If you believe that cryptocurrency is the future of currency, you might want to learn how to invest in bitcoin. You might have heard that it was the first cryptocurrency available, so you’re more willing to invest in a cryptocurrency that has been around longer. Investing in bitcoin is relatively straightforward, but as with any cryptocurrency, there are still risks associated with bitcoin investing.
How To Invest In Bitcoin
To invest in bitcoin, you need to:
- Figure out where you want to buy it.
- Decide how you want to store it.
- Figure out your investing strategy.
While those are the three basic steps, there is more to consider when executing them. Below you will find more details on what you need to know about investing in bitcoin.
Where Can You Buy Bitcoin?
Before you can invest in bitcoin, you need to know where you can buy it. You can buy it from one of the following options:
- Exchanges
- Stockbrokers
- Bitcoin ATMs
- Other Owners
What Is the Best Cryptocurrency Exchange?
While there are many exchanges available, some are more reputable than others. It is important to know that exchanges will charge a fee, so do your research on this to ensure you are okay with the transaction fees.
One of the most popular exchanges and the one that I suggest is Coinbase. Coinbase has an app and a website and is easy to use. Plus, you can easily link your bank account. Click here for the Coinbase fee structure.
Other popular cryptocurrency exchanges include the following:
- Kraken: An excellent alternative to Coinbase, specifically for bitcoin. They have good customer support, low fees, and an excellent trading platform. Click here for the fees.
- Binance: This is the largest global exchange by volume for all cryptocurrencies. You can only make purchases through using cryptocurrency or by credit card. Click here for the Binance fee schedule.
- Gemini: A US-based cryptocurrency exchange where you can trade bitcoin. Click here for access to the various fee schedules.
What Are The Best Stockbrokers For Bitcoin Investing?
There aren’t as many stock brokers for investing in bitcoin, but Robinhood Crypto is the main one. They were the first to offer bitcoin. Fortunately, they don’t charge fees for bitcoin trades. Other options that you have are TradeStation and eToro. They also don’t charge trade fees.
What Are Other Ways To Invest In Bitcoin?
Another way that you can obtain bitcoin is through Bitcoin ATMs. They work like regular ATMs, and there are more than 4,000 Bitcoin ATMs across 76 countries. This will help you find one near you.
You can also buy bitcoins directly from bitcoin owners through peer-to-peer transfers. This is like using Craigslist for cryptocurrency. You find owners and meet up to exchange bitcoins for cash.
To find someone who owns bitcoin, you can use tools such as:
Doing it this way usually takes longer than using an exchange, though. It’s also riskier because you don’t know the person doing the buying or selling. If you go with this method, make sure to meet up with the buyer or seller in a public place.
Where Should You Store Your Bitcoin?
Now that you know where to buy and sell bitcoin, you’ll want to know where to store it. With any cryptocurrency, you can store it in a software or hardware wallet. A bitcoin wallet is what lets you send and receive bitcoins. It also helps store your private key, which you will need to access your bitcoins.
Most exchanges have a wallet where they will keep your cryptocurrency for you. However, leaving your bitcoins on an exchange is riskier since exchanges can and do get hacked.
Your safest bet is a hardware wallet, as it is more secure. Two of the best options are Trezor and Ledger Nano. Expect to pay around $100 for a hardware wallet.
When creating accounts for your wallet and currency exchange, make sure to use two-factor authentication and a strong password.
You should also have a backup storage place.
How Do You Make A Bitcoin Investment?
Now that you know where you plan to buy and sell your bitcoin and where you want to store it, it’s time to make your purchase and decide your investing strategy.
To make your purchase, you need to set up your account. Depending on where you buy your bitcoin, you’ll need to provide some or all of the following information:
- Social security number
- Bank account information
- Debit or credit card information
- Picture ID
Once you are set up, you need to decide what amount of bitcoin you want to purchase. While investing in one bitcoin requires thousands of dollars, you can instead buy a fraction of share. Buying a fraction of share allows you to have an initial investment as low as you would like. A satoshi is the smallest bitcoin unit that you can buy.
Also, it’s important to note that you should avoid making purchases with your credit card due to the high-interest.
With bitcoin (and any security), you want to buy low and sell high. If you plan to trade bitcoin, you can buy it now and sell it when the value increases. You can sell bitcoin for both cash and other forms of cryptocurrency. You could also hold it as a long-term investment if you truly believe in it taking over the future of currency.
However, it is important to know that investing in bitcoin is extremely risky because of its volatility. There is no way to tell if it will be up or down tomorrow, and it has seen huge swings in price.
Additionally, unlike other securities protected by traditional stock brokerage accounts, Bitcoin is not insured by the Securities Investor Protection Corporation. And while you can purchase private insurance, it won’t protect you again online breaches such as someone stealing your password. Because there is a risk of hackers getting your information, make sure only to use a secure, private network. That means don’t buy bitcoin while using the wifi at a hotel or coffee shop.
Financial analysts are still not certain of the future of bitcoin. Therefore, it should only take up a small percentage of your overall investment portfolio. Keep it to a maximum of 10% of your portfolio. Additionally, you should also only invest the amount that you are willing to lose. Many see investing in cryptocurrency as taking a gamble. The uncertainty of if you will win or lose is high. Therefore, you should minimize your risk by diversifying your portfolio and not investing more than you can afford to lose.
Noteworthy, though, is that bitcoin is limited in supply. Therefore as demand increases and supply remains the same, it is probable that the value will go up.
As far as whether it will be the future of currency, some major companies already accept bitcoin.
Again though, buying, selling, and using bitcoin comes with risks, so proceed with caution.
Wrapping Up: Investing In Bitcoin
Now you know how to invest in bitcoin. It’s quite simple. All you need to do is figure out where you want to buy and sell, where you want to store it, and your investing strategy. You could make money off trading bitcoin, but it is volatile, and there is no telling if you’ll end up making a profit or not. As far as long-term investing goes, while there are some promising happenings in the world concerning the acceptance of bitcoin as a currency, many financial analysts are still skeptical. As with any investment, it’s important to diversify your portfolio by investing in stocks, bonds, and funds. And remember: don’t risk more than you are willing to lose.
