregated Witness, or SegWit, was implemented in 2017 as a soft fork upgrade. It prevented transaction malleability and made the Lightning Network possible. SegWit increased the number of transactions per block while keeping backwards compatibility - a smart move that didn't force everyone to upgrade at once.

The Lightning Network Explained

The Lightning Network is a layer 2 payment protocol built on top of Bitcoin. It enables faster transactions at much lower fees. Here's how it works: payment channels open between parties off the main blockchain, and transactions only return to layer 1 when those channels close. It's like running a tab at a bar instead of paying for every single drink separately.

As of mid-2023, the Lightning Network had around 16,000 nodes and roughly 70,000 channels, with total capacity around 4,900 bitcoin. That's an increase of almost 500% in capacity since 2020. Strike, a Lightning Network payment provider, has partnered with Shopify, NCR, and Blackhawk Network to enable bitcoin payments for over 400,000 merchants. Merchants benefit from minimal fees compared to credit card processing, which typically runs 1.5% to 3.5%.

Other Bitcoin Scaling Solutions

The Liquid Network is a sidechain protocol built on Bitcoin that offers faster transactions and settlement times. Blocks are added every minute compared to Bitcoin's 10-minute block time. It supports multiple assets and provides transaction confidentiality. The trade-off is that it relies on a centralized federation to handle the two-way peg, which goes against Bitcoin's decentralization principles.

Rootstock, often called RSK, is another sidechain that brings programmability to Bitcoin. It lets you build decentralized applications on top of Bitcoin's security. It uses a two-way peg where bitcoin gets converted to RBTC for use on the RSK network. Block confirmations happen in about 33 seconds, and costs are lower than on Ethereum.

Stacks is a separate Bitcoin layer 1 blockchain that enables DeFi, NFTs, and decentralized applications. It uses a unique proof-of-transfer consensus mechanism and settles all transactions on Bitcoin. Stacks miners commit bitcoin to mine blocks and receive STX tokens as rewards. It's an interesting approach that ties new functionality back to Bitcoin's base layer.

Ethereum's Pectra Upgrade

Ethereum's Prague/Electra upgrade, known as Pectra, introduces 11 Ethereum Improvement Proposals focused on optimization rather than a complete overhaul. Five of those EIPs are dedicated to staking optimizations. It's a measured approach that aims to improve the network without disrupting what already works.

One key change is the blob throughput increase, which lets rollups scale further and keeps fees low within the Ethereum ecosystem. The upgrade bumps the blob count from three to six, though that might not be enough for all the rollups expected to launch. There's also an increase in the maximum effective balance for validators - going from 32 ether to 2,048 ether - while the minimum stays at 32 ether. This is great for solo stakers who want to compound rewards without managing multiple validators.

The calldata cost increase reduces the maximum possible block size on Ethereum from roughly 2.2 megabytes to 0.9 megabytes. This works alongside a gas limit increase to improve Layer 1 scaling. Ethereum's current data capacity translates to about 210 transactions per second, which Pectra will push to around 420 TPS.

Looking further ahead, Ethereum's scaling vision includes PeerDAS, which could increase blob capacity by two to four times. The end goal is 128 blobs per slot, potentially enabling roughly 100,000 TPS or 8.6 billion transactions per day. That would generate significant fee revenue while keeping transaction costs low for everyday users.

Crypto as an Alternative Investment

Is crypto really an alternative investment? It depends on how you look at it. Let's break it down. On liquidity, crypto can be traded and settled almost instantly on platforms like Coinbase and Gemini, with markets running 24/7. By that measure, it's far from alternative - it's actually more liquid than many traditional assets.

Cost-wise, transaction and ownership expenses can be reasonable for buy-and-hold investors, though some listed OTC and private funds carry high fees. Complexity is another factor. Sure, crypto can be complex, but plenty of traditional financial systems are too. Simple heuristics help - thinking of Bitcoin as "digital gold" or Ethereum as "programmable money" makes things easier to grasp.

How crypto compares as an alternative investment

Crypto assets have historically shown modest to low correlation to other asset classes, though increased financialization has made them behave more like risk assets during periods of macro volatility. Transparency is a strong point - most blockchains are built on open-source software, and anyone can download and view the chain. That level of transparency beats most alternative assets in private markets.

Bitcoin is barely a teenager, and most crypto assets are even newer. That relative newness is a defining characteristic. Adoption patterns vary by generation too. Millennial and Gen-Z investors have made crypto a portfolio staple, while older generations have been more cautious. Different people reach different conclusions about whether crypto counts as alternative.

What the Data Says About Adoption

A Fidelity report on digital assets found some telling numbers. 49% of financial advisors have been asked about