Bitcoin and other cryptocurrencies remain an alien concept to many people. Although many investors reap handsome rewards from their Bitcoin ventures, many people are still hesitant about investing. Beginners to cryptocurrencies often find themselves searching for answers to many questions. One of the most bewildering concerns for most people is how to invest in Bitcoin. This article addresses this issue to make Bitcoin investing more accessible for everyone.
How to Invest in Bitcoin
Bitcoin is not different from other investment vehicles, such as stocks, funds, and bonds. The process is also less complicated than what many believe.
The first step to investing in Bitcoin is to register with a crypto exchange to buy, manage, and sell Bitcoin. For example, one can create an account with Coinbase, eToro, Gemini, Kraken, Binance, or Bitfinex.
Next, potential investors must choose a Bitcoin storage solution serving as a virtual wallet. Most people choose an online “hot” wallet for convenience. However, if one wants a more secure Bitcoin investment, a “cold” wallet is crucial.
The third step involves linking the Bitcoin exchange or virtual wallet to a bank account. Some people connect their Bitcoin accounts to a credit card or a debit card.
Once the link is set, investors can buy Bitcoin from the crypto exchange using the bank account or card funds. They can also continue to grow their Bitcoins while waiting for the right time to sell and generate a substantial return on investment.
There are a few factors one must consider when investing in Bitcoin.
- Risk Tolerance
Cryptocurrency trading is highly volatile. It can skyrocket one minute and plummet to rock-bottom the next. That is why Bitcoin investors must determine their risk tolerance or the amount of money they are comfortable losing.
- Profit Tolerance
Equally important is an investor’s profit tolerance. Like all investments, Bitcoin investors must have a reference point that tells them when to sell without the emotional underpinnings.
Successful Bitcoin investments hinge on perfect timing. Cryptocurrencies have a knack for surging fast, creating huge bubbles. Unfortunately, these bubbles burst without warning. Hence, investors must know the bubble breaking point to sell their Bitcoins before prices plummet.
How Do Beginners Invest in Bitcoins?
Beginners can invest in Bitcoins in five straightforward steps.
- Choose a cryptocurrency exchange where you can buy, manage, and sell Bitcoins. Excellent choices are Coinbase, Binance, Kraken, Gemini, and Bitfinex.
- Get a storage solution for safeguarding Bitcoin investments. Beginners can choose online “hot” wallets, such as Electrum and Mycelium. Unfortunately, online wallets are less secure than hardware-based “cold” wallets. One can buy Trezor or Ledger Nano flash drive-like devices to store Bitcoin purchases.
- Link a bank account or a debit/credit card to the Bitcoin wallet or crypto exchange account.
- Buy Bitcoins from the crypto exchange, using the money from the bank.
- Manage the Bitcoin investment, preferably waiting for Bitcoin value to increase before selling. One can also buy Bitcoins to grow the investment.
What is the Minimum to Invest in Bitcoins?
In general, there is no minimum to invest in Bitcoin. However, crypto exchanges and other Bitcoin trading platforms often set their minimum. For example, $2 is the minimum Bitcoin investment required from Coinbase. Experts advise against investing less than $10 because there are fees the crypto platform collects for each Bitcoin transaction. Most experts recommend investing at least $50 in Bitcoin.
Can I Invest $25 in Bitcoin?
Yes, one can invest in Bitcoin for as low as $25. Coinbase offers this advantage along with a $2-minimum spend. On the other hand, Gemini has a minimum Bitcoin trading of 60 cents or 0.00001 BTCs, while eToro requires a $25 minimum trade size and a $50 minimum deposit.
How Much Does It Cost to Invest in Bitcoin?
Risk-averse investors should consider investing no more than five percent of their investment capital. For example, one can invest no more than $500 from a $10,000 investment capital. On the other hand, people willing to gamble more of their money can increase the investment to 30%. That is $3,000 out of the $10,000 capital. Many experts recommend limiting one’s Bitcoin investment to 50% because of crypto uncertainties and risks.
Investing in Bitcoin is not for everyone because of the risks a highly volatile market brings. However, it remains a viable investment tool for those who only have several tens to hundreds of dollars to spare. For as low as $25, people can invest in Bitcoin and give it a try before expanding their Bitcoins.