How to Invest in Bitcoin: A Beginner’s Guide
Over the last several years, Bitcoin has become increasingly popular amongst today’s investors. During that same time, there’s been a lot of debate about Bitcoin and other cryptocurrencies—Its proponents argue that it’s the future of currency and investing, while its detractors argue that it’s a risky investment option that may not generate big returns.
Elon Musk, the mind behind both Tesla and SpaceX, recently announced his automotive empire would not only purchase $1.5 billion in Bitcoin, but it also intends to accept the cryptocurrency as payment in the future. Several popular FinTech (financial technology) companies like Square and PayPal also announced their intentions to support cryptocurrencies moving forward. Despite all of that, however, the most important development for Bitcoin maybe the recent IPO (initial public offering) of Coinbase Global, Inc. (NASDAQ: COIN), today’s leading cryptocurrency exchange platform.
So, how can you determine whether it’s the right investment for you? Read our beginner’s guide on how to invest in Bitcoin.
How to Invest in Bitcoin
Are you ready to dive into cryptocurrency? You’re in luck, as buying Bitcoin is simpler than you might think. Here’s how to invest in Bitcoin, in 5 easy steps:
Join a Bitcoin Exchange
Get a Bitcoin Wallet
Connect Your Wallet to a Bank Account
Place Your Bitcoin Order
Manage Your Bitcoin Investments
First, you’ll need to determine where you want to make a Bitcoin purchase. Most Bitcoin investors use cryptocurrency exchanges. There’s no official “Bitcoin” company because it’s an open-source technology, but there are several different exchanges that facilitate Bitcoin transactions. These exchanges are the middlemen of cryptocurrency investing, like a stock brokerage.
If you decide to purchase from an exchange, you’ll have to decide which exchange you want to buy from. Here are a few of the most popular options:
Coinbase: A very popular crypto exchange that insures losses in the event of a security breach or fraudulent transfers
Binance: Founded in 2017, Binance is a crypto exchange with a strong focus on altcoins
When you purchase a coin, it’s stored in a “wallet,” which is where all your cryptocurrency is stored.
Some notable wallets are:
Trust Wallet
Metamask
After you’ve purchased bitcoin, you can:
Use your coins to make online transactions
Hold your coins for a long period in the hopes it’ll appreciate in value
Perform day trading with your coins—that is, buying and selling coins with other Bitcoin owners, which can be facilitated on the cryptocurrency exchange
Your cryptocurrency exchange will provide you with everything you need to buy and sell coins.
The Pros of Bitcoin Investing
The main benefit to Bitcoin investing is that you may be able to generate a huge return on profit, perhaps as high as 200% or more. Of course, that’s a challenging thing to accomplish, but it’s possible.
In other words, you’ll buy coins when they’re at a low price and sell them when they’re at the highest possible price. High-risk investors who pay close attention to the market may be able to generate massive returns when employing that strategy. They might even generate returns that are highly improbable in the world of corporate stocks or government bonds.
Summary
Bitcoin is a popular type of cryptocurrency that utilizes a large chain of interconnected computers to store and protect your digital assets. Bitcoin is a highly volatile asset that’s prone to large and fast swings in value, which presents an opportunity for large returns but also poses a tremendous risk. It is critical that you learn how to invest in Bitcoin responsibly before making any decisions. Be sure to diversify your investment portfolio to protect yourself from marketplace volatility.