Digital currencies are what the internet is all about. Every now and then we see news circulating about how digital currencies are replacing traditional ones and how analysts have been predicting that bitcoins’ prices could rise to $100,000 in the year 2022.
It’s crazy how something that was invented a few years back has gained popularity just because of how convenient, exciting, and different it is.
Cryptocurrencies, on the other hand, have central banks and regulators concerned. The concerns haven't stopped huge internet corporations like Amazon and well-known figures like Elon Musk from actually participating. Now, the question is, should you walk a mile or join them?
The most frequent approach to investing in bitcoin is to buy coins (or units of a coin) on a crypto exchange. However, there are alternative options as well. You can have a look at them below:
You might buy shares in firms that accept bitcoin as payment or start investing in crypto exchanges. But you should consider these when you are new to bitcoin and cryptocurrency.
You could buy a bitcoin ETF (exchange-traded fund). The great part is that it mirrors the price of bitcoin, enabling you to invest in the ETF fund without having to trade bitcoins in real.
You could put your money into the network of the blockchain (a system where you can record details about cryptocurrency). For instance, Salona, a tech platform, said that it's the world's fastest blockchain.
Bitcoin funds are being launched by a number of investment firms. Bitcoins are highly volatile, and they won't lose this nature. However, selling your investment and getting your money back may be easier than directly investing in bitcoins. Moreover, some funds invest in bitcoin as well as traditional assets such as stocks and bonds.
Bitcoin options are a type of financial derivative. They allow you to sell or buy bitcoins at a predetermined price, also called "the strike price", even before the expiration date.
Apart from the option that bitcoin cryptocurrency gives you to buy it instantly, bitcoin options help you in taking a speculative (up or down) position on the market price's future direction. If you feel the price of the market will rise, you will purchase a call option:
You'd be able to purchase bitcoins at the predetermined price if what you predicted turns true and the price of the market rose above the striking price of the bitcoin option. Here, the amount of profit you can make depends on how far the price of the bitcoins rose beyond the strike price.
Moreover, if what you predicted didn’t turn out correctly and bitcoin’s price fell, let the contract options expire. This way, you have the chance to only let go of the premium you purchase to start the trade.
Bitcoins can easily be bought through stockbrokers, exchanges, or other owners. It does not matter where you get bitcoins from. What matters the most is the risk involved when you invest in any digital asset.
For most people, purchasing bitcoins is what lays the foundation for investors to step into the cryptocurrency world and make the most out of the different benefits and profits it offers.
Although, people who always used financial products traditionally and are not an expert in the digital aspects may find it difficult to cope. However, you learn everything with experience and it’s better that you start from somewhere.
Moreover, if we look at the news of December 2018, bitcoins struck 3,237 dollars and accomplished a new record in November 2021 when the price rose to 65,000 dollars. Since bitcoins are volatile and speculative, they have not tied investments that will stay true to their word.
You will always see them fluctuating with them, so you need to make good decisions at the right time. But never forget the thumb rule. It says to not invest above 10% of your investment portfolio in bitcoins or individual stocks.
Since bitcoins are quite risky, the safer choice is to do your research and then see how the market works. Once you are well-equipped with knowledge, you can then move towards the buying/selling part.