According to Coin Market Cap, over 7,000 cryptocurrencies are traded publicly online. But despite the highs and low points of its existence, Bitcoin is still by far the most popular cryptocurrency in the world.
The appeal of high-grade security and privatized control over your money is evident in the collective fascination with digitized assets. With more and more rags-to-riches stories of Bitcoin investors, investing in this digital currency has become a hot topic. If you’re new to the world of investing, Bitcoin can be a great experimental investment. But this only applies to when the investment is done cautiously.
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Step by step guide to investing in Bitcoin
Like any investment, there are risks involved. The only way to minimize these risks would be by studying the market and coming up with a plan. Here are four easy steps to guide you with your investment in Bitcoin:
Step 1: Buying Bitcoins
There are several ways online marketplaces to buy bitcoins.
Bitcoin ATMs – Just like normal ATMs for traditional cash, Bitcoin ATMs are used for the buying and selling of Bitcoins. Globally, we have over 8,000 Bitcoin ATMs available.
Traditional stockbrokers – If you are familiar with traditional stock exchanges, then this can be a good option for you. Traditional stock-trading platforms like Robinhood and Tradestation allow bitcoin trading for no fees.
Cryptocurrency Exchange – There also platforms available that specialize in cryptocurrency exchanges. Exchange rates for these can vary depending on the security, reputation, transactional, and processing fees. For those on a budget, platforms like Coinbase and Binance are recommended. You can buy bitcoins for fees as low as 0.1-0.5% of the purchase price.
P2P Purchase – Besides these, you can buy bitcoins from other bitcoin users directly without the hassle of going through crypto-trades.
Step 2: Inform Yourself
Bitcoin investments can be tricky if not done correctly. So, do your research.
Learn more about Bitcoin and other cryptocurrencies: Being well-informed about how different cryptocurrencies work will make it easier to make a financial decision.
Study the stockmarket: Look at the trends of bitcoin trading over the years. Find out the fees of different stock-trading platforms to see what option will be best suitable for you.
Be Prepared: Once you have researched your options, set your cryptocurrency account under a private connection to avoid any security risks. Keep your private information ready for setup, including the source that you will use to fund your bitcoin account.
This means deciding whether you want to use your credit or debit card. It is recommended to link your account to your debit card. Making investments with credit cards involves a high risk of paying huge interests on the credit you decide to use.
Step 3: Deciding on a Wallet
When creating a Bitcoin wallet, you will have a choice between a hot and a cold wallet.
Hot Wallets: These are given by trusted third-party providers, including the trading platforms. Hot wallets can be beneficial for those who engage in transfers quite often and like getting it done quickly. The issue with hot wallets lies in the fact that it keeps your Bitcoins online, where hackers can get to it.
To ensure the safety of your assets, carefully choose your third-party provider. The most commonly used provider is blockchain. Since blockchain is not a crypto or fiat exchange platform, it is seen as a less viable option for hackers.
Cold Wallets: Cold wallets is a portable storage device in which you can carry your bitcoins. While hot wallets are automatically installed for free online by the third-part providers that is not the case for cold wallets.
Cold wallets are sold at a price as high as $100. Despite the costly option, many choose to go for cold wallets to protect their assets. So, those who do not mind the slowed transfer for better protection prefer this option.
For $200, Ledger Nano X is seen as one of the best cold wallets out there. This is a practical option for people who aren’t familiar with the Bitcoin tech and want something easy to use.
Step 4: Buy and Manage your Bitcoins
Once you have decided on your mode of exchange for Bitcoins, and set up your Bitcoin wallet, provide the wallet address to either the person or the trading platform that will help you with your currency exchange.
Don’t start your investment at a high point. How much you invest in Bitcoin is your choice – it can be a moderate amount like $25. Some people even start with a bare minimum of $2 to avoid any risks at all.
Once you have made your investment, think of your long-term plan. Bitcoin investment is the same as any investment made through the stock markets.
For many, immediate cash flow is the aim of any investment. In that case, they can sell their shares on an ideal day for Bitcoin trading and take the fiat currency. However, if you see its use as valuable currency for future exchanges, then stick with it for the long haul.
How To Benefit from Investing in Bitcoins
Potential of Higher ROIs
In 2019, Bitcoin’s price rose by 87% and outperformed all its competitors in the trade market. This digital currency has had similar success in September 2020, with its price rising by 50%.
Bitcoin is relatively new, and compared to most early-stage investors, Bitcoin investors are some of the few who have gotten assured higher and quicker returns on their investment. With its proved investment potential and ability to liquidate easily for short-term cash flow, Bitcoin can be a great investment starter for you.
Easy Trading
Trading with Bitcoins does not require racking your brain over what trading broker to consult and what company shares you need to buy. You can just go to a Bitcoin ATM or a Bitcoin user for your buying and selling purposes, getting your digital assets instantly.
Portability
When dabbling in investments, one becomes more and more cautious about how to handle their money. With all the money going in and out, you become liable to put your money in the bank. With Bitcoins, all your money is online. So, carry your Bitcoins with wherever you go.
Low risk of inflation
Fiat currency is controlled by the centralized authority of the government. The only thing Bitcoin is dependent on is the blockchain, and its system is infinite. This means that the money can never run out, and with no government policy controlling it, Bitcoins have lower inflation risks.
Full control and security
This peer-to-peer system coming together under an umbrella network addresses the root problem with the traditional system – the involvement of a centralized authority that made banking transactions untrusting and costly.
For those who respect privacy above all else, investing in Bitcoin is perfect for you. You can maintain your anonymity, making a trade untraceable between the buyer and the seller. As for the security, Bitcoin keeps millions of copies of the same blockchain of transactions, making it impossible for anyone to get to your money.
New Opportunities
Bitcoin will be a must-have asset in every investor’s portfolio in 2025. More and more companies see the viability of this digital asset. This has resulted in higher adoption rates over the last few years.
With the pricey stock markets, the usual go-to investments in gold, real estate, or mutual funds will no longer do. So, smaller investors look up to alternatives like crypto investments. Diversifying your investment portfolio to something relatively new before it becomes more popularized will be worth it in the long-run.
Final verdict
There are obvious risks, in the long run, a big one being the lack of stability for Bitcoin to power through as the currency of the digital age. Bitcoin was traded at $19,000 in December 2017, only for it drop to as low as about $3,200 in 2018. But to say that no good investment comes without risk would be to live in ignorance.
Bitcoin has become widely popular for meeting the monetary requirements of people. The technological support, along with good usability and credibility, has made it an attractive asset for not just the common man but also institutional investors.
Even though Bitcoin is still ways away from becoming as viable as real money, investing in a digital asset has become an important step in the way of adapting to this digitized era. Investing in Bitcoin is like a goldmine – there will be a lot of uncertainty when you’re digging and trying to find your way through.
You can try out a demo account at eToro or IC Market. With these demo accounts, you won’t have anything to worry about and you will be able to have practical experience of investing in bitcoin. Moreover, this will be without risking your money. Create your demo account today!