How to Invest In Bitcoin In 2024

4 Ways to Invest in Bitcoin

Whether you are looking to invest in Bitcoin for the long-term or for short-term monetary gains, you need to be aware of all the methods that you can use to invest in Bitcoin, other cryptocurrencies, and other digital assets.

1. Buy Through Bitcoin Exchanges

If you want to invest in Bitcoin for the long-term, then the ideal way for buying and selling Bitcoin is through a crypto exchange. These are digital platforms that sell you BTC coins directly so you can own, hold, and sell them anytime you want. That being said, it has to be kept in mind that for holding or storing Bitcoin for months, you will need a compatible Bitcoin wallet. There are two different types of digital wallets that you can get:

• Hardware Wallets – These are physical devices like flash drives and contain hardware that disconnects them completely from the outer world. It means that they cannot be accessed by any network and your private key is offline. That’s why hardware or cold wallets are the safest way to store Bitcoin, cryptocurrencies amd other digital assets. Trezor and Ledger Nano S are two of the top Bitcoin wallets.
• Software Wallets – These come in the form of websites, web apps, and desktop applications. They offer less security as compared to hardware wallets but are more convenient to use and make your Bitcoin tokens more accessible for trading. Some leading software wallets for storing Bitcoin include Coinbase, Atomic Wallet, Edge, and Exodus.

2. Buy Fractions of Bitcoin through an Exchange

Many people who are new to investing in Bitcoin and other cryptocurrencies often get discouraged by its high price. For instance, at the time of writing, a single BTC token is worth more than $34,000, which means that there won’t be many people who afford to invest in an entire Bitcoin token. However, you don’t need to be discouraged at all!

With a digital currency like Bitcoin, you don’t actually need to buy the whole unit of the digital asset or coin. For example, the smallest unit of Bitcoin is called a ‘Satoshi’, which is equal to 0.00000001 BTC. With the current price of Bitcoin and taking high price volatility into consideration, that’s worth less than a penny. This means that you can invest in smaller quantities that you can afford. All you need to do is:

• Select your favorite Bitcoin exchange from the ones we’ve recommended.
• Sign up on the exchange and go through the registration process.
• Invest in Bitcoin according to your financial requirements.

It is important to keep in mind that investing in Bitcoin incurs a network fee since the Bitcoin transaction has to be processed. That’s why you should buy enough BTC that cover your expenses; otherwise, you will end up paying more in terms of fees than your profit.

If you don’t want to deal with the network fee, then there are other methods to invest in Bitcoin which are listed below.

3. Trade Bitcoin through a Broker

Cryptocurrency brokers are also digital platforms, but unlike Bitcoin exchanges, they do not sell you Bitcoin or other cryptocurrencies directly. Instead, they let you invest in the token of your choice by making predictions about their pricing. This is done through a wide range of financial instruments, the most popular of which is Contract for Difference or CFD. Other instruments include options, futures, and ETFs.

Bitcoin brokers are a better option for those investors who don’t want to hold BTC tokens for a long time and just want to cash in on the price volatility that is not offered by fiat currencies (forex). Another positive of cryptocurrency investing through a broker is that you don’t need to get a Bitcoin wallet and manage your BTC tokens.

4. Invest in a Bitcoin ETF

An ETF or Exchange Traded Fund is a financial instrument that bundles in a variety of stocks and other digital assets to minimize trading risk. ETFs are created and managed by deliberately selecting those assets that are likely to perform well in the future based on their historical performance, market indicators, and other factors.

This ensures that even if one or a couple of assets don’t see any increase in their prices, the loss gets offset by the performance of other assets. The idea of an ETF is to ensure that your investment has a very high probability of leading to a net positive i.e. profit.

If you want to invest in Bitcoin but also want to manage your risk, investing in a Bitcoin ETF is a smart idea. You can do so through the traditional stock market as well as many digital platforms such as brokerage firms that offer a Bitcoin ETF. You can also invest in an ETF that is comprised entirely of cryptocurrencies if you don’t want diversification in the asset class.

What to Consider Before Investing in Bitcoin

Before you invest in Bitcoin, ensure that you are aware of all the major factors that can affect the price and investment decisions. Some of the key considerations include the following:

Fees for Investing in Bitcoin

The first factor that you should keep in mind is your transactional costs which include a variety of fees and charges. If you are using a bitcoin exchange, it means that you are directly buying Bitcoin tokens which will incur a network fee.

For instance, at the time of writing, Bitcoin transaction fees are close to $7.00 per transaction. This can be impacted by the demand and price of the BTC token. Apart from that, the exchange may require you to pay a fee for their services, including deposit and withdrawal charges, wallet fees, and inactivity charges.

On the other hand, if you are investing through a broker or purchasing a financial instrument to bet on the BTC price, you won’t have to pay the network fee. However, you will need to cover the cost of commission, transaction charges, deposit and withdrawal fees, wallet fees, and an inactivity fee.

Also, keep in mind that the bank or your payment processor may also deduct their service charges. This is why it is important to come up with a cryptocurrency investment strategy that covers all of your costs while providing a healthy profit margin.

Risks of Investing in Bitcoin

Just like any other asset class, Bitcoin also comes with its own set of risks. Since it is a relatively new digital asset, you need to ensure that you are managing your risk in an effective manner. Some of the major risks you need to consider include:

• Market and price volatility can change overnight. You can overcome it by hedging your investment in Bitcoin through ETFs or investing in different tokens that show promise.
• Lack of regulatory oversight can lead to financial loss or even fraud. To overcome it, only rely on Bitcoin exchanges or brokers that adhere to Anti-Money Laundering (AML) and Know Your Customer (KYC) regulations to safeguard your data and funds.
• Cybersecurity challenges, such as hacking and data breaches. You can avoid these by ensuring that your BTC tokens are stored in a safe and reputable Bitcoin wallet such as Ledger Nano S or Coinbase.

Payment Methods to Invest in Bitcoin

Another aspect of investing in Bitcoin is choosing the right payment method since it can make or break your investment experience. The most popular payment methods used to invest in Bitcoin include:

• Invest in Bitcoin with Cash – If you want to invest in Bitcoin with cash, find the nearest Bitcoin ATM or teller service. You can rely on CoinATMRadar.com to find the nearest Bitcoin ATM to invest in BTC.
• Invest in Bitcoin with Credit / Debit Card – Another option is to use your debit or credit card to invest in Bitcoin as all crypto brokers and Bitcoin exchanges support the payment method. You can make an instant payment, but it can also be relatively expensive.
• Invest in Bitcoin with Bank Transfer – For buying Bitcoin through bank transfer, you first need to verify if your selected exchange or broker supports the payment method in your region. While bank transfers are slow, it is usually the most affordable payment option and helps if you want to withdraw to your bank account.
• Invest in Bitcoin with Cryptocurrency – If you own any other altcoins such as ETH or XRP, you can use them to invest in Bitcoin using an exchange. Keep in mind that there is an exchange fee involved, which can be volatile depending on the demand at that moment.

Why Invest in Bitcoin?

You are the best person to make the decision whether you should invest or not. When it comes to the digital markets, currently, Bitcoin has everything going for it – from price and technological success to demand and internet hype. That being said, some of the major reasons to invest in Bitcoin include:

• The leading cryptocurrency with more than 60% of the share of the crypto market.
• Most likely to stay around with sustainable success in the next ten years
• Immense faith from technology and cryptocurrency opinion leaders, analysts, influencers, and celebrities.
• Most mainstream and well-known cryptocurrency in the world. n
• Volatile enough for day trading and short-selling along with the long-term potential for those who want to ‘hodl’.

Benefits of Investing in Bitcoin

• It’s a deflationary currency – This means it’s immune to inflation, which causes currencies to lose value, thereby reducing their purchasing power. Retirees are an example of individuals who suffer from inflation.
• Enjoy low transaction fees – Fees make a huge difference, especially when you have to make many transactions. With an average of around $0.18 per transaction, BTC has some of the lowest fees of any currency.
• Easy to use worldwide – Bitcoin isn’t mainstream yet, but has seen increased adoption around the globe with lots of merchants accepting it as a payment option. This makes it more appealing than the local fiat option that you may struggle to spend outside your jurisdiction.
• Accessibility – Bitcoin exists as a code on a computer. This makes it easily accessible to anyone who has a device that can connect to the internet.
• Autonomy – You have absolute control over your finances. You don’t have to deal with a central authority like the bank or government.
• Anonymity – There is a level of anonymity with Bitcoin. It’s possible to spend the currency, and you won’t be easily traced.
• Peer to Peer focus – One reason Bitcoin transactions are so cheap is the lack of intermediaries. You get to deal directly with the other party.
• Scarcity – This is the single reason why the price of BTC is always rising. Only 21 million coins will ever exist, and at the time of writing, we have about 18 million in circulation. The greater the scarcity, coupled with higher demand, will continue to push the prices up, which is excellent for those invested in the asset.

Disadvantages of Investing in Bitcoin

• High volatility – Due to high speculation of investors betting whether the price will rise or fall, BTC is highly volatile, making it unusable as a stable store of value. Even though it’s important to note, this makes it profitable for speculative investors.
• Beware of scams – The crypto market has seen plenty of crypto scams that have seen investors lose millions of dollars. If you are not very careful, you may be caught up in the wrong type of investment.
• Tainted reputation due to association with the black market – Thanks to its anonymous nature, Bitcoin has been a favorite among bad actors, damaging the reputation of the asset.
• A superior currency might replace it – Even though Bitcoin is highly popular being the first crypto asset, it’s based on a first-generation blockchain, limiting its capabilities. Today there are plenty of superior designs that could potentially replace Bitcoin in the future.
• Mining effects on the environment – Bitcoins are created through mining, an energy-intensive endeavor.

Strategies For Investing in Bitcoin

Buy and Hold

Buy and Hold involves buying a lump sum of Bitcoin and holding it for as long as possible. The strategy is based on Bitcoin’s historical performance and the assumption that it will continue to appreciate in price over the years.

If you hold it long enough, the price should appreciate beyond what you bought it for; this strategy doesn’t focus much on the current market price. This strategy suits investors who believe in Bitcin’s long-term prospects and don’t mind waiting years.

Dollar Cost Average

Dollar-cost averaging involves breaking your total investible amount into portions and using Bitcoin at set intervals regardless of price. This strategy aims to spread the cost of buying Bitcoin across various price points to incur less risk, especially if prices are trending downward.

Buying Bitcoin Companies

Buying Bitcoin companies is an excellent way to gain indirect exposure to the crypto. These companies could be institutional miners or holding Bitcoin on their balance sheets.

For example, MicroStrategy is a Business Intelligence firm with 174,530 Bitcoin worth $5.3 billion on its balance sheet. With that much exposure, an investment in MicroStrategy (i.e., holding their stock) would grant indirect exposure to Bitcoin.

Other Ways You Can Invest in Bitcoin

There are a few other ways you can get a hold of BTC. You can opt for face-to-face transactions where you meet up with the seller. Ensure you meet in a safe environment to avoid getting conned. You can also opt to use a Bitcoin ATM if there is one near you.

This is a safe and fast process that doesn’t require one to disclose their personal details, and it’s fast. Ensure you check for ATMs that are listed on Bitcoin ATM Radar to avoid getting scammed. Another popular option is using PayPal to buy Bitcoin, although this facility is not yet available worldwide.

You have to sign up and fund the account. Recently the payment giant announced it would have to allow users to purchase, sell, and hold Bitcoin. Another way of investing in Bitcoin is through leverage, a process we will go through below.

Trade Bitcoin on Leverage

Leverage trading helps the investor increase their exposure in the Bitcoin market. Your capital is multiplied by a given percentage, and this helps you profit more. You have to be careful since the bigger the leverage you opt to use, the greater the risk of getting liquidated from small price movements.

Leverage trading is a great way to speculate short term price movements and profit quickly. It’s only possible through an online broker such as eToro, Skilling, Plus500, and many more.

Invest in a Bitcoin ETF

A Bitcoin ETF offers a simple and legally compliant way to invest in the top cryptocurrency. It’s an investment vehicle that tracks the price of Bitcoin and trades on the traditional stock market. The value of the ETF rises and falls depending on the price of the underlying asset. Each share of the ETF represents 1/10 of one BTC.

It’s an ideal way to invest for people with little knowledge of the Bitcoin market who would love to avoid the technicality involved, like dealing with Bitcoin addresses, private keys, and Bitcoin wallets.

Mine Bitcoin

Bitcoin mining is the process through which Bitcoins are released on the network. At the start, it was quite easy to participate through the use of GPUs, but as the hash rate went up with more people using the network, so it became more difficult to mine profitably. The dawn of ASICs (Application Specific Integrated Circuits) made competition through the use of a GPU virtually obsolete.

Today mining is only really possible through large Bitcoin mining pools, which you can join to share the profits with other participants. Cloud mining is also an option, where you purchase time on someone’s rig. To make more, you will have to spend more by purchasing a higher hash rate on platforms like Genesis Mining or HashFlare.

Summary of Investing in Bitcoin

If you are looking to invest in Bitcoin, there are multiple effective ways to do so. Every investment method has its own pros and cons, and you need to evaluate your own investment objectives, strategies, accessible capital, and available time to identify the best possible investment method. This will allow you to leverage your time and financial resources in the most effective manner so you can optimize your profit returns.

Don’t forget that there are more cryptocurrencies that you can invest in to create a more diversified portfolio.

UK reader looking for a more specific guide? Check out our article on how to invest in Bitcoin in the UK.