Why Bitcoin Is Still A Smart Investment Move

Bitcoin has been described as a risky but good investment, with some experts predicting its price could reach $250,000. The cryptocurrency has had a good track record, with a return on investment of 100 million percent over the last decade. However, it's important to remember that the crypto market is largely unregulated, and the value of Bitcoin can be extremely volatile.

Bitcoin wallets

Once you've decided to invest in Bitcoin, you'll need to choose a Bitcoin wallet to store your cryptocurrency. There are two main types of Bitcoin wallets: hot wallets and cold wallets.

Hot wallets are connected to the internet and are often free to use. They are typically considered less secure than cold wallets, as they are more vulnerable to hackers. However, they make it relatively easy to carry out transactions using crypto. Examples of hot wallets include the Trust Wallet, Crypto.com DeFi Wallet, and Coinbase Wallet.

Cold wallets, on the other hand, are not connected to the internet and are considered more secure. They tend to cost money as you have to buy a piece of hardware to store your crypto. Examples of cold wallets include Ledger and Trezor.

When choosing a Bitcoin wallet, it's important to consider factors such as security, ease of use, transaction fees, and the number of digital assets supported. Additionally, make sure to use strong passwords and two-factor authentication to protect your wallet and its contents.

Cryptocurrency exchanges

Some popular centralized exchanges include:

• Coinbase: the largest exchange by trading volume in the United States, with customers in over 190 countries.
• Binance: the exchange with the highest trade volumes, registering more than $36 billion in trades by 2021.
• Gemini: founded by the Winklevoss twins in 2014, it has generated more than $175 million in trading volume.
• Kraken: one of the largest exchanges in the US, with very low fees.
• Crypto.com: admitted to a $35 million hack in January 2022.

Decentralized exchanges offer transparent transactions and fees, as well as direct peer-to-peer exchange of cryptocurrency. However, they may sound scarier as they are unregulated.

When choosing a cryptocurrency exchange, it is important to consider security, fees, and the cryptocurrencies offered. It is also crucial to understand how your cryptocurrency will be stored and whether you can take custody of it by transferring it to your digital wallet.

Traditional stockbrokers

When choosing a traditional stockbroker to invest in Bitcoin, it is important to consider the fees charged for trading cryptocurrencies. For example, Robinhood does not charge any fees for Bitcoin trades, while other brokers may charge a spread or commission. It is also worth noting that some brokers may offer a limited number of cryptocurrencies to trade, so it is essential to ensure that the broker you choose offers the cryptocurrencies you are interested in.

In addition to the fees and the range of cryptocurrencies offered, it is crucial to consider the security measures and regulatory compliance of the traditional stockbroker. As the Bitcoin and cryptocurrency market is prone to scams and theft, it is essential to choose a broker that is properly licensed and regulated, such as being licensed as a Money Service Business (MSB) with FinCEN.

Another factor to consider is the user-friendliness and functionality of the broker's website and trading platform. A good platform will provide the necessary trading tools and resources to make informed investment decisions. It is also beneficial to choose a broker with a mobile app to enable trading on the go.

Overall, while traditional stockbrokers offer a more limited range of cryptocurrencies compared to dedicated cryptocurrency exchanges, they can still be a viable option for those looking to invest in Bitcoin. It is important to do your research and compare the different brokers to find the one that best suits your needs and investment strategy.

Bitcoin exchange-traded funds (ETFs)

ETFs are a type of exchange-traded product (ETP) that holds assets and issues securities as shares of the fund, which trade on an exchange. Bitcoin futures ETFs hold Bitcoin futures contracts and sell shares of the fund to investors. The shares are then traded on a mainstream exchange.

The first Bitcoin-linked ETF was the ProShares Bitcoin Strategy ETF (BITO), approved by the SEC in October 2021 and listed on the New York Stock Exchange. This ETF mainly uses futures contracts. Other examples of Bitcoin futures ETFs include the Valkyrie Bitcoin and Ether Strategy ETF (BTF) and the VanEck Bitcoin Strategy ETF (XBTF).

In January 2024, the SEC approved the first 11 spot Bitcoin ETFs, which hold Bitcoin as opposed to futures. These spot ETFs began trading in January 2024 and include the Grayscale Bitcoin Spot ETF.

Bitcoin ETFs provide a more accessible way for investors to gain exposure to Bitcoin's price moves without the technical challenges and security concerns associated with managing a cryptocurrency wallet. They also offer regulatory oversight, which provides transparency and protects investors.

However, it is important to note that investing in Bitcoin ETFs carries risks, including the volatility of Bitcoin prices, regulatory uncertainty, and security risks. Additionally, Bitcoin ETFs may have higher fees and expenses compared to traditional ETFs.

Peer-to-peer money transfer apps

There are several peer-to-peer money transfer apps that allow users to purchase Bitcoin. Here is some information about some of the most popular ones:

Cash App

The Cash App by Square allows users to send, receive, save, and invest money. It also lets users buy and sell Bitcoin and stocks. The app is free to use and offers an optional debit card. However, there is a 3% fee for sending money using a credit card and a 1.5% fee for instant deposits.

Venmo

Owned by PayPal, Venmo is one of the most popular P2P services in the world. It is widely accepted by local and international merchants and offers high transfer limits. While some transfers can be received instantly, transfers from Venmo to a bank account can take up to five business days. There is a 3% fee for sending money via credit card and a fee for instant cash-out transfers.

PayPal

PayPal is a widely used payment service that runs the gamut of personal money transfers, online purchases, and e-commerce. It offers P2P money transfers for registered users, who can send up to $60,000 in a single transaction. While PayPal has high transfer limits, there are multiple fees for different types of transactions. For example, there is a 2.9% transaction fee for sending money using a debit or credit card, and a 1.75% fee for cashing out to a bank account.

Zelle

Zelle is a service offered by most major banks in the U.S. that allows users to send money to other Zelle users through their bank account or the Zelle app. Money transfers to other enrolled Zelle users tend to happen within a matter of minutes. Zelle is compatible with many banks and credit unions and does not charge any fees for sending or receiving money. However, it does not support credit cards or international bank accounts.

Meta Pay

Meta Pay, previously known as Facebook Pay, is a service that allows users to send, request, and receive money through Facebook Messenger and, in some cases, WhatsApp. It is a convenient option for people who use Messenger or WhatsApp, as transfers happen instantly. However, there are relatively low transaction limits, and it does not support credit card payments or international transfers for U.S. residents.

Apple Cash

Apple Cash allows Apple device users to send, receive, and request money through the Messages or Wallet apps. It is a convenient option for Apple users, as it is built into the iPhone as part of Apple Wallet. Apple Cash offers high transfer limits and instant, free transfers to other Apple Cash users. However, it does not support credit card transfers or international transfers.

Frequently asked questions