With the new legislations coming around since last year, and countries considering regulating crypto, it’s no wonder that more people are turning to crypto investments. Since personal and business investments in crypto are on the rise, now is a good time to take bitcoin into consideration in your portfolio. But before you go any further with your bitcoin investment, read on to know more about purchasing bitcoin and investing it.
How can you purchase bitcoin
Most people purchase bitcoin through crypto exchanges. These exchanges let you purchase, sell, and hold cryptocurrencies, and set up an account similar to having a brokerage account. You will have to verify the identity and offer a type of funding source like a debit card or bank account. So, bitcoins can be bought from the crypto exchanges or online brokers. You will find more information about it from well-reputed sites like Bitcoin Up.
Irrespective of where you purchase the bitcoins, you will require a bitcoin wallet to store them. These are known as a cold wallet or hot wallet.
- Hot wallet: Hot wallets, also known as online wallets, are stored by a provider or an exchange in the cloud.
- Cold wallet: Cold wallets or mobile wallets are offline devices useful in storing bitcoin and isn’t connected to the internet.
Many investors who feel bitcoin is costly tend to purchase fractional bitcoin from the vendors. However, in this case, it is important to consider the fees that are usually a small percentage of the cryptocurrency transaction amount. However, it tends to add up on the small-dollar purchases.
Lastly, it is worth mentioning that bitcoin purchases tend not to be instantaneous like those other equity purchases. As bitcoin transactions need to be verified by the miners, it might need you a minimum of ten to twenty minutes to see the purchase in the account.
How can you invest in bitcoin
Similar to stocks, bitcoin can be purchased and held as investments. Regardless of where you plan to hold the bitcoin, people’s ideas on how they should invest it tend to vary. While some purchase and hold long-term, others purchase and try to sell after price rallies. Yet, there are others betting on price decrease.
The price of bitcoin has experienced major price swings over time, getting as low as $5,160 and as high as $28,995 in 2020. Though crypto-based funds might add some diversification to the crypto holdings and reduce risks, there are risks associated with its volatility.
In other words, you can think of bitcoin like one stock, and advisors do not recommend putting a major part of the portfolio in any one company. The best thing you can do is to put nothing more than one to ten percent in bitcoin if you are really interested in it.
The endnote
And that’s all! If you are keen on investing in bitcoin, you should go ahead and talk to a crypto broker straight away. Let the broker explain the risks to you and guide you along.