Bitcoin Company Investment: Where To Put Your Money?

Bitcoin is a well-known cryptocurrency that offers an alternative form of money. It has quickly become a hot investment that is gaining mainstream adoption. The cryptocurrency sector reached a peak market value of $3 trillion in fall 2021. The sudden surge in value and rapid evolution created immense wealth for early crypto investors. As a result, there is huge interest in finding and investing in the next cryptocurrency unicorn.

If you want to join the ranks of Bitcoin investors, you have several options to buy the world's biggest and most popular cryptocurrency. The easiest way for most people to buy Bitcoin is through a brokerage account or cryptocurrency exchange account. Popular places to buy Bitcoin include Coinbase, Robinhood, eToro, FTX, Gemini, and BlockFi, among many others.

However, it is important to note that Bitcoin is a relatively new and risky asset. While it is possible that Bitcoin could double, triple, or even 10x in value over a short period of time, it could also drop to zero.

Choosing a Bitcoin exchange or brokerage

When choosing a Bitcoin exchange or brokerage, it's important to consider several factors to ensure you're making a well-informed decision. Here are some key points to keep in mind:

Reputation and Security

The reputation and security of the exchange are paramount. Look for platforms that have established themselves as trustworthy and secure, with a strong track record of protecting user funds and data. Research their security protocols and whether they have experienced any significant security breaches in the past.

Fees and Payment Methods

Take note of the fees associated with each platform. These can include deposit, transaction, and withdrawal fees. Compare the fee structures across different exchanges to find the most cost-effective option for your needs. Additionally, consider the payment methods they support. Some exchanges allow funding your account via bank transfer or payment apps like PayPal, so choose one that aligns with your preferred payment method.

Cryptocurrency Selection

Different exchanges offer different selections of cryptocurrencies. While you're primarily interested in Bitcoin, you may also want to explore other cryptocurrencies in the future. Check whether the exchange offers a wide range of options, including major cryptocurrencies like Ethereum, Cardano, and Dogecoin.

User Interface and Functionality

The user interface and functionality of the exchange are crucial for a seamless trading experience. Look for platforms that offer an intuitive and user-friendly interface, making it easy to navigate and execute trades. Some exchanges provide advanced trading features and tools that can be beneficial for more experienced traders.

Regulatory Compliance

Ensure that the exchange complies with regulatory requirements, particularly in your country or region. Regulatory compliance helps protect users and adds an extra layer of trust and security. It's also essential to understand the tax implications of buying and selling cryptocurrencies, as these vary across jurisdictions.

Customer Support

Consider the level of customer support provided by the exchange. Look for platforms that offer multiple support channels, such as live chat, email, and phone support. Efficient and responsive customer support can be invaluable, especially if you encounter any issues with your account or transactions.

Withdrawal Options

If you plan to transfer your Bitcoin out of the exchange and into a personal wallet, ensure that the exchange supports this feature. Not all exchanges allow withdrawals, so clarify this before signing up.

Geographic Limitations

Some exchanges have geographic limitations, meaning they may not be available in certain countries or regions. Check that the exchange is accessible and fully functional in your location before committing to it.

Additional Features

Look for exchanges that offer additional features such as crypto savings accounts, staking rewards, or the ability to earn interest on your crypto holdings. These features can provide opportunities to maximize the potential of your investments.

Remember, investing in Bitcoin and other cryptocurrencies carries significant risks. It's essential to do your own research, understand the volatility of the market, and only invest what you can afford to lose.

Opening an account

Opening a Bitcoin account can be as simple as installing an app on your mobile device or laptop. However, it's important to note that there are different types of Bitcoin wallets, and the type you choose will affect the security of your coins. Here's a step-by-step guide to opening a Bitcoin account:

Step 1: Research

Take time to research the different kinds of exchange websites or platforms that support Bitcoin, such as Coinbase, Kraken, or Bitstamp, and what they offer. This will help you determine which one best suits your needs.

Step 2: Registration

Go to the chosen cryptocurrency exchange website and enter your email address and a strong password. You will then receive a verification code in your email inbox.

Step 3: Verification

Exchange platforms usually have Know Your Customer (KYC) and Anti-Money Laundering (AML) protocols in place. This typically involves verifying your address by submitting documents such as proof of ID. The time this takes can vary from a few minutes to several days, depending on the exchange's requirements and the number of verifications they need to complete.

Step 4: Deposition

Once your account is verified, you can start depositing funds immediately. There are various ways to transfer funds, including bank transfers and credit cards. Be sure to check the processing time and fees associated with each method, as these can vary between exchanges.

Step 5: Buying and Selling Crypto

Once you've deposited your funds, you can start buying and selling Bitcoin and other cryptocurrencies.

Choosing a Bitcoin Wallet

As mentioned, there are several types of Bitcoin wallets available, each with its own advantages and disadvantages. Here are some of the most common types:

• Hot Wallets: These store Bitcoin private keys on internet-connected devices, such as mobile phones or laptops. While convenient, they pose a significant security risk if the device is lost or stolen. They are best used for storing small amounts of cryptocurrency.
• Cold Wallets: These store Bitcoin private keys offline, making them highly secure and less susceptible to hacking. Examples include hardware wallets and paper wallets. However, they can be difficult to use while mobile and are not ideal for frequent Bitcoin transactions.
• Mobile Wallets: These are perfect for face-to-face trades and shopping at physical stores. Most use near-field communication (NFC), allowing users to tap their phone on a terminal to initiate a transaction. While convenient, they may be more vulnerable to hacking than cold wallets. Examples include CryptoWallet and Trust Wallet.
• Software Wallets: These are mobile or desktop applications that connect to the internet to facilitate transactions. They are usually self-custodial, meaning only the user can access their cryptocurrency. There is typically no cost to download or register. However, they depend on electronic devices and may be prone to user error. MetaMask is a popular software wallet.
• Hardware Wallets: These are physical devices that store your funds offline. You connect them to your computer when you need to manage your Bitcoin. They offer increased security as the keys are never connected to the internet. They are also easy to back up and restore. Examples include Ledger Nano S and Trezor Model T.

When choosing a wallet, consider factors such as security, ease of use, transaction speed, and the level of control you have over your private keys and funds. Additionally, some wallets support different cryptocurrencies, so ensure the wallet you choose supports the coins you want to invest in.

Funding your account

Once you have chosen a platform to buy your Bitcoin, you will need to fund your account. This can be done by linking your bank account or credit card to your chosen platform. You can then transfer funds from your bank account to purchase Bitcoin, or use your credit card to make a purchase.

Credit card purchases of Bitcoin are the most expensive way to buy, but they are also the fastest to complete transactions. Bank transfers can take up to a few days, and you will get the exchange rate at the time your transaction is completed.

If you are using a direct deposit of Bitcoin, you will need to get your wallet address from the target exchange. You then enter this on the source exchange along with the amount of Bitcoin you want to transfer. The transaction will take a few minutes to appear in the target wallet.

If you are using a platform such as Coinbase, you will need to open an account and link your bank account or credit card. You can then enter the amount of USD you want to buy Bitcoin for, and the website will convert this into the equivalent amount of Bitcoin.

It is worth noting that credit card purchases of Bitcoin are the most expensive way to buy, and bank transfers can take several days to complete.

Entering a purchase order

When entering a purchase order, it's important to understand the process and what information to include. Here is a step-by-step guide on how to create and send a purchase order for Bitcoin company investments:

Step 1: Identify the Supplier

First, identify the Bitcoin company you want to invest in. Research and select a reputable company that suits your investment needs. Examples of popular Bitcoin companies include Coinbase, Block, and Tesla.

Step 2: Create the Purchase Order

The purchase order, or PO, is a legal document outlining your intention to purchase goods or services from the supplier. It should include the following information:

• Header: Provide your company details, including the company name, business address, purchase order date, and purchase order number.
• Vendor Information: Specify the name of the seller company, your specific contact, and their address.
• Ship To: Indicate where the order should be delivered, including the shipping method, terms, and expected delivery date.
• Order Details: List each product with its product code or SKU, name or description, quantity, price per unit, and delivery date.
• Summary: Provide a subtotal, apply any discounts or taxes, add shipping costs, and calculate the grand total.

Step 3: Send the Purchase Order

Send the purchase order to the seller for review and approval. Include a deadline for their response to ensure timely processing. The seller will review the PO and either approve it, request amendments, or cancel it if it doesn't meet their policies.

Step 4: Receive Seller's Approval

Once the seller approves the purchase order, it becomes a legally binding agreement for both parties.

Step 5: Receive Invoice from Seller

Based on the approved purchase order, the seller will send you an invoice outlining the payment breakdown and terms. The invoice should also include a summary of the goods provided and the relevant quantities.

Step 6: Review and Approve Invoice

Review the invoice to ensure it matches the information in the purchase order. This process is known as purchase order matching and helps to confirm the accuracy of the transaction.

Step 7: Make Payment

After approving the invoice, release the payment to the seller according to the agreed-upon terms.

Step 8: Receive Goods or Services

Finally, the seller will proceed with order fulfillment, delivering the Bitcoin investment products or services you ordered.

Additional Tips:

• Use digital tools: Consider using software or platforms like QuickBooks Online to create and manage your purchase orders. This can streamline the process and reduce administrative burdens.
• Timing: When sending the purchase order, indicate when approval is needed to ensure a timely response and delivery of the products or services.
• Record-keeping: Purchase orders are important for record-keeping. They help you track your orders and confirm that you've received the correct items and quantities.

Understanding the risks

Investing in Bitcoin and other cryptocurrencies is a risky business. Here are some of the key risks to be aware of:

Volatile and Fluctuating Market

The price of Bitcoin is constantly changing, and its value can fluctuate wildly. For example, in the space of a week in December 2017, the price of one bitcoin went from over $20,000 to less than $14,626. With such an unpredictable market, there's no guarantee of a return on your investment. To avoid a massive loss, it's important to keep a close eye on the market and make small, cautious investments.

Cyberattacks and Fraud

As a technology-based investment, cryptocurrency is vulnerable to cyberattacks and hacking. If your Bitcoin is stolen, there is usually no way to retrieve it. Exchanges are common targets for hackers, and even if you have the protection of a smart wallet, your investment could still be at risk. Fraud is also a significant issue in the Bitcoin market, with fake exchanges duping unsuspecting investors out of their money.

Little or No Regulation

The Bitcoin market currently operates with very little regulation, and governments and tax authorities are still figuring out how to deal with this new form of currency. In the US, the IRS has defined cryptocurrencies as property rather than currencies, meaning that investors are subject to capital gains tax laws when reporting profits and expenses. The lack of clear, consistent regulation across the world creates uncertainty and risk for investors.

Technology Reliance and System Shutdown

Bitcoin is entirely reliant on technology—it is digitally mined, exchanged via smart wallet, and verified using various systems. Without that technology, it is worthless. This makes Bitcoin owners particularly vulnerable to cyber threats and online fraud. There is also a risk that the systems and technology underpinning Bitcoin could be shut down, causing the currency to lose all value.

Block Withholding

New Bitcoins are created by solving "blocks", which are mathematical equations created every time there is a Bitcoin exchange. However, a mining pool can use computational power to mine a block and hide it from honest miners, essentially allowing a select few to benefit while others lose out. This practice undermines the supposed benefits of Bitcoin's decentralised nature.

Limited Acceptance

Despite its popularity, Bitcoin is still not widely accepted as a legitimate form of currency. Only a handful of online stores and travel companies currently accept Bitcoin, and it is not recognised by many companies as a viable form of exchange. This limits its usefulness and could impact its future prospects.

Frequently asked questions