Investing in Bitcoin
When investing in Bitcoin (BTC), you need to keep several things in mind – such as the best places to buy Bitcoin, security for your transactions, and top payment methods to use when purchasing a cryptocurrency.
If you’re looking for a one-stop-shop with all the information you need to invest in Bitcoin, you’ve come to the right place. We’ll show you the best providers to use to purchase Bitcoin through in addition to explaining how the coin works and whether or not it’s safe to invest. Keep reading to discover all you need to know.
Best way to invest in Bitcoin in 2022
When researching ways to invest in Bitcoin, you’ll quickly notice that you have several choices. And while having a lot of options is often great, it can also serve as an annoyance and lead to indecision. Fear not though, because we’ve put together a list of the best providers below.
What is Bitcoin?
Bitcoin is the most recognizable cryptocurrency and also the oldest. It has the largest market capitalization out of all the currencies that exist today. With the exception of the countries that have banned it, Bitcoin is available worldwide.
Bitcoin launched in 2009 and was created by “Satoshi Nakatomo”, a pseudonymous character of whom many have claimed to be. But it wasn’t until the late 2010s when the currency began gaining real traction. In December 2017, it reached a new all-time high that put it on the map for many people (though this has since been beaten).
As of 2021, Bitcoin is the most widely used cryptocurrency. It aims to facilitate borderless transactions and limit processing fees. Earlier this year, El Salvador became the first country to accept the currency as legal tender alongside its main currency, the U.S. Dollar.
Key facts about Bitcoin
Year Launched: 2009
Total Coins in Circulation: 18.82 million (as of September 13, 2021)
Maximum Allowed Bitcoins: 21 million
Distribution System Used: Blockchain
Trading Opportunities: Cryptocurrency exchanges, brokers, P2P lenders, and more
Items That Can Be Purchased with Bitcoin: There are a limited number of items that can be purchased with Bitcoin but the list is growing over time.
What are the pros and cons of using Bitcoin?
When investing in and using Bitcoin, plenty of benefits exist. But at the same time, you’ll also run into a few drawbacks. Here’s an overview of them both:
The most mature cryptocurrency with the longest history and information available for informed decision making
Broad levels of circulation both for investing and using as a currency for purchasing items
Almost all cryptocurrency exchanges and brokers allow users to trade Bitcoin
Bitcoin is extremely volatile even when compared to other cryptocurrencies
Buying Bitcoin is expensive -- at the time of writing in October, 2021, 1 Bitcoin is equivalent to over $50,000
From a usage sense you still can’t use Bitcoin everywhere
Bitcoin has taken the world by storm over the past five years or so, and unsurprisingly, the currency has a lot of famous backers.
Tesla and SpaceX CEO Elon Musk has invested heavily in Bitcoin, with Tesla even accepting the currency as a payment method for a while. However, Tesla stopped facilitating Bitcoin payments due to the perceived environmental impact. But Musk has since said that Tesla will “most likely” reintroduce accepting these types of payments.
Twitter co-founder Jack Dorsey is another well-known Bitcoin supporter. Dorsey has also dabbled in a few other crypto-related fields and even sold his first-ever tweet as a non-fungible token (NFT) in 2021.
Former boxer Mike Tyson is also a big Bitcoin backer and has himself invested in the currency. Tyson has also launched a wallet with Bitcoin Direct alongside Bitcoin ATMs.
Additionally, many within the music scene have backed the success of Bitcoin. For example, the rapper Logic invested in the currency just before it began rising again in 2020. Meanwhile, Snoop Dogg has accepted Bitcoin as a payment method for some of his albums in the past.
Famous Uses of Bitcoin
In its 12-year-long existence, Bitcoin has had several uses – both for individuals and within overarching infrastructures.
One of the most common uses of this cryptocurrency is for trading. Many individuals benefitted from getting in early before Bitcoin’s first big boom, and others continue to capitalize on its gains even having just invested more recently. A common misconception is that you need to buy a whole Bitcoin to start trading, however, this is not true as you can buy parts of a single Bitcoin.
In addition to trading, many people around the world regularly use Bitcoin to pay for goods online. Some gambling websites have even dedicated their services to cryptocurrency users, and you can book hotels and more with the cryptocurrency.
Bitcoin has also been crucial for businesses. When investing in startups, for example, some individuals choose to use this cryptocurrency instead of fiat currencies. In some cases, you’ll see initial coin offerings (ICOs) booming in popularity which is where companies can raise capital for the projects using cryptocurrencies to get their ventures underway.
How does Bitcoin work?
At face value, Bitcoin isn’t different from a fiat currency. After all, you use it as a way to exchange value. But if you look a little deeper, things are somewhat different.
Compared to fiat currencies, no physical version of Bitcoin exists. The currency is built on the blockchain, which enables borderless and decentralized payments.
When Bitcoin first came onto the scene, online payments weren’t as widespread as they are today. Often they were expensive and transactions took a lot of time to process. Bitcoin aims to help people send money on the internet quickly and without restrictions that a centralized bank might impose. Besides quicker transaction times, users can benefit from not needing to pay exchange fees.
If you’re interested in learning more about Bitcoin, and you want to find communities of like-minded people, consider checking out these forums:
Ways to buy Bitcoin
When buying Bitcoin, you don’t need to worry about having limited options. Nowadays, you can buy this cryptocurrency both online and offline – so there is no wrong answer. Just choose whichever option is right for you.
Below are the most common ways to buy Bitcoin. We’ve broken them down into bullet points, so they’re easier to digest:
Cryptocurrency Exchanges: Cryptocurrency exchanges are the easiest way to buy Bitcoin. Exchanges are centralized platforms, and to buy a coin you simply need to put in a buying order. Rates and fees will vary depending on your choice.
P2P Marketplaces: P2P marketplaces work in a similar way to cryptocurrency exchanges. The primary difference is that they’re not centralized – you buy directly from the user. If you’ve got a dispute, you’ll need to go through the platform provider – but they’re relatively hands-off apart from that.
ATMs: Depending on where you live, buying Bitcoin from an ATM is a potentially viable option. You can use either your bank card or physical cash to make the purchase.
How to invest in Bitcoin
There is no shortage of ways to invest in Bitcoin. Each of them works a little differently, so before you make a decision it’s worth thinking about both your investing strategy and the choice that best fits you.
Below is a list of different ways you can invest in Bitcoin.
Bitcoin Brokers: You can buy Bitcoins directly from several cryptocurrency brokers and trade them on the market. If you’re looking at short-term investment strategies, this might be a smart place to begin.
Cryptocurrency Exchanges: Besides buying Bitcoin outright, you can also trade on cryptocurrency exchanges. In this sense, platforms of this kind don’t differ greatly from brokers -- you buy and sell depending on your market speculation.
Bitcoin ETFs: You can also trade using Bitcoin ETFs, which could either result in you trading shares or not directly owning the coins.
Bitcoin Index Funds: Right now, no Bitcoin-specific index fund exists – but you can use cryptocurrency-dedicated ones. Index funds are a good idea if you’re looking to invest long-term.
Bitcoin Mutual Funds: You can also use Bitcoin mutual funds to invest. If you’re not interested in trading via a broker, you might find this a less risky alternative.
Bitcoin Trusts: In some cases, using a trust to buy Bitcoin shares might be more effective. The most popular Bitcoin trust is the Grayscale Trust.
Bitcoin Debit Cards: Several Bitcoin debit cards exist and allow you to use the currency in several places. Once you’ve got money on it, it’ll work no different from a standard bank card – only you use cryptocurrency instead of fiat currencies.
Bitcoin Apps: Several Bitcoin apps exist, ranging from exchanges and brokers to trackers and more.
Bitcoin Wallets: Once you’ve bought Bitcoins, keeping them in an exchange is a risky game – especially if a security breach occurs. Don’t worry, though, because plenty of wallets exist to mitigate this risk.
Is it safe to invest in Bitcoin right now?
Cryptocurrency markets are volatile, and buying any coin carries risks. Rates can fluctuate dramatically, meaning that the value of your coin could drop in little time.
Bitcoin has enjoyed significant growth in 2020 and 2021 and is the undisputed big dog in the cryptocurrency space. It’ll be around for a while, but there’s no guarantee that a crash won’t happen again.
Considering its price right now and its downward trend towards the end of September 2021, it’s worth monitoring for a little while before making an investment.