The Increasing popularity and acceptance of Bitcoin has turned it into a viable investment option. Many enthusiasts of this cryptocurrency will tell you that the coin will become the future of money. We can’t fault them for saying that given what has been happening in the industry in recent years. For now, Bitcoin is the number one cryptocurrency and not about to relinquish that position soon. There’ve been other crypto coins after BTC, but still, they are yet to equal it in any ramification.
We’ve been following Bitcoin developments for some time now, and it’s evident that many hot shots in several industries have adopted it as a means of payment. Also, many investors are widening their portfolio to accommodate investments in Bitcoin without minding the market condition. Nowadays, there’s an increasing number of options for newbie investors to explore in the crypto market.
However, if you are planning to invest in Bitcoin, bear in mind that the Bitcoin price is volatile. It can offer great returns if you invest smartly, but you may also lose all if the market moves negatively. Every investment has risks, and Bitcoin is not an exception. We can only advice you to research thoroughly and invest smartly. Better still, start gradually and grow from there.
In this article, we’re going to discuss some of the options available for you to invest in Bitcoin. After reading, choose the best for you and join the world of digital currencies. But before we explore these options, let’s show you the first steps you must take if you’re a new crypto investor.
How to Start Investing In Bitcoin
1. BTC Wallet
You can’t start the process without a wallet. So, if this is your first time, create the wallet. This wallet is your digital account, which enables you to buy, sell, or store Bitcoin as long as you want. Many reputable and trustworthy sites are available online to create a Bitcoin Wallet. We can recommend some like Blockchain.info, Coinbase.com, etc. But look for others as well and compare then create your wallet.
2. Account Linking
Once you’ve created the wallet, the next step is to link your real-world account to the BTC wallet. The process requires your bank account details such as full name, routing number, and account number. Sometimes, there may be a need for your phone number depending on the prevailing standards. Many newcomers are often reluctant to release their details, but you can rest assured that you’re not at any risk. Many of these reputable sites use hardcore security systems and encryption to protect their users.
3. Purchase BTC
After the second step, you are ready to grab some coins. All it takes is for the service provider to verify your account and just like that, you are set to add Bitcoin to your digital wallet. When you log into your Bitcoin Wallet, you’ll see the “Buy Bitcoin” option. Click it and follow the process to buy Bitcoin from the money in your account. But don’t forget that the price fluctuates all the time. So, buy when it’s low.
Bitcoin Investment Options
So, you’ve created your wallet and purchased your first set of BTC now what next? It’s time to start making money from your investments. There are many ways to invest and make profits when it comes to Bitcoin. As we discuss them in full details, you’ll decide on which one to adopt in your investment.
1. Bitcoin Holding
This is one of the ways to invest in Bitcoin and hope to make good returns. Before considering this option, ensure that the site you used for the Bitcoin wallet is reliable. All you need to do here is to buy as many coins as you can afford and hold in the digital wallet for some time. You have to wait for the price to rise before you sell it off if you want.
Nowadays, many people prefer to store their money in crypto. You can join them and wait for the Bitcoin value to increase. Once it does, sell and recoup your investments.
However, there’re risks to this option as well. Given the volatile nature of the crypto market, you may have to wait a little while before you can resell your Bitcoin at a better price. So, if you’re interested in a mid-term investment, buy and hold.
Now you understand why the site must be secure. You don’t want to lose your hard-earned cash to cyber thieves. So, research the site thoroughly before operating on it.
2. Bitcoin Mining
Here’s another way to invest successfully in Bitcoin. In the early days, mining BTC was very easy. People used their desktops and laptops to mine at lower values. These miners made lots of money, but nowadays, mining Bitcoin is no longer that easy. There’s a whole new industry now for it, and big shots like BTC.com and F2Pool have taken over the market.
But there’s still hope for you if you’ll love to join the miner’s race. You can become an ASIC miner. To utilize this option, you have to host an ASIC rig which requires hardware, electricity, and operating time. Before you can succeed, you’ll spend huge amounts of money to acquire all the tools. However, there’s no guarantee that you’ll make it big because, sometimes, depreciation of BTC spot prices diminishes the profit margins. But don’t bother because, other times, you can earn big as an independent miner too.
One good news is that there are other options to consider. You can use online tutorials to learn how to get affordable software and hardware for mining. Also, you could purchase an ASIC mining contract from companies who offer cloud Bitcoin mining services. These third-party miners operate mining warehouses where you can invest in mining rigs and earn.
So, instead of giving up for lack of money, you can leverage these companies and still make money from Bitcoin mining.
3. Cold Storage Bitcoin Wallets
This option is for the long haul. You can safeguard your Bitcoin in a cold storage hardware wallet using brands such as Ledger and Trezor. But we still advise you to research further before committing your earnings. These two also allow you to store other cryptocurrencies on your wallet. A further step is to tighten the security of your Bitcoin by using Casa. The service allows you to sign in from many physical devices to unlock the BTC you stored. At least, crypto thieves will not have it easy if they tamper with your Bitcoin.
Another way to store Bitcoins as a long term option is by using full Bitcoin clients. However, it’s not as secure and reliable as cold storage. As for the short term investors, you can use the custodial and hot wallets to store your coin. These wallets are good for sending and receiving BTC whenever you want. But you can’t store in them for security reasons.
4. Trading on Bitcoin Exchange
How about adding a little spice by becoming a Bitcoin trader. Many people visit exchanges daily to trade and acquire BTC. You can find more than one hundred exchanges all over the world today. These exchanges operate in different styles and offer different services. For instance, there’re decentralized exchanges, fiat-to-crypto on-ramps, P2P marketplaces, centralized exchanges, and crypto-to-crypto exchanges. But before you choose any type of exchange, research further to learn of its pros and cons, afterward, you can know the risks you face for trading on the platform.
One advice we have for you is to trade on popular exchanges and avoid platforms that engage in what we call “wash trading”. This wash trading is a manipulative strategy which some exchanges practice to deceive investors. They’ll buy and sell cryptocurrencies to inflate trade volumes and move the market to their advantage.
Bitcoin trading involves buying low and selling high. It may be confusing or challenging if you’re a first-timer because it requires knowledge and practice. But, it’s rewarding and also very risky. Already, you are aware of the volatility that defines the crypto market. So, you have to tread lightly when engaging in Bitcoin trading.
Meanwhile, two of the options available for you are arbitrage and day trading.
Arbitrage trading is a process of buying lower in one exchange and selling in another exchange where the price is higher. According to how Investopedia defines it, you’ll be buying and selling Bitcoin simultaneously on many exchanges. This method is tasking, but it pays also. All you need is to monitor the price movement of the coin on different exchanges in many countries. Buy from the platforms where the price is low and sell on the platform where the price is high immediately. Interestingly, you can make more than “hodlers” of Bitcoin. One way to simplify this process is by using arbitrage bots. But you need some technical knowledge here.
• Day Trading
Day trading on the other hand is the process of monitoring the price movement of Bitcoin and trading according to the tide. The returns here may be small unless you’re doing it with big bucks. One important thing to note here is that you can earn a very big or lose big time too. Bitcoin price is never easily predictable. It can rise or fall to the lows in one single minute. So, if you want to join the traders, study the market, understand relevant economic rules and develop strategies on how to gain more from your day trading.
5. Bitcoin Futures
This is another way to invest in Bitcoin successfully. You can delve deeper into the Bitcoin futures market and make some returns while reducing risks. A futures contract is an agreement to sell or buy Bitcoin at an agreed date and a particular price in the future. Traders use a futures contract to hedge investments or lock in their profit, especially in an unpredictable market environment. One advantage of investing in futures contracts is that you can use it to avoid the effects of a fall in Bitcoin price. Another benefit is that investing in futures can make you speculate the direction which the market is likely to move. Once you do, you can decide to take a short position or long position in your futures investment.
6. Binary Trading
Binary trading is not a new thing, but what’s new is that it has entered the crypto space. You can now trade on Bitcoin as well and no longer on currencies alone. The process here is simple, invest in an option and earn a pay-out depending on how the price moves. Many brokers have made Binary Options and CFDs available to traders on their platforms. So, you can also trade on these instruments and make some money too.
One good thing about this method is that you’re not required to purchase Bitcoin but merely to trade on the price differences. You may lose big time, but you can also make impressive returns at the end of every day if you understand the market better.
7. Bitcoin ETFs
The crypto community is still waiting for the SEC’s final decision on the ETFs proposals. But, the expectation is high that there’ll be a positive outcome. So, let’s mention that this is another Bitcoin investment strategy without much interaction with the currency. As an investor, you can speculate on the price without owning the digital asset. These ETFs will enable you to use Bitcoin without buying it from a cryptocurrency exchange. Instead, you can invest in the platform of a regulated crypto exchange. So, consider this option as soon as the ETF proposals become a reality.
Risks of Bitcoin Investment
Bitcoin investments can be lucrative, but the risks are also high. The best approach to mitigate the risks and gain more rewards is to understand what they are and what to do. So, here’re some risks to study:
Many exchanges operate illegally and dubiously online. If you are starting in Bitcoin investment, do thorough research before entrusting your money to any broker. Many exchanges are fake and fraudulent. They can steal from unsuspecting investors without batting an eyelid. So, be careful by using popular and regulated exchanges only.
• Market Volatility
You already know that volatility is a prevailing condition that defines the crypto market. Bitcoin value can fluctuate terribly when you don’t expect. If you buy high when the bulls are reigning, you may lose a lot if a bearish trend suddenly occurs. So, be vigilant and study the market movement before investing.
Did you know that crypto exchanges get hacked? Many investors have lost millions in Bitcoin after such attacks. So, before you invest, research the options available for your BTC wallet. Target reliability in every exchange and secure your investments. Don’t forget, crypto is based on technology, and as such, cyber thieves prowl every day to exploit vulnerabilities. Therefore, operate smartly and carefully.
• Lack Of Regulation
One alarming aspect of a crypto investment is the lack of regulation in the market. Since there’s no stance for the government yet, some big players in the market make selfish decisions that may be detrimental to others. So, as a new operator, bear in mind that things might change for the better or worse depending on what happens in the future.
• High Dependence on Technology
Without the blockchain technology, Bitcoin will not exist. The risk here is that if the system shuts down for one second, investors will lose everything in that moment. So, bear in mind that you’ve no physical item to show for your investments. Everything is digital and can also varnish digitally in one second. Therefore, diversify your portfolio instead of putting all your eggs in one basket.
Bitcoin has come a very long way from its humble origins, given the increasing adoption and interests of both individual and institutional investors. With such a position as the number one cryptocurrency, many investment opportunities have continued to open. There’re no denying that multiple risks for investors surround the digital currency. However, it can be a profitable option for storing and transferring value besides our traditional financial systems.
Therefore, if you are capable of navigating the volatile market and making high returns, embrace the BTC investment opportunity. Do your research extensively and evaluate every option prudently before you buy Bitcoin. As for whether it’s worth it, we believe that you can be successful by playing safe and smart.
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