Bitcoin kick-started the world of modern cryptocurrencies in 2009 when it was introduced as a modern, internet-based replacement for government-issued currencies. Bitcoin enthusiasts then and now look forward to a day when Bitcoin can be used as widely and easily as conventional euros, dollars, and francs. The crypto community even has a shorthand phrase to describe that digital future: “buying a cup of coffee with Bitcoin.”
It’s not practical to buy a cup of coffee with Bitcoin today. But the cryptocurrency has found another compelling use: as an investment. The limited supply and high demand for Bitcoins has resulted in rising prices. You could buy a Bitcoin for 1 euro in 2011. Ten years later, the price topped 59,000 euros. Historically, Bitcoin’s value has risen at a faster rate than the price of gold, stock market indices, and other investments. That’s one reason so many people are eager to learn how to invest in Bitcoin (BTC).
Prices of commodities and stocks rise and fall. So does Bitcoin’s. The cryptocurrency is notoriously volatile, which means it is subject to large sudden price swings. But overall, Bitcoin has delivered historic returns, especially for investors who purchase it and hold it for months or years until it achieves a new all-time high price. Is Bitcoin a good investment? Like any investment, the value can rise or fall. But millions of Bitcoin owners have reaped the benefits of this unique currency’s remarkable long-term price gains.
It’s no wonder people all over the world are curious about how to invest in Bitcoin.
Define Your Goals
The first step in cryptocurrency investing is to define your goals. Maybe you’re looking to purchase a home in a few years or maintain your lifestyle during retirement. Maybe you’re investing so you can set aside some money to cover unanticipated expenses or emergencies. It’s possible you have multiple goals. Defining them is an essential first step in making any investment.
Once you have defined your goals, you can determine your Bitcoin investment timetable. If you’re investing to pay your children’s college expenses or fund your post-retirement golden years, you can take a long-term view. If you’re looking for your investment to cover short-term goals, then you’ll pursue a different strategy.
The third step is to define your investment budget. You may have a lump sum to invest all at once, or you may want to fund your investment portfolio with a schedule of small purchases over time. Both approaches have advantages. Because investing always implies an element of risk, experts advise investing only as much as you can afford to lose if the market takes a downward turn.
Where and How to Invest in Bitcoin
The next step is to choose an investment platform. Hundreds of cryptocurrency exchanges and platforms exist on the internet. Each is designed to cater to a particular kind of investor.
Many of the largest crypto exchanges are geared to the needs of investors who are immersed in the crypto world: knowledgeable about blockchain technology, able to set up public-key cryptography with third-party wallets, and comfortable dealing directly with the distributed database that records Bitcoin transactions.
These exchanges are great for tech-savvy full-time investors who prefer to control all aspects of their Bitcoin transactions. But most people are better off with a custodial platform that handles all the complexity of blockchain transactions on the investor’s behalf. Platforms like Kriptomat are specifically designed to support investors who don’t have the time or interest to become experts in blockchain technology and public key encryption. These platforms allow you to create an account and begin investing in minutes. The best of them combine their ease of use with great support and simple access to advanced investing tools, the kinds of tools that are available only to the largest clients of conventional investment bankers.
Building a Portfolio
Many investors stick with Bitcoin or combine their Bitcoin investments with other assets such as pension funds or stock-market investments. Experts have long recommended diversity to protect investors from downturns that affect one stock or industry. Investing in cryptocurrency is no different.
The platform you use to buy Bitcoin is sure to offer additional cryptocurrencies so you can diversify and balance your crypto investment portfolio. You might want to supplement your Bitcoin holdings with cryptocurrencies associated with financial applications, for example, or the world of metaverse-style gaming. Maybe you’ll invest in cryptocurrencies that support the fast-growing world of collectible non-fungible tokens.
When you evaluate a cryptocurrency as a potential investment, look at its price history and do some simple analysis. The two most widely used analysis methods are technical analysis and fundamental analysis. With technical analysis, you look for trends and repeating cycles in the coin’s price history and use them to make predictions about future performance. Fundamental analysis is based on factors that influence the price of a commodity: economic indicators, government regulations, unemployment rates, world events, and forecasts of demand for particular services that are associated with different cryptocurrencies.
It sounds complicated, but it doesn’t have to be. Many investors find this research both interesting and educational.
Once you have identified the cryptocurrencies you wish to add to your investment portfolio, it’s time to make a purchase.
How to Buy Bitcoin
You start by making an account at an online cryptocurrency exchange like Kriptomat. These sites provide the current trading prices for Bitcoin and other cryptocurrencies so you can do your research before making a purchase.
Creating an account at a reputable exchange is not quite as simple as selecting a username and password. The best exchanges will require you to verify your identity by providing a copy of your government-issued ID and perhaps other documents. These Know Your Customer regulations are legally required by sites and applications that comply with the anti-money laundering provisions of international e-commerce law.
Identity verification is a long, complicated process at many crypto exchanges. At streamlined sites like Kriptomat, which operates throughout the EU and around the world, it’s a simple process that you can complete in minutes.
The website or mobile app will prompt you to provide your address and upload a high-resolution photograph of your passport (or, in some countries, driving license). Prompts guide you through creating and uploading a selfie – a photograph that matches the photo on your government ID. Your identity will be verified within a few minutes.
The next step is to fund your account so you can buy Bitcoin and other cryptocurrencies. Common options include credit and debit cards, bank wire transfers, and cash-transfer services like Neteller and Skrill. Credit and debit cards are generally the fastest and easiest, but reputable crypto exchanges offer multiple options.
That’s all there is to it – you are now an expert at the fine art of crypto and fully briefed on how to buy Bitcoin.
Investing Tools and Options
The best crypto platforms don’t leave you on your own to manage your portfolio. When you want to invest in Bitcoin, there’s more to it than buying low and selling high. Advanced tools can help you get the most out of your investment.
For example, some sites allow you to set price alerts. If the price of Bitcoin rises or falls by percentages that you specify, you’ll be notified with an email or notification.
You can even set up automated trading with parameters that you define. For example, you might want to sell 2,000 euros worth of Bitcoin if the price rises to a certain point. When you set up an automated trading rule, the crypto platform will monitor prices around the clock and execute the transaction you desire when the trigger conditions are met – any time of the day or night.
A recurring buy feature lets you practice a technique that investment advisors call cost averaging. The idea is that you schedule purchases in advance. For example, you might purchase 25 euros worth of Bitcoin every Monday or 300 euros on the 10th of every month. These recurring purchases let you add to your portfolio using small amounts of money you might otherwise have spent thoughtlessly. Over time, your portfolio will painlessly grow in value.
It Starts With a Single Step
Investors around the world are building fortunes with Bitcoin and other cryptocurrencies. The prices of these electronic currencies have risen at unprecedented rates, and even some of the most conservative financial advisors from the traditional banking world are now adding Bitcoin to their portfolios of conventional stocks and index funds.
If you choose the right platform, you can begin investing quickly and easily. Look for a secure site that is licensed and regulated in the country where you live. Make sure the site provides plenty of accessible information and a responsive tech support team. And check out advanced investing tools like automated trading and recurring purchases. These can help you advance your investing game to the next level.
Cryptocurrencies like Bitcoin have the potential to deliver the benefits of financial freedom and self-determination to millions of people who don’t have access to banking services or high-end financial advisors. They have the potential to spark a revolution that could bring universal financial autonomy to anyone with a Wi-Fi connection.
You can join the crypto revolution and reap the benefits of this exciting new investment opportunity. Create an account at a platform like Kriptomat and check out the options. It’s faster and easier than you think.