The Ultimate Guide To Bitcoin Investment

Bitcoin is a type of cryptocurrency, a virtual currency secured by blockchain technology. It was created by a programmer or group of programmers using the name Satoshi Nakamoto, and its latest movements have sparked interest in its potential as an investment.

There are several ways to invest in Bitcoin, both directly and indirectly. You can purchase it directly from a cryptocurrency exchange, such as Coinbase, Binance, or Kraken, or through certain broker-dealers. You can also invest in companies with a partial or total focus on Bitcoin, or in cryptocurrency-focused funds.

Before investing, it's important to understand the risks. Bitcoin is a very high-risk and volatile asset, prone to large and fast swings in value. It's also important to note that Bitcoin is not backed by any physical asset, like gold or silver, and there's no central regulator to ensure that its value remains stable.

Cryptocurrency exchanges

Centralized exchanges are managed by a single organization and allow users to convert fiat currency, such as dollars, directly into crypto. These exchanges often require users to follow Know Your Customer (KYC) rules and provide proof of identity. Examples of centralized exchanges include Coinbase, Gemini, and Kraken.

Decentralized exchanges distribute responsibility for facilitating and verifying crypto trades across a network of users. They offer transparent transactions and fees, as well as direct peer-to-peer exchanges. However, they are often less user-friendly and may not support fiat currency deposits. An example of a decentralized exchange is Binance.

When choosing a cryptocurrency exchange, it is important to consider factors such as security, fees, the range of cryptocurrencies offered, and whether you can take custody of your crypto by transferring it to your own digital wallet. It is also crucial to research the legitimacy and security of any exchange before using it.

Traditional stockbrokers

To get started, you will need to open an account with one of these brokers and verify your identity. You will also need to provide bank account information and set up a way to transfer funds.

It is important to note that investing in Bitcoin carries significant risk due to its volatility. Therefore, it is recommended to carefully assess your risk tolerance and investment strategy before purchasing any Bitcoin.

Bitcoin ATMs

• Get a Bitcoin wallet: Before purchasing Bitcoin, you need a place to store it. A Bitcoin wallet is a digital tool that allows users to store, send, and receive Bitcoin securely. You can create a Bitcoin wallet by installing an app, such as the Bitcoin.com Wallet app, on your mobile device or laptop/desktop.
• Find a Bitcoin ATM near you: There are tens of thousands of Bitcoin ATMs globally, mostly in the United States. You can use an online map to locate the nearest Bitcoin ATM.
• Buy Bitcoin from the ATM: Enter the amount you want to purchase. Depending on local regulations and the amount you are purchasing, you may need to verify your identity. Provide your Bitcoin wallet address by using the ATM's camera to scan the QR code of your Bitcoin wallet address displayed in your Bitcoin wallet app. Make the payment using cash, credit card, payment app, or other accepted methods. Receive the Bitcoin in your Bitcoin wallet. This process usually takes a few minutes, and the ATM will provide you with a transaction ID to monitor the status of the purchase.

It is important to note that some Bitcoin ATM providers require users to have an existing account to transact on the machine. Additionally, Bitcoin ATMs typically charge transaction fees, which can vary between different machines and locations. Therefore, it is essential to review the fees and have a plan for where to send the Bitcoin once you have purchased it.

Bitcoin exchange-traded funds

ETFs are highly liquid funds that change price throughout the trading day, much like stocks. Bitcoin ETFs specifically track the price of Bitcoin, either directly by holding the cryptocurrency itself or indirectly through other means, such as investing in Bitcoin futures or Bitcoin mining stocks.

The first Bitcoin-linked ETF was the ProShares Bitcoin Strategy ETF (BITO), which was approved by the Securities and Exchange Commission (SEC) in October 2021 and is listed on the New York Stock Exchange. In January 2024, the SEC approved the first spot Bitcoin ETFs, which hold Bitcoin directly rather than futures contracts.

Some examples of Bitcoin ETFs include:

• ProShares Bitcoin Strategy ETF (BITO)
• Valkyrie Bitcoin and Ether Strategy ETF (BTF)
• VanEck Bitcoin Strategy ETF (XBTF)
• Global X Blockchain & Bitcoin Strategy ETF (BITS)
• Franklin Templeton Digital Holdings Trust (EZBC)
• Bitwise Bitcoin ETF (BITB)
• Invesco Galaxy Bitcoin ETF (BTCO)

It is important to note that investing in Bitcoin and other cryptocurrencies is risky due to the high volatility of these assets.

Peer-to-peer money transfer apps

Some of the most popular P2P payment apps include Zelle, Venmo, Cash App, Apple Pay, and PayPal. These apps are convenient, easy to use, and, in most cases, free. They also allow users to pay without using physical cash and are available for both Android and iOS devices.

However, there are some drawbacks to using P2P payment apps. Transaction durations can vary, and some providers charge transaction or service fees. There is also plenty of room for human error, and P2P transactions are still susceptible to potential fraud and security threats.

When choosing a P2P payment app, consider factors such as transfer speed, ease of use, currency exchange rates, and fees. It is also essential to only use a money transfer app when transacting with people you trust and to create a strong password for your account to keep it safe.

Frequently asked questions