Bitcoin has been around since 2009, indeed, but you don’t have to feel guilty that only this moment it has caught your attention. It’s never too late to start your cryptocurrency journey, all the more so since these virtual coins aren’t going anywhere – at least not in the near future. Read about investing in Bitcoin here.
The ever-growing interest in cryptocurrency, particularly Bitcoin, and its worldwide adoption, have paved the path for increasingly more investments. Some people choose it as their main asset class, while others complete it with some altcoins to diversify their portfolio. Whatever the case, Bitcoin tokens have found their way into numerous cryptocurrency wallets. So, if you’re interested in trying your luck at investing, we can’t stop you – more than that, we encourage you. Nonetheless, just as you may have already guessed, it’s not that simple, especially if you’re new to the game. Research is the first and most important step in this case, so if you’re serious about your documentation, everything will be fine.
To make your job easier, we’ll detail it all for you in the following, so keep reading for valuable insights into Bitcoin investing.
What is Bitcoin?
Bitcoin (BTC) is a virtual currency created to perform as a form of payment and money outside the involvement of a third party, such as individuals, groups, or financial institutions. The third-party contribution to financial transactions has often proved problematic, so the developer of Bitcoin, the so-called Satoshi Nakamoto, planned for this digital currency to be a game changer in the economy.
Ever since its introduction in 2009, Bitcoin has seen considerable success, so we can presume that the invention of cryptocurrency was met with a ripple of applause. Not for nothing is Bitcoin today the world’s largest digital currency by market cap – the overall value of the tokens that have been mined. At the time being, all the bitcoins in circulation make for about 19 million BTC from a total supply of 21 million.
Nevertheless, there are the so-called whales (individuals or companies that hold unbelievably large amounts of Bitcoin) who possess millions of bitcoins. Some of the most influential whales are the Bitcoin creator himself (or themselves), Winklevoss, Tim Draper, and Michael Saylor. With their influence, these entities can manipulate the cryptocurrency’s price in their favour, one of the reasons for the coins’ price fluctuations. For you, as a novice investor, it would be hard to know the moves of these cryptocurrency whales; that’s why we recommend taking your research seriously and not jumping into buying without cautiously assessing this digital currency’s price history and volatility.
The Many Types of Investing
Investing in cryptocurrency – any type of cryptocurrency – isn’t just about buying and holding coins in an electronic wallet. Sure, if this method is suitable for you, feel free to adopt it. But if you’re a novice, we’ve thought that it would be wise to know about more cryptocurrency investing types so that you can choose something that aligns with both your needs and talents. After all, your ability to buy and stake your digital coins can be called talent.
So, here’re the various investing options:
- Buying Bitcoin directly
- Investing in cryptocurrency companies – Increasingly more companies and businesses today, including the payment giant PayPal, have started to adopt digital currencies in one form or another. Numerous companies have varying levels of cryptocurrency exposure, some only support this asset, and others hold huge amounts of virtual coins on their balance sheets.
- Investing in cryptocurrency-focused funds – If you’re a bit doubtful about putting your money on companies, you also have some other variants that may look more viable. Some of these include ETFs (exchange-traded funds), like future and index funds, or cryptocurrency investment trusts.
- Becoming a cryptocurrency miner or validator – Mining may sound daunting, as it implies solving complex mathematical problems called “hashes”, but it’s perhaps the most direct manner to invest in Bitcoin – or altcoins. Another solution is to become a validator. Either way, you’ll likely be rewarded with cryptocurrency for your mining efforts. Miners are precious for the cryptocurrency network, as they help validate transactions and introduce new coins into the system. Given these facts, the blockchain’s security is constantly assessed; hence, cybersecurity threats and supply issues are avoided.
- Investing in a cryptocurrency Roth IRA – If you intend to invest in digital currency and also reap the tax benefits provided by an IRA (individual retirement account), take into account investing in a cryptocurrency Roth IRA. By relying on an IRA’s services, you can also garner the advantages of more secure and safer storage for your digital goods.
As you can see, you have several investing methods to choose from, so be sure you make a rational, informed decision. Thorough research is a vital requirement in this sense, including the peculiarities of your cryptocurrency, in this case, Bitcoin, such as BTC coin price, market cap, liquidity, volatility, and the global level of adoption.
Steps to Invest in Bitcoin Properly
Bitcoin investing is becoming handier every day. Numerous exchanges and brokers are available, so it seems that you only have to decide on a viable option. But it’s not all fine and dandy – you must consider several aspects and take a couple of steps when investing in a cryptocurrency, be it Bitcoin or an altcoin. If you’ve just entered this vast world of digital currencies and have no idea where to start, consider these simple yet practical steps:
- Select a cryptocurrency exchange – Pay special attention to aspects like trading volume, fees, security, and minimum investment requirements. Remember that not all crypto exchanges are the same, and you need to choose something that best aligns with your allocated budget and reward expectations.
- Decide how much to invest – There’s an unwritten rule in crypto – you shouldn’t invest more than you afford to lose. In other words, you shouldn’t play roulette, especially as a beginner, as you’re likely to suffer the consequences.
- Choose your storage option – Once you buy your bitcoins, you must store them safely. Such a place could be a hot or cold digital wallet.
- Manage your investment – Is it for the long or short term?