How can you invest in BITCOIN?
BITCOIN investment rush has been seen with many people wondering on how they would invest in this fast growing capital market. As a minimum, you can invest in BITCOIN through mining, purchase via exchange, and lastly you can purchase shares in a BITCOIN invested firm.
Anyway, as much as this looks good and easy, it is evident that this investment is more of a gamble. Surprisingly, you are required to purchase valueless things like tulip bulbs, Beanie Babies, and postage stamps.
BITCOIN is valuable and it is convenient and safe when using this digital currency. Remember, when you use in buying something, the payment cannot be reversed and there is no consumer-safety.
Can BITCOIN value be equated to that of Gold? For my opinion, it’s a bit NO. The increment of BITCOIN may be as a result of its technological influence.
- Let’s talk about BITCOIN MINING
I told you earlier, one way of investing in BITCOIN is through MINING. Ideally, when mining stated, it was one of the best way of making money with BITCOINS. However, as time progressed, the process has grown from hard to rigid; in that, nowadays one need to be a specialized hardware, and be a member of “mining pool” where there is cooperation and teamwork between miners. Anyway, you can check on these cryptos that may still be worth mining: Bytecoin, Dogecoin, Litecoin and Ethereum.
If you ask me, I would rather choose Ethereum over BITCOIN on mining. Unlike the latter, Ethereum is regarded much by alliances like Banco Santander and Microsoft. It is planned to carry out fast transactions over BITCOIN. Ethereum is decentralised and favors a person, not mining pools.
- Buying BITCOINS
BITCOIN can be bought from online brokers or from BITCOINS exchange. The exchange has gone further to Automatic Teller Machines that enable a person to buy BITCOIN. You can easily see this in London. This process is chargeable with some percentage, say 3.1-17.6 percent.
Some of these ATMs accept bank notes or takes money directly from individual’s bank, or both. The ATM then converts the money to BITCOIN and sends it to individual wallet. At this point, one can access through email address, or smartphone application. A number of ATMs can produce “paper wallets” print in which a client can scan in future.
If you buy a digital currency from an exchange, it may well offer you an online wallet, but your money is at risk unless you have the keys. When the Mt Gox bitcoin exchange was hacked, around 850,000 bitcoins went missing. It was a $450m loss at the time, but at today’s exchange rate, it would be $2bn.
Wallets
There are dozens of different wallets for different purposes, with “hot” wallets on smartphones and “cold storage” wallets held offline on paper, on hardware devices (cards, thumbdrives etc) or on separate PCs. These are equivalent to your spending money and your savings account respectively.
You will need to research wallets. However, We Use Coins has a decent guide, and it recommends BitPay’s Copay to beginners. It’s easy to use and it runs on iOS, Android, Windows and Windows Phone, MacOS and Linux. It can also handle shared accounts.
I used my Android phone to search for “bitcoin wallet” on Google Play, and gave up when it produced around 200 results. Copay was near the top. It only took two minutes to create a wallet, and it prompted me to make a backup: “Watch out! If this device is replaced or this app is deleted, neither you nor BitPay can recover your funds without a backup.”
It also warned me that “Anyone with your backup phrase can access or spend your bitcoin”. I dutifully wrote it down.
Once the wallet is set up, you can use the app to buy bitcoins from Coinbase in 33 countries, and from Glidera in the USA. It can take several days to buy or sell bitcoins via Coinbase.
Alternative strategies
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Some investors – presumably ones who do not have teenage children – think bitcoin is “for the tech-savvy, difficult to buy and perhaps even harder to store safely”. This has given rise to funds that buy bitcoins or related assets such as mining companies. Last month, The Motley Fool described one ETF as The Worst Way to Buy Bitcoin. At the time, the story said, shares in the Bitcoin Investment Trust cost about twice as much as the bitcoins it owned, but typically they “have traded at an average premium of 39% to underlying value of the bitcoin”.
You could buy dollar bills for $1 each, so why would anyone pay $1.39 to invest in a $1 bill … which is actually worth less than $1, because of the 2% annual management fee? Answer: “the laws of supply and demand”.
Other American investors were conned by a Ponzi scheme that offered shares in bitcoin mining machinery.
Stories like that could be signs of a bubble market, but if so, when and how it will end is impossible to say.
