A Small Investment, Big Returns: Bitcoin's $100 Entry Point

Bitcoin is a highly volatile cryptocurrency that has delivered incredible returns for those who invested when it was launched in 2009. While it is possible to invest as little as $100 in Bitcoin, it is important to note that there are associated risks and no guarantees of future performance. With a $100 investment in Bitcoin, you can start building your portfolio and benefit from the high liquidity associated with the digital currency. However, it is crucial to remember that the value of Bitcoin fluctuates, and there is a high risk of losing some or all of your capital.

How much Bitcoin can you buy with $100?

Bitcoin is a cryptocurrency with a volatile value, meaning that its price can fluctuate significantly over time. As such, the amount of Bitcoin you can buy with $100 will vary depending on the current price of Bitcoin.

At the time of writing, the price of Bitcoin is approximately $30,000, according to Android Authority. This means that with $100, you can buy around 0.0033 BTC. However, it's important to note that this value can change rapidly, and you may be able to purchase more or less Bitcoin with the same amount of money depending on the market conditions when you invest.

Additionally, when buying Bitcoin, you may need to consider transaction fees and other charges associated with the purchase, which can eat into the total amount of Bitcoin you're able to acquire. These fees can vary depending on the platform or exchange you use to make your purchase.

Some sources suggest that you can invest in Bitcoin with as little as a few dollars. For example, you can use platforms like Coinbase, eToro, or Robinhood to buy fractions of a Bitcoin, allowing you to build your portfolio over time. These platforms may also offer incentives, such as a limited-time offer from eToro, where you get $10 free when you trade $100 worth of cryptocurrency.

It's worth noting that investing in Bitcoin and other cryptocurrencies is considered a risky endeavour due to the volatility of the market. The value of Bitcoin can change quickly, and there is a high risk of losing some or all of your investment. Therefore, it's essential to carefully consider your risk tolerance and conduct thorough research before deciding to invest.

How do you buy Bitcoin?

There are several ways to buy Bitcoin, each with its own advantages and disadvantages. Here is a step-by-step guide on how to buy Bitcoin:

Choose a Cryptocurrency Exchange:

Select a cryptocurrency exchange platform that offers Bitcoin trading, such as Gemini, Kraken, Coinbase, or Crypto.com. These platforms typically provide a user-friendly interface and a variety of payment options. Compare the fees and consumer protections offered by different exchanges before making your choice.

Create an Account:

Sign up and create an account on your chosen cryptocurrency exchange. You will usually need to provide personal information, including your name, email address, and password. Some exchanges may also require additional verification, such as proof of ID and address.

Connect a Payment Method:

To buy Bitcoin, you need to fund your account. Connect a payment method, such as a bank account, debit card, or credit card. Each exchange will have its own instructions for adding payment methods, so follow the provided steps carefully.

Place a Bitcoin Buy Order:

Once your account is funded, you can place a buy order for Bitcoin. Specify the amount of Bitcoin you want to purchase, choosing between buying a set amount or spending a set amount of money. Review the order details, including the Bitcoin price and any applicable fees, before placing the order.

Store Your Bitcoin in a Digital Wallet:

After purchasing Bitcoin, you need to store it securely. You can use a hot wallet, which is typically provided by the exchange, or opt for a third-party hot wallet provider. Alternatively, consider using a cold wallet, which is a small, encrypted portable device that offers enhanced security for your Bitcoin holdings.

Consider Trading or Holding:

Once you have purchased Bitcoin, you can choose to trade it or hold it as a long-term investment. Trading involves buying and selling frequently, attempting to capitalise on short-term price movements. On the other hand, holding Bitcoin involves keeping it for the long term, believing in its potential for future price appreciation.

Understand the Risks and Investor Protections:

Investing in Bitcoin carries risks due to its volatile nature. There are limited investor protections in the cryptocurrency space, and Bitcoin is not insured by the Securities Investor Protection Corporation. Understand the potential risks before investing, and never invest more than you can afford to lose.

Monitor Your Investment:

Keep track of your Bitcoin investment by regularly checking its price and market movements. Stay informed about news and developments in the cryptocurrency space, as they can impact the value of your investment. Consider setting price alerts to notify you of significant price changes.

Withdraw Your Bitcoin (Optional):

If you wish to withdraw your Bitcoin from the exchange, you can transfer it to your digital wallet. This step may be necessary if you plan to use your Bitcoin for transactions or want to store it in a different wallet for security reasons. Each exchange will have its own withdrawal process, so follow the provided instructions.

Remember, investing in Bitcoin and other cryptocurrencies involves a high level of risk due to market volatility. Always do your research, understand the potential risks and investor protections (or lack thereof), and invest only what you can afford to lose.

Is Bitcoin a good investment?

Bitcoin is a highly volatile cryptocurrency. Its value can increase or decrease by thousands of dollars in a matter of days, and it has a history of boom-and-bust cycles.

For example, if you invested in bitcoin when it was first launched in 2009, your returns could be in the millions or billions, because the initial value of the asset was $0. Say you got into the game when a bitcoin was 10 cents, around October 2010. If you invested $100, you'd have been able to buy about 1,000 bitcoins. At its all-time high in February 2021, those 1,000 bitcoins would've been worth more than $48 million, not accounting for compounding and assuming you bought and held the asset the entire time.

On the other hand, there are also many stories of people losing just as much money by buying and selling at the wrong time. For example, by May 2021, less than three months after reaching new highs, the price of bitcoin had dropped by more than $15,000.

Bitcoin's value is influenced by many factors, including supply and demand, fear and greed, institutional adoption, regulatory changes, and macroeconomic trends.

Some advantages of investing in Bitcoin include:

• It can be used as a store of value and a unit of exchange.
• It is scarce, divisible, acceptable, portable, durable, and uniform.
• It is in demand by investors interested in the possibility of returns.
• It is recognised as a medium of exchange, a store of value, and a unit of account.
• It is highly liquid, making it a great investment vessel if you're looking for short-term profit.

However, there are also several risks and disadvantages to investing in Bitcoin:

• It is extremely volatile, and its value can fluctuate by large amounts in a short space of time.
• It is not backed by any central government authorities, so it is not considered legal tender in many places.
• It is not protected by law, so there is a high risk of losing some or all of your capital.
• It is subject to interference from federal or government authorities, who can track financial transactions.
• It is susceptible to 51% attacks, where a miner or group of miners gain control of more than 50% of the network's mining hash rate.
• It is subject to environmental criticisms due to its energy consumption.
• It is not widely accepted as a form of payment.

Overall, Bitcoin can be a good investment if you are willing to take on a high level of risk and deal with extreme volatility. However, it is important to remember that Bitcoin is not a guaranteed way to make money, and there is always the possibility of losing your entire investment.

What are the risks of investing in Bitcoin?

Investing in Bitcoin and other cryptocurrencies is risky due to the volatility and fluctuating nature of the market. The price of Bitcoin is constantly changing, and there is no guarantee of a return on investment. For example, in November 2018, one bitcoin was worth $6,461.01, but just a year earlier, in December 2017, the price topped $20,000.

Another risk to consider is the lack of regulation in the Bitcoin market. Currently, the market operates without any major regulations, and the government doesn't have a clear stance on cryptocurrency. While this lack of taxation can make Bitcoin enticing as an investment opportunity, it could also lead to problems if it poses competition for government currency.

Additionally, Bitcoin is a technology-reliant investment. It is an online exchange that relies on technology for mining, exchanging, and storing coins in digital wallets. This reliance on technology makes Bitcoin owners more vulnerable to cyber threats, online fraud, and system failures.

Bitcoin is also susceptible to hacking and fraud. Many reports suggest that buyers lose their investments on exchanges and mining losses due to hacking. Exchanges are particularly vulnerable to cyberattacks, and even smart wallets may not be enough to protect your investment.

Furthermore, there is a risk of block withholding, where a mining pool mines a block and hides it from honest miners instead of reporting it to the network. This allows a select few to benefit while others lose out.

Finally, Bitcoin has been referred to as a Ponzi scheme, creating a bubble economy that could burst and render Bitcoin useless. With no regulation, physical collateral, or central authority, investors could lose everything they have invested.

Therefore, while it is possible to invest as little as $100 in Bitcoin, it is important to be aware of the risks involved and approach this investment opportunity with caution.

How do you cash out of Bitcoin?

There are several ways to cash out of Bitcoin. Here is a step-by-step guide on how to do it:

• Use an exchange to sell crypto: One of the easiest ways to cash out your Bitcoin is to use a centralized exchange such as Coinbase, Binance, or Kraken. You can choose which cryptocurrency you want to sell and the amount. After the sale, the funds will be available in your cash balance, and you can transfer them to your bank account.
• Use your broker to sell crypto: If a broker holds your crypto coins, then it is easier to sell through them. For example, if you’re a client of Robinhood or Webull, execute a trade on their platform. After the trade, you’ll have the cash in your account.
• Go with a peer-to-peer trade: You can also sell your cryptocurrency directly to another person through a peer-to-peer online platform or even in person. Binance runs a well-known online peer-to-peer platform called Binance P2P, and another popular option is Paxful.
• Cash out at a Bitcoin ATM: Bitcoin ATMs allow you to get immediate access to cash using your bitcoins. To make a cash withdrawal, the machine provides a QR code to which you send your Bitcoin, and you then receive your cash. However, the commissions on Bitcoin ATM trades can be very high.
• Trade one crypto for another and then cash out: Some exchanges do not allow the conversion or selling of some cryptos to dollars, so you’ll need to take an indirect route. Depending on the exchange, you may need to transfer or convert your cryptocurrency to another popular currency such as Tether, before converting to dollars.

It is important to note that selling your cryptocurrency may create a tax liability, so be sure to account for taxes when deciding to sell.

Frequently asked questions