5 Ways To Invest In Bitcoin In 2021
As Bitcoin exceeded all the expectations in breaching the $30,000 ceiling in December 2020, it is only logical that many have seriously started considering the new asset class as a legitimate investment. At the time of writing, the BTC coin is trading at just above $40,000 with a lot of volitility over the last couple of months.
For those of you who don't know about the fundamentals of Bitcoin, it should be kept in mind that it is a decentralised blockchain-powered by a cryptocurrency that is hedging against the traditional fiat currency such as the dollar.
1. Trade Bitcoin
One of the most popular and common ways to invest in Bitcoin is trading through cryptocurrency brokers. These are the platforms that allow you to bet on the price of Bitcoin through a wide range of financial instruments, including Contracts for Difference (CFDs), Futures, Options, and more.
This type of trading makes sure that you can capitalise on the price volatility of Bitcoin without having to own and manage the digital currency. You don't have to deal with the issues of purchasing and managing a software or hardware cryptocurrency wallet that is required to hold BTC and other cryptocurrencies for a longer period.
This method of short-term trading is best suited for those investors who are looking to generate secondary income that can supplement their primary earnings. However, it is recommended that if you are a new investor or trader of Bitcoin, start slow and learn crypto trading before you go all in.
Where to trade Bitcoin
Now when it comes to choosing the Bitcoin trading platform, you might already be aware of the fact that there are a number of online crypto brokers that provide the service. That being said, you need to take a multitude of factors into account before you choose a crypto trader or broker that meets your requirements. Some of the key factors that you should consider include user-friendliness of the platform, compliance with legal regulations, overall security measures, payment options, trading expenses and costs including commissions, withdrawal fees, and more.
We understand that it could be quite overwhelming for a crypto investor who has just started out to weigh all of those factors. That's why we have carried out a comprehensive review of all the popular cryptocurrency brokers and trading websites to suggest our top recommended services.
2. Buy and HODL
The term 'HODL' is a misspelling of the word ‘HOLD’, and it comes from a drunken Bitcoin trader who threw a long rant on the internet back in 2013 about Bitcoin price not picking up when the leading cryptocurrency was still to go mainstream. The said trader promised himself in the hilarious rant that whether Bitcoin gains sufficient traction or not, he will 'hodl' onto his BTC tokens since he was firmly invested in the idea of building a decentralised blockchain platform and peer to peer currency network that becomes a viable fiat currency alternative.
Since then, the buy and 'hodl' strategy has become synonymous with the idea that you would invest in Bitcoin and hold it for a long period since you believe in its long-term success and price performance. Investors who use this strategy, buy Bitcoin and hold it for months, sometimes even years, before they sell it off to make big gains.
Since this particular investment strategy involves buying BTC, this would be the right time to let you know that we have already conducted comprehensive research and prepared dedicated pages that will guide you through the process of buying Bitcoin and other cryptocurrencies using a variety of payment methods. Bear in mind that most payment methods are dependent on the region you live in and come with different operational costs and buying expenses:
3. Invest in Cryptocurrency and Blockchain Companies
If you don't want to indulge in direct Bitcoin trading due to the market volatility, there is another way for you to invest in Bitcoin. Instead of purchasing BTC or trading it, you can invest in the stocks of the companies and start-ups that are either heavily invested in Bitcoin or make use of the cryptocurrency its business foundation. This way, you will be able to capitalise on both the success of Bitcoin as well as the company.
Remember that there are hundreds of companies and brands today that are attempting to jump on the Bitcoin bandwagon and you need to be careful in terms of buying and selling stocks ensuring your risk is minimal. In order to invest in blockchain or Bitcoin companies, you will need the services of a broker.
Where to invest in Bitcoin shares
What a crypto broker does is allows you to open a short or long position on buying a particular blockchain or bitcoin stock. If you have done your research about a certain company and want to invest in their stocks, you can open a trading position through a broker who will facilitate purchase with financial instruments. The strategy is quite similar to traditional trading, except you are investing in a Bitcoin-based stock.
Talking about selecting the right broker platform, you might already know that there are dozens of cryptocurrency brokerage services. That’s exactly why you need to take a number of factors into consideration prior to choosing a crypto broker that is suitable for your needs. Some of the key considerations that you should take into account include user-friendliness of the broker platform, trading data and charts, regulatory compliance, security measures, payment methods, trading and operational costs including commissions, deposit fee, spreads, withdrawal fees, and more.
We get that it could be a bit challenging for a new crypto trader who is just beginning to trade to consider all of those factors to make an informed decision. That's why we have conducted a comprehensive analysis of all the major brokers and trading platforms to make top recommendations for easy trading.
4. Become a Miner/Staker
Mining and staking are processes undertaken by those individuals who either believe in the blockchain project or want to be more involved for financial gains or maybe both. However, there is a major difference in both strategies, and some blockchains rely on the cryptocurrency mining process, while others go for the staking method.
- Mining - It's the process of verifying transactions occurring on the blockchain by dedicating computing resources that validate transactions by solving complex mathematical or cryptographical equations. That's why it is also called proof of work protocol.
- Staking - also called the proof of stake method, it involves purchasing the cryptocurrency token to earn the right to validate transactions. Putting in your money means that you are serious about the project. Your stake depends on the number of tokens you own.
Bitcoin uses the proof of work method, so if you want to be more involved in the BTC project, you'll need to buy considerably powerful computers. That being said, the mining method has become prohibitively expensive with very little reward since almost 90% of the coins have already been mined. Out of the limited supply of 21 million bitcoins, more than 18.5 million have already been mined. That's why this method is no longer recommended for beginners who want to invest in bitcoin.
Where to store Bitcoin
Whether you mine or stake cryptocurrencies, you will need a safe and secure way to hold the tokens. In the case of BTC, if you are mining Bitcoin tokens, you will need a software or hardware wallet to ensure that your digital currency remains safe and out of the reach of hackers and cybercriminals.
- Hardware Wallet - A hardware wallet is a physical device like a flash drive that is completely disconnected from the outer networks to ensure robust security. It's the safest way to hold your bitcoins and keep your private key safe.
- Software Wallet - These come in the form of desktop applications, mobile apps, and web services and offer more convenience and features as compared to a hardware wallet with a reasonable amount of security. If you aren't going to hold your Bitcoins for months, software wallets are a decent choice.
Since you need to ensure that the Bitcoin wallet you are going for is compatible with your cryptocurrency coins and offers the features you need, we have prepared a list of digital wallets that will allow you to store your bitcoins in a safe and secure manner.
Become a Bitcoin Developer to Make Money
If you don't want to invest or trade Bitcoin but would like to be a part of the Bitcoin project to make money, one of the most lucrative ways to do so is by becoming a Bitcoin developer. According to ‘Hired’, a blockchain developer’s average annual salary is between $150,000 and $200,000, which is almost four times the average national salary.
That said, to become a Bitcoin developer, you will need to get an education, and preferably a degree, in software engineering while learning to code in a multitude of programming languages such as Python, PHP, C++, Java, and more. Learning these languages to code will get you started and provide you with a Launchpad to make money off Bitcoin without directly investing your money.
Expert Tip on When and How to Invest in Bitcoin“ If you have just let an opportunity slide, don't be too hard on yourself. The cryptocurrency market, including Bitcoin, is highly volatile, and the next chance of making it big could be just around the corner. Some choose to wait out until the Bitcoin price settles down instead of getting caught up in FOMO and then try to sell as high as possible. Expanding your portfolio helps to ensure that you are managing your risk by investing in different cryptocurrencies. When it comes to deciding the right moment, there is no best time to invest in Bitcoin. Find your moments by making yourself aware of related news price movements. By practising with a small investment, you will find yourself improving at identifying trends, reading charts, and finding the right moments to buy and sell Bitcoin. ”