It is now more than 15 years since Bitcoin was launched, and since then, an estimated 50 – 100 million people have, or have had, ownership of at least one unit of it.
Indeed, some experts suggest there are as many as 50,000 Bitcoin transactions a day, and several high-profile businesses, including Microsoft, Starbucks, PayPal, and AT&T, now accept it as a form of payment.
If you have been considering dabbling with crypto as a form of investment, you’ll be pleased to hear that buying Bitcoin is easier today than ever before. However, it is certainly true that there is still plenty of uncertainty around doing so – not least the long-term stability and profitability of it as an investment. Therefore, due to the high volatility of the market, you should only ever invest what you are comfortable with losing.
That said, if you do want to invest in it, here is how you can go about doing so.
How Did People Originally Buy Bitcoin?
When Bitcoin was originally launched by the mysterious pseudonymous Satoshi Nakamoto in 2009, the ways to invest in this cryptocurrency were risky, to say the least.
At that time, the only way you could acquire this type of cryptocurrency was to arrange a P2P (peer-to-peer) trade on a forum such as Bitcointalk, which Nakamoto launched to host discussions about it.
Alternatively, you could mine it yourself, which could be done on a personal computer and required a lot less computing power than it would now, although you did need to have some technical knowledge.
Unfortunately, quite a few people have horror stories of people being scammed, accounts being hacked, and crypto exchanges regularly facing intense scrutiny back in the day.
Overall, P2P trades were considered much riskier because they were dependent on a level of trust between the buying and selling party.
How Can I Buy Bitcoin Today?
Essentially, if you are new to the crypto game, you have two options when it comes to investing in Bitcoin today. You can either use an exchange or a money app.
Some of the most well-known exchanges are Coinbase, Binance, Kraken, and eToro, and if you live Down Under, you can also buy bitcoin in Australia with bitcoin.com.au.
In terms of money apps, PayPal and Venmo lead the way.
As a general rule of thumb, exchanges require you to have a broader knowledge of crypto than money apps. However, they tend to give you greater control over your assets, charge cheaper fees, and provide you with a lot more crypto options. That said, often, these may be less well-known assets that can be extremely volatile and prone to scams.
For those who don’t want to learn the finer points of the transaction process, you can just purchase it via a few clicks on PayPal or Venmo. They tend to offer the more established cryptos, such as Bitcoin and Ether, at much less risk to the investor – although it is worth reiterating all cryptocurrencies come with risk.
Factors to consider when buying bitcoin
If you want to buy cryptocurrency today, there are a few things you should consider, and one of the main ones is where will you buy the cryptocurrency from.
There are believed to be over 1500 crypto exchanges currently operational, although most of them are not all that ‘operational’. Each of the ones who are has their own rules and protocols that need to be followed, and some are stricter than others.
For many of them, you will need to verify your identity before you will be allowed to buy or sell crypto. Additionally, some will also enforce minimum or maximum buying limits, while others are prepared to accept any amount of money you are happy to part with.
You will also find that some exchanges charge higher fees than others and if you buy crypto, you might not be able to direct the asset to a wallet that you have direct control over. Money apps, including PayPal, keep your crypto in a ‘custodial’ wallet, which means they have full control over the private keys that are used to access it.
Overall, exchanges tend to let you transfer your cryptocurrency to your own ‘noncustodial’ wallet, which provides you with much more control over your crypto assets.
Before you invest, you should be aware that in comparison with property or the stock market, cryptocurrency does come with significant risk. You will also need to record all transactions you make – including the amount, date of purchase or sale, and various other information, for the purposes of filing your tax returns.
Can I Invest in the Bitcoin Market Without Buying Bitcoin?
If you still think cryptocurrency and the Bitcoin market are a bit too complicated for you, there are a few other ways for you to invest in the market without directly buying it.
One is to purchase a Bitcoin futures contract, which essentially is a commitment to buy a pre-determined amount of the crypto at a future date for a set price.
You can also choose to invest in some ETFs (exchange-traded funds) that incorporate Bitcoin futures contracts or companies that operate within the blockchain technology sector.
