Thinking of investing in Bitcoin or digital currency?
This post will outline some things you NEED to know before you buy.
We’re going to explain:
- The basics of investing in bitcoin
- Why it needs to be taken seriously as an asset class
- How to buy bitcoins (with credit card or bank account)
- How to protect and properly secure your bitcoins in a digital wallet
What is a Bitcoin Investment?
A Bitcoin investment is exactly what it sounds like – using dollars or euros or any other fiat currency and buying Bitcoin with them. It may also mean using retirement funds from a 401k or other funds to invest in a qualified Bitcoin IRA. How to Invest in Bitcoin
BUY NOW at Coinbase’s Secure Site
- High liquidity and buying limits
- Easy way for newcomers to get bitcoins
- “Instant Buy” option available with debit card
BUY NOW at eToro’s Secure Site
Varies by crypto/spread
- Supports Bitcoin, Ethereum & 15 other coins
- Start trading fast; high limits
- Your capital is at risk.
Cryptoasset investing is unregulated in some EU countries and the UK. No consumer protection. Your capital is at risk.
BUY NOW at Coinmama’s Secure Site
30% Referral Commission
- Works in almost all countries
- Highest limits for buying bitcoins with a credit card
- Reliable and trusted broker
How to invest in Bitcoin will depend on what country you live in. Developed countries have more options and more liquidity.
Coinbase is the world’s largest bitcoin broker and available in the United States, UK, Canada, Singapore, and most of Europe.
But, you can use our crypto exchange finder to find a place to purchase bitcoin in your country.
Find a Bitcoin Exchange Is Bitcoin Safe?
In some ways, buying Bitcoin is much like buying any other currency. You always need to be mindful that its price rises and falls compared to other currencies.
One way Bitcoin is different than traditional investments is that you either need to hold the coins yourself or trust a third party to do it.
Holding them yourself means there is the risk that if you don’t store them properly you could lose them forever.
If you let a third party hold them for you, they may get hacked. And unlike storing dollars or stocks in banks and brokerage accounts, once the coins are hacked, they may not be easily restored. Some exchanges are now offering protection if the hack is determined to be the exchanges fault. But hacks of an individual’s account may be difficult to prove as a system security issue. Coinbase specifically tells users in thier security policy that coins hacked from a compromised account will not be covered.
For instance, if someone robs a bank, the US government will make that bank whole through something called the Federal Deposit Insurance Corporation (or FDIC). There is no risk to you, as the bank customer, of having your funds stolen.
But Bitcoin is different. Bitcoin are inherently limited in supply (only 21 million will ever exist). So it isn’t so easy to replace them. Once they are gone, they are usually gone for good.
If the institution holding your Bitcoins gets hacked, they may cover the loss because they can afford to and its good for business, as Binance did in 2019.
Keep in mind, though, there is no legal obligation for them to do so.
There is an advantage to accepting these risks though.
For one, Bitcoin cannot be artificially inflated like US dollars.
When your government prints more money, it makes the dollars you have worth less over time.
For instance, you used to buy a soda for $0.10. Now, it costs $1.50.
An old cola machine selling bottles for $0.10
Bitcoin is deflationary, which means the coins become MORE valuable over time, not less. You can buy more with a Bitcoin today than you could a year ago.
So while holding Bitcoin has its own risks, so does holding dollars.
Its up to you to decide which one you trust more. How to Invest $100 in Bitcoin Today
The best way to invest $100 in Bitcoin today is using a Bitcoin exchange.
These services allow you to make recurring Bitcoin buys on a regular schedule (every week, every month, every day, etc), or one-time purchases.
These services do usually require you to verify your identity, which can take up to a few days.
Just be aware that there are higher fees on credit card purchases! How Much BTC Does $100 Get You?
In November 2020, the price of bitcoin was around $15,000, so $100 would have purchased .0067 BTC. In January 2022, with the price around $47,000, the same $100 would purchase about .0021 BTC. The price of bitcoin relative to the USD will always affect the amount of BTC you can purchase at any given time. When is the Best Time to Buy Bitcoin?
As with any market, nothing is for sure.
Anyone’s guess is just about as good as anyone else’s when it comes to predicting near term Bitcoin prices.
Throughout its history, Bitcoin has generally increased in value at a very fast pace, followed by a slow, steady downfall until it stabilizes.
Use tools like our Bitcoin price chart to analyze charts and understand Bitcoin’s price history.
Bitcoin is global, and therefore less affected by any single country’s financial situation or stability, good or bad.
For example, speculation about the Chinese Yuan devaluing has, in the past, caused more demand from China, which also pulled up the exchange rate on U.S. and Europe based cryptocurrency exchanges.
We’ve also seen bull markets in Bitcoin in the United States result in large arbitrage events in markets with much less liquidity due to capital controls, such as Korea. In the case of Korea, these were known as the ‘Kimchi Premium’
As Igor Makarov and Antoinette Shoar note in Trading and Arbitrage in Cryptocurrency Markets,
The daily average price ratio between the US and Korea between December 2017 to February 2018 reached 40% for several days… We estimate that during this period a minimum of $2 billion of potential total arbitrage profits were left on the table. In contrast, the price deviations between exchanges in the same country typically do not exceed 1%, on average.
Makarov & Schoar, Economists, Harvard and MIT
Getting Bitcoin into Korea to take advantage of the large premium was incredibly easy. The issue was getting your fiat out of the country after you sold.
Ironically, such controls only fed the Bitcoin price even further, as individuals realized Bitcoin could do what fiat could not: make cross border payments in any amount without permission from any regulatory authority.
All of these examples illustrate how global chaos is generally seen as beneficial to Bitcoin’s price since Bitcoin is apolitical and sits outside the control or influence of any particulate government.
COVID19 was one such example of global Chaos boosting Bitcoin, as the Federal Reserve proclaimed an ‘ample reserves regime’.
When thinking about how economics and politics will affect Bitcoin’s price, it’s important to think on a global scale and not just about what’s happening in a single country. Is Bitcoin Legit?
Yes, Bitcoin is absolutely a legitimate asset. So much so that publicly traded companies such as Microstrategy and Tesla have invested billions of dollars into Bitcoin.
But Tesla isn’t the only big firm catching onto Bitcoin.
In fact, the oldest and largest bank on planet Earth – BNY Mellon – has said they are going to provide custody and exchange integration services into their banking offerings.
We firmly believe digital assets are here to stay, so that’s the future.
Michael Demissie Head of Advanced Solutions, BNY Mellon
Nearly every large bank that has ever had anything bad to say about Bitcoin is now stumbling over themselves to offer services to customers who want in.
Here are some of the biggest changes in position from major financial firms over the years:
There are almost no institutions of consequence left who haven’t reversed their opinions on Bitcoin – and they all agree: Bitcoin is legitimate and here to stay.
Here is a global view of how much Bitcoin is owned and held by big public and private institutions as well as governments all over the world: How to Check the Bitcoin Price – How Much Does a Bitcoin Cost?
The best way to check the price of Bitcoin is by using our Bitcoin price page!
On that page, you can see our historical chart.
As well as more specific information related to the price for that day. How Much to Buy in Bitcoin