How to buy and invest in Bitcoin

Posted on 22 de November de 20196 de March de 2023 by Carlos Martins

In 2014, around the same time that Bitcoin and Cryptocurrency terms were making their way into the world of finance, the most you could do with 10,000 BTC was buy a Pizza.

Less than 5 years later, the value of a single bitcoin has risen to peak at $20,000. The success of the digital currency has inspired the formation of a new global industry, the cryptocurrency industry, which is threatening to take over mainstream banking and finance.

And in its wake, it left successful investment tales. Numerous individuals and institutions have amassed considerable wealth because they embraced the legacy alt-currency early on.

In recent years, the company has taken on several titles, one of the main ones being an acceptable payment agreement adopted by most e-commerce stores as well as major high street stores.

On the one hand, it triggered national and international debates about the currency’s viability and the ramifications of its adoption as a legal tender. On the other hand, it gave rise to an investment rush, where every investor now wants a highly profitable currency.

The runaway demand and ever-condensing supply of the commodity, in turn, has led to never-before-seen market volatility, which has seen bitcoin gain more than 10,000% in value in one year and drop so much the next.

Industry experts, however, believe that bitcoin’s more unpredictable phases as an investment tool are over and that it is approaching stabilization. If so, and with the proliferation of ways you can safely acquire the currency, it could be argued that there will likely never be a better time to invest in Bitcoin. But, how do you do it and why should a good investor consider digital currency in the first place?

Why Invest in Bitcoin

A good portfolio must be carefully distributed to include virtually all investment vehicles. And that includes bitcoin investments. The portion of your investment you nevertheless allocate to high-risk/high-reward and volatile bitcoin must, however, be determined by factors such as risk aversion and age.

This is based on the fact that younger investors, who have more than enough time to recover from bad trades and negative market turns, can afford to risk more compared to seniors who are likely to gamble their savings and retirements.

Every new day Bitcoin opens up to more expansive horizons. It brings news about a new e-commerce store or legacy institution accepting bitcoin payments, another crypto-recognizing country, or another multinational looking to leverage blockchain technology from digital currency anchors.

Without discounting any negativity associated with the currency, such as the threats of government regulation and bans in countries like China, every investor can agree that the advances achieved by Bitcoin far outweigh any possible threats.

The fact that it still has more ground to cover in its quest to replace modern fiat currencies makes it an excellent long-term investment option.

Unless you are investing in Bitcoin futures and inspired ETFs, Bitcoin investments can become the most liquid asset class in your portfolio. This means no tying your funds into long-term, highly complicated projects with painfully slow deletion processes.

It also means that if you suspect a significant and imminent downturn, you can quickly liquidate your investments here, protecting you from big losses. This is not possible with other investments like stocks and shares.

Real estate investing has long been considered the golden child of investing. In 2018, however, this lucrative industry saw annual growth of 5%. Bitcoin has on hand reported an average gain of 200% over the past five months.

You will, therefore, want to invest in bitcoin if you are looking for above-average gains in the shortest possible time. The only caveat is the fact that you also face the threat of above-average losses over the same period.

How to invest in Bitcoin

Buying bitcoins is not an event, but a four-part process that starts with identifying where to buy the digital currency, the investment approach and how to keep it safe.

A well-calculated investment should also involve constantly vigilance over the bitcoin markets for point-of-sale cues.

Step 1 – Identify where to buy

There are several approaches to bitcoin investments. Some of the more popular ones, however, include buying from a reputable cryptocurrency exchange such as Binance through a peer to peer cryptocurrency exchange website through a multi-asset exchange. And while buying from an acquaintance can easily pass for one of the quickest approaches to acquiring crypto assets, it’s hardly safe, especially when dealing with strangers online.

Understand that the biggest and most impactful bitcoin scams today are driven by the ‘vendors’ you find online and promise to sell the digital currencies at discounted rates. In that case, there is no way to guarantee your legitimacy or the existence of your coins.

The proliferation of bitcoin scams, hacks and investment scams also requires you to carefully examine the authenticity of any of these investment approaches before creating an investor account with them. Start by checking that they are licensed by the financial regulatory agencies in the jurisdictions in which they operate.

Also, review user reviews from independent customer review sites to check customer satisfaction scores.

Step 2 – Decide Your Approach

Buying and holding bitcoins for the long term with the hope of cashing in on their prosperity remains one of the most popular approaches to bitcoin trading. This strategy is largely adopted by individuals who believe that Bitcoin prices will continue to rise for the foreseeable future. This group of investors is not bothered by the short-term volatilities that are synonymous with trading.

If you’re investing for the long term, chances are you’re buying bitcoins in bulk. And in that case, we advise you to consider buying from a highly regulated exchange and storing your coins offline in a secure hardware wallet.

Step 3 – Learn how to keep them safe

Planning to secure your bitcoins involves identifying a cryptocurrency wallet where you can secure your bitcoins. You have the option to choose the bitcoin hardware wallet or the convenient online and mobile wallet. However, if you choose to invest in eToro bitcoin CFDs, chances are you won’t need a wallet.

This is mainly due to the fact that CFD involves price action trading and therefore does not trigger the generation of transactional private keys. It also does not involve the distribution of actual bitcoin tokens.