It can be hard to turn on the television, listen to the radio or surf the Internet without hearing about Bitcoin. Many of the stories that you may hear are about other people getting rich because of a Bitcoin investment they made years ago that has turned them into a multi-millionaire. This can sound too good to be true, and many people are jumping on board and trying to make at least a modest profit through a Bitcoin investment. Learning how to invest in Bitcoin is the first step to take if you want to get in on the action and potentially turn a great profit yourself.
What Does It Mean to Invest in Bitcoin
Bitcoin is a type of digital currency or cryptocurrency, and you can use the currency to make many types of everyday purchases. Because of its incredible value increase, it is also a popular investment. Bitcoin is just one of many cryptocurrencies that you could invest in, but it is the most popular and most well-established one. It also is among the most expensive to purchase. When you learn how to invest in Bitcoin, you do not necessarily have to buy a full coin in most cases. For example, if Bitcoin is trading at $17,000 per coin, you can buy .01 coins for $170. As the price of Bitcoin increases, the value of your .01 coins also increases.
However, keep in mind that Bitcoin and all other cryptocurrencies are rather volatile. If you want to know how to invest in Bitcoin, you should be prepared for this volatility. You also need to be aware that cryptocurrency prices can fluctuate 24 hours per day year-round. Because it is impossible to constantly monitor the markets at all times, there is always a risk associated with loss.
In addition to buying actual coins, you can also invest in cryptocurrency stocks or even invest in futures now. While these investment options seemingly shut down during non-trading hours, keep in mind that their value is inherently tied to the actual Bitcoin price as well.
How to Invest in Bitcoin
If you want to know how to invest in Bitcoin to turn a profit, you have a few options available to consider. The good news is that Bitcoin is available for all investors regardless of your initial starting investment amount. However, investment options may be limited based on the amount of capital that you want to contribute to your investment.
1. Buy Coins Through a Broker
There are several brokers or exchanges that allow you to buy Bitcoin and other types of cryptocurrencies directly through them. Some popular exchanges are Gemini and Coinbase. If you are looking at how to invest in Bitcoin companies, however, be aware that some are more reputable and established than others. In addition, some are known to have higher fees than others. You will typically pay a transaction fee each time you buy coins, and the amount of the fee is typically based on the amount of Bitcoin that you purchase. Remember that you may also pay another fee when you sell your coins and convert the investment back to currency. You make money through your investment when you sell the coins for a higher amount than you purchased them for, but you must take the fees into consideration as well.
2. Use a Bitcoin ATM
If you prefer to avoid going through a broker or exchange with an online purchase, you can also make a direct investment in Bitcoin through a special ATM machine. In many larger and even mid-sized cities, you can find Bitcoin ATM machines in specialized locations. You may be able to search for a location closest to you online. As is the case with buying Bitcoin through a broker or exchange, you also can expect to pay fees through an ATM. It is up to you to compare the fees at your local ATM in relation to the fees that you may pay through an online investment. By doing so, you can make the most cost-effective decision to potentially maximize your gain.
3. Consider a Bitcoin ETF
If you want to know how to invest in Bitcoin stock, your best option is through an ETF. An ETF is an Exchange Traded Fund. At this time, there are very few Bitcoin ETFs available for you to invest in. However, there are still some options available, such as the Bitcoin Investment Trust. You purchase an ETF through the broker that you normally use for stock or mutual fund investments. Most of these brokers also charge a fee for trades. The ETF price typically fluctuates with the Bitcoin price, but the volatility may be less severe. In addition, the ETF shares are traded during normal trading hours. This means that there is some downtime at night, on weekends and on holidays.
4. Mine Bitcoin
Another way for you to obtain Bitcoin is to mine it. You can actually mine any type of cryptocurrency. By mining the cryptocurrency, you typically are paid a small amount of the coin that you mine. The amount of the payment has decreased substantially recently. More than that, it can take a significant amount of time to mine coin. Also, the energy costs related to mining can also be significant. At one time, some people were earning a full-time living as miners. However, this is not a hobby or side job for many people because it is no longer as profitable as it once was.
Where to Buy Bitcoin / Best Bitcoin Funds and Brokers
Now that you know more about the different ways to purchase Bitcoin, you may be looking for a broker to make your purchases with. Understanding how to invest in Bitcoin generally means that you must find a reputable broker and trust that broker to take necessary steps to safeguard your investment against hackers. These are a few of the top options available for investing in Bitcoin.
Coinbase: Coinbase is undeniably the leading exchange service today. It charges modest fees, and it currently allows trading for Bitcoin, Ethereum and Litecoin. Many people enjoy how user-friendly the platform is compared to other platforms. This exchange has also has encrypted vaults that make it easier for you to keep your investments safe.
Gemini: Another large and popular exchange platform is Gemini. This platform has options for both private and institutional investors. It enables trading for Bitcoin, Bitcoin Cash and Ethereum. Like Coinbase, it also has security features that reduce the chance that its investors will lose money related to hacking activities.
Bitcoin Investment Trust: The Bitcoin Investment Trust is an ETF that is traded as common stock. One share equates to approximately 0.1 Bitcoin. You can purchase this ETF through some brokers, but it is not available through all major brokers at this time.
As lucrative as Bitcoin investments can be, it is important to avoid being caught up in the mania. Some people have become incredibly wealthy through this type of investment. However, it is also possible to lose most or all of the money that you invest. With this in mind, consider balancing your portfolio with other types of cryptocurrencies and with less risky types of investments as well. Please share your thoughts on how to invest in Bitcoin in the comment form below.
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