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An A-Z Guide on How to Invest in Bitcoin

09/21/2018
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  • trading
  • cryptocurrency
  • ethereum
  • mining
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All You Need to Know about How to Invest in Bitcoin

Cryptocurrencies are super-stars of modern financial market; by investing in them, you can both lose everything and make a fortune overnight. A risky but highly promising endeavor, isn’t it? And many people are ready to put all their savings at stake and try their hands at crypto-investments. The risk is high, but the other option is so attractive that many beginners and expert traders just can’t resist making a Bitcoin investment.

Why Bitcoin, you may ask? That’s simple. While other altcoins enjoy rising popularity and promise high yields, their minute of glory is still the matter of chance and future. Bitcoin has already shown strong growth by rising nearly to $20,000 in 2017, which means that people know it can work and bring them money. Thus, investing in Bitcoin remains much more popular than trading manipulations with other altcoins, and the first thing you need to do to get the most of such an investment is to learn the principles and specifics. Many traders fail, that’s true. But knowing the nuts and bolts of the process, you will have much higher chances for success.

What Is Bitcoin?

Too much has been said about what Bitcoin is and how good it is, so we’ll stop briefly on this point. A short definition is necessary as it’s hard to invest in something that you don’t know. Thus, a basic understanding of the concept and principles of its existence is a vital step to grasping how to invest in Bitcoin.

Bitcoin, or BTC, is the first successful cryptocurrency launched in 2009 by Satoshi Nakamoto. This form of digital currency can be bought, sold, stored in an e-wallet, and transferred to other BTC users, just like any other digital money. The only difference is that you can’t cash it, unless you exchange it for conventional currencies like EUR or USD. More than that, you can create your own BTC by mining, which is a fundamental difference from traditional currencies that can be issued only by the central bank. All information about BTC transactions and ownership is held in the ledger enabled by blockchain technology. The blockchain also keeps the owners’ coins protected from hacking and theft.

It used to enjoy modest popularity among a small group of geeks and technical experts for several years, but its immense price increase in 2016 and 2017 made it world-famous. After the success of Bitcoin and its soaring prices, even laypersons got actively interested in buying and selling Bitcoins as a source of income, as well as making Bitcoin investments.

Bitcoins as an Investment: Is It a Good Deal?

First, it’s necessary to clarify whether Bitcoin investing is overall a good idea. At the end of 2017, it definitely seemed a great asset, with the price of BTC growing hour by hour. Moreover, Bitcoin has been named the best investment for the past decade. However, at the start of 2018, its rate reduced more than threefold, and there is no definite answer to the question of whether Bitcoin will rise in price again or not.

Advantages of Investment in Bitcoin

Together with all the price fluctuations that Bitcoin shows within the past 10 years, there is still a number of Bitcoin invest pros:

  • There is a limited number of BTC in the world. According to the BTC creator’s information, the limit of BTC offering is 21 million coins. Thus, given the current high demand for the currency, BTC will always enjoy finite, limited supply. This, according to the rules of economics, is a guarantee of a stable high price of a commodity;
  • Bitcoin exhibits stable high ROI. Yes, the price of BTC fluctuates tremendously, and if you are not patient enough and sell it too early, you can really lose funds. But in the long run, and if you buy BTC, not at the peak of its price, it offers a high return on investment that no other security can provide;
  • It’s very easy to start investing in BTC. The whole setup process takes a couple of hours to complete; more details on it will be given in the next section;
  • BTC can be used in a number of ways. You can conduct confidential and secure transfers to clients, providers, and vendors with BTC. You can send money globally at much lower fees, and never transfer the control over your funds to a third party like a bank. Moreover, you can use Bitcoin as an investment and trade it for getting the revenue from price rate fluctuations, or simply save it in the e-wallet for some time to wait until its price doubles or triples.

These pros definitely suggest that if not getting rich with Bitcoin, you can still derive numerous benefits from having some BTC for transactions and payments. And who knows, maybe storing some coins will make you rich overnight?

Why Should You Not Invest with Bitcoin?

Before giving your hard-earned money to traders, let’s also deal with some reasons not to invest in Bitcoin. You should know both sides of the issue to make a reasonable decision.

  • Extreme market volatility. Since there is no single crypto-regulator that would set and control prices for cryptocurrencies, the price rates experience dramatic fluctuations from day to day depending on hundreds of reasons and influences. For instance, BTC lost over one-third of its price only in 5 days in December 2017 – a huge loss for many traders;
  • Limit to growth. Due to the specifics of BTC operation via a blockchain, the upper limit of that the system may handle is 3-7 transactions per second, which makes the scaling of BTC trading or other business operations impossible. With the growing popularity of BTC as a heavily traded cryptocurrency, the number of pending transactions increases, the duration of one transaction processing grows, and so do the commission fees for BTC transactions. Thus, the problem of blockchain limits is pressing to date, leaving the profitability of BTC investment under question;
  • Tough government regulations. Being an alternative to traditional money, Bitcoin is surely unpopular with state’s governments. Another reason for mounting anti-Bitcoin regulations is an effort to assume greater control over BTC transactions to avoid secret flows of finance to terrorist and criminal organizations. Thus, we may expect a new wave of bans and regulations for cryptocurrencies in the near future, which can make BTC investment lose its attractivity.

These are not scary tales, but realistic facts about the current status of BTC. So, take these factors into account when making investment decisions; if you are ready to live with these drawbacks of Bitcoin investment, then this area is for you. In case these hurdles may become a source of serious discomfort for you, then maybe investing in BTC is not your piece of cake?

Where to Invest in Bitcoin?

Now that you have made up your mind on whether to invest or not to invest in BTC, let’s quickly cover the places where you can make that investment. The choice may be:

  • To buy BTC at some exchange and hold the assets there;
  • Buy BTC at an exchange or from another person and withdraw it to your desktop, mobile, online, or hard-drive e-wallet;
  • Buy equipment, mine your own BTC and keep them until the price goes up.

The starting step in this process is to select a cryptocurrency exchange that fits your needs, supports your currency and payment method, and works in your country. The global leaders in crypto-transactions are Kraken, Coinbase, Coinmama, Coinbase, etc. But hundreds of smaller exchange platforms may have more attractive terms and fees, so we recommend first researching the market.

How to Invest in Bitcoin? The Basics

Any of you can invest a couple of bucks in Bitcoins; that’s not hard at all. The process of joining the crowd of BTC investors is as follows:

  1. You register at some Bitcoin exchange platform. There are hundreds of them nowadays, offering a variety of commissions and work terms, dozens of features, and numerous perks. But all of them also have some specific limitations such as withdrawal limits, available payment methods, the range of currencies they work with, etc. So, study all the terms carefully before registration to find the platform ideal for you;
  2. You open a BTC wallet. Some exchanges offer built-in wallets to save you from the trouble of doing so many manipulations. But if you wish to buy many Bitcoins or wish to involve in serious trading by buying a variety of cryptocurrencies, we recommend having a separate wallet (maybe even a hard drive) to store your belongings intact. Exchanges are frequently get hacked nowadays, so while online, your crypto-belongings are never 100% secure;
  3. You buy BTC and hold it until better days. In such a way, you invest in Bitcoin and become a happy owner of some amount of this cryptocurrency within hours. Today, the price of Bitcoin is much lower than it used to be a year ago, but experts promise that BTC rates will soon soar. Thus, the best way to invest in Bitcoin is to buy and keep the coins until they recover in price again.

Where to Get the Bitcoin Shares/ Stocks for Bitcoin?

Unfortunately, Bitcoin is not a company with a public offering of shares or stock, so you can hardly find any place to buy stocks for Bitcoin or Bitcoin shares. Thus, an answer to the question, “is Bitcoin a stock?” is definitely no. Though many bloggers and authors on the Web present an over-simplified image of cryptocurrency as a digital security in which you can invest in the expectation of high yields as soon as its rate soars, in fact, it does not possess some vital features of securities.

Despite such essence of crypt-money, many people continue asking online, “how to purchase Bitcoin stock?" and expressing a desire to get some stock Bitcoin for their investment portfolios. So, is the demand not corresponding to the supply of offers in terms of crypto-investment? In fact, it is, as some companies (e.g., trading platforms and exchanges) have already captured the value of Bitcoin and have gone public. Thus, answering the question, “how do you buy Bitcoin stock?” we may advise buying the stock of such companies investing heavily in BTC and working solely with it. For instance, companies that work with blockchain and Bitcoin and invest in it, include Facebook and IBM, the BTL Group, 360 Blockchain, Coinsillium Group, Hive Blockchain, and many others. While business giants like FB and IBM may have unaffordable, expensive stock, other business entities are only starting their way in the market, so their shares/stock are cheap to acquire. Thus, you may join the company’s list of shareholders even with a dozen bucks in a pocket.

Bitcoins as an Investment: A Summary

All in all, Bitcoin has become an attractive investment for thousands of people worldwide. Even though it lives through tough times right now, its price is expected to rise one day soon. Thus, despite numerous fluctuations and general instability of the BTC trading and investment market, more and more people make the choice to invest in BTC every day. Join the pool of BTC owners and wait for your favourite moment to get rich!

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