A Beginner's Guide To Investing Bitcoin In Singapore

Bitcoin is a highly volatile and popular cryptocurrency that has seen prices soar to more than US$61,000 per Bitcoin in March 2021, and drop to under US$32,000 per Bitcoin in July 2021. In Singapore, there are several ways to buy and invest in Bitcoin, including through cryptocurrency exchanges, peer-to-peer (P2P) exchanges, Bitcoin derivatives, Bitcoin ATM machines, and buying stocks with exposure to Bitcoin.

Before investing in Bitcoin, it is important to understand the risks associated with cryptocurrencies, such as their high volatility and the lack of regulation in Singapore. Additionally, it is recommended to have a secure crypto wallet to store your Bitcoin.

Using a cryptocurrency exchange

Step 1: Choose a cryptocurrency exchange

When selecting a cryptocurrency exchange, consider factors such as whether they are exempted under MAS' Payment Services Act, the ease and affordability of funding your account, their trading fees, the cryptocurrencies they support, and if they allow you to withdraw your Bitcoin easily. Examples of cryptocurrency exchanges available in Singapore include Gemini, CoinHako, FTX, Coinbase, and Luno.

Step 2: Create an account

Once you've chosen an exchange, the next step is to create an account. This process is typically fast and may even offer perks or promotions for new users.

Step 3: Complete the Know-Your-Customer (KYC) process

The KYC process is a verification process required by most financial services, including centralised cryptocurrency exchanges, to reduce the risk of money laundering. You will need to provide identification documents such as a passport, proof of address, and may be required to submit a biometric check or a selfie with customised instructions.

Step 4: Fund your account

After your account has been verified, you can fund it using the methods provided by your chosen exchange. Common methods include bank transfers and credit card payments, though credit card payments may incur additional fees.

Step 5: Buy Bitcoin

Once your funds are in your account, you can place an order to buy Bitcoin on the exchange. Remember to take into account any trading fees charged by the exchange.

It is important to note that while cryptocurrency exchanges offer a convenient way to buy Bitcoin, there are also security risks associated with storing your Bitcoin on an exchange. Consider using a hardware wallet for added security, especially if you are investing a significant amount.

Using a Peer-to-Peer (P2P) exchange

If you're looking to buy Bitcoin in Singapore, one way to do it is through a Peer-to-Peer (P2P) exchange. This is where you buy Bitcoin directly from another person, rather than purchasing it from the crypto market.

P2P crypto transactions can be done on crypto exchanges such as Binance and Huobi. On these P2P platforms, you can post an offer to buy a specific amount of crypto at a specific price, along with the mode of payment. Once you've made the payment, the seller will release the crypto to you.

It's worth noting that different exchanges have different transaction fees, withdrawal limits, payment modes, and verification processes, so it's important to do your research and choose an exchange that suits your needs. For example, Coinbase claims to have no deposit fees and charges a 1.49% fee for purchases, while Bitcoin ATMs typically charge high fees of around 4.5% per transaction.

Additionally, keep in mind that when using a P2P exchange, you may be required to get your own wallet to store your Bitcoin. Even if it's not required, it's generally recommended for security reasons, preferably a hardware wallet.

Using a Bitcoin ATM

Bitcoin ATMs can be found in several locations across Singapore, including Funan Mall, Plaza Singapura, Paya Lebar Quarter, and The Arcade. While the exact process may vary slightly depending on the ATM, the general steps to follow are:

• Find a Bitcoin ATM near you using an online Bitcoin ATM map or finder tool.
• Go to the ATM and verify your identity, typically by providing your telephone number.
• Feed the required amount of cash into the machine.
• Follow the instructions on the ATM to purchase the desired amount of Bitcoin.
• Provide your digital wallet address to receive the purchased Bitcoin.

It's important to note that the fees for using Bitcoin ATMs can be high, typically ranging from 5% to 10% per purchase, plus additional transaction fees. There may also be minimum and maximum transaction limits imposed. Additionally, while Bitcoin ATMs offer a quick and convenient way to buy Bitcoin, they may not support the purchase of other cryptocurrencies (altcoins).

Buying stocks with exposure to Bitcoin

If you're risk-averse and don't know how to start investing in crypto, you can stick to stocks that have exposure to the cryptocurrency space, or own Bitcoin directly.

One example of such a stock is Coinbase, a cryptocurrency exchange that was listed on the Nasdaq in April 2022. The price of Coinbase stocks opened at US$381 but has since fallen to around US$241 per share.

Other options for investing in stocks with exposure to Bitcoin include Silvergate Capital, MicroStrategy, Riot Blockchain, PayPal, Square, and Tesla. These companies all have some degree of exposure to cryptocurrencies.

Additionally, keep an eye out for potential crypto ETFs that may be introduced in the future, providing a diversified cryptocurrency fund to invest in.

• Brokerage Account: You'll need a brokerage account that offers access to the desired stocks. Not all brokerages offer the same range of stocks, so ensure your chosen platform provides access to the stocks you want.
• Research and Due Diligence: Before investing, conduct thorough research on the companies you're considering. Understand their business model, financial health, and level of exposure to Bitcoin and the crypto space.
• Risk Management: Investing in stocks with Bitcoin exposure still carries risks. The stock market and the crypto market can be volatile, and the performance of these stocks may be influenced by factors beyond just Bitcoin's price movements. Diversify your investments and consider setting stop losses or using risk management tools to limit potential losses.
• Fees and Expenses: Be mindful of any fees and expenses associated with trading stocks. These may include brokerage fees, commissions, or management fees. Compare the costs across different platforms to find the most cost-effective option.
• Long-Term Perspective: Investing in stocks with Bitcoin exposure is typically a long-term strategy. The crypto market is known for its volatility, and short-term price movements can be unpredictable. Focus on the long-term potential and avoid making impulsive decisions based on short-term fluctuations.

Remember, investing in stocks with Bitcoin exposure offers a way to gain indirect exposure to the crypto market while potentially benefiting from the growth of companies operating in the cryptocurrency space. Always conduct your own research, assess your risk tolerance, and consider consulting with a financial advisor before making any investment decisions.

Using a non-custodial wallet

If you're looking to invest in Bitcoin in Singapore, one option is to use a non-custodial wallet. This type of wallet gives you, the user, complete control over your private keys and, therefore, your funds. With a non-custodial wallet, you are responsible for securing and managing your cryptocurrency and ensuring its safety. This means that you will need to have a basic understanding of wallet backup and restoration, as well as the security measures necessary to protect your private keys.

Non-custodial wallets provide users with a seed phrase, which is typically a 12 to 24-word recovery phrase. It's important to store this phrase securely, as it can be used to gain full control of the funds in your wallet. If you lose your private key, the seed phrase can be used to recover your wallet. However, if both your private key and seed phrase are lost, you may lose access to your cryptocurrency forever.

One advantage of using a non-custodial wallet is the increased security it offers. Since you are in control of your private keys, there is less risk of your cryptocurrency being stolen or lost due to a third-party breach. Additionally, non-custodial wallets tend to be free to use, whereas custodial wallets may charge additional fees.

When choosing a non-custodial wallet, you can select from several different types, including browser-based wallets, mobile wallets, and hardware wallets. Browser-based wallets are extensions that allow you to initiate transactions and input your private key. Mobile wallets are downloadable apps, while hardware wallets are physical devices that can be accessed and managed offline, making them the most secure option.

It's important to note that non-custodial wallets may be more difficult to use, especially for beginners, as you are responsible for managing your cryptocurrency and ensuring its security. Additionally, if you lose your private key, you may lose access to your cryptocurrency permanently. Therefore, it's crucial to securely back up your wallet and take the necessary precautions to protect your private keys.

Frequently asked questions