Investing in Bitcoin has become much easier over the past few years, but there are still a few hurdles to overcome if you have a traditional stock investing background. Read on to learn different ways to invest in Bitcoin and a step-by-step guide to buying your first Bitcoin.
Investing in Bitcoin has been compared to investing in “digital gold.” Setting aside the inflation-hedge claims of Bitcoin enthusiasts, comparing it to gold is a good analogy when considering the myriad ways to invest in Bitcoin.
This type of investment will not give you direct ownership of Bitcoin, but it will let you invest in innovative companies advancing the use of blockchain technologies.
An ETF is a specialized investment vehicle that tracks the performance of a particular asset without the investor having to own the actual asset itself. It takes away the hassle and security risks of owning Bitcoin directly and opens the doors for anyone with a brokerage account to invest in Bitcoin.
Bitcoin mining is a way to receive actual Bitcoin in exchange for lending your computing power to solve complex math problems and completing blocks of verified Bitcoin transactions on the blockchain. As more coins are mined, the reward for solving the subsequent successive block decreases, and the difficulty increases.
If you are new to cryptocurrencies, owning Bitcoin differs from holding other assets. Investors can buy Bitcoin from an exchange such as Coinbase and take ownership in an encrypted wallet. More technically, the wallet stores the private keys that you use to access your coins and prove they belong to you.
If, after evaluating the pros and cons of investing in Bitcoin, you decide you want to own it for yourself, there are a few things you need to know. The steps below offer a guide to buying Bitcoin and provide a jumping-off point for further research.
The first step in buying Bitcoin involves choosing a cryptocurrency exchange to make your purchase. These exchanges offer a platform to buy and sell Bitcoin and many other alt-coins. Each exchange generally has different fees and consumer services provided.