Cryptocurrency began with Satoshi Nakamoto’s design and development of Bitcoin, which amalgamated several existing ideas from the cryptography system. Cryptocurrency has experienced rapid expansion since the introduction of Bitcoin, becoming a substantial store of wealth and an investment option both online and offline. Some companies began taking bitcoin in addition to traditional currencies in the mid-2010s.
Bitcoin began trading at $0.0008 in July 2010, and by the end of the month, it had risen to $0.08. After that, the cryptocurrency had a rather stable performance, gradually increasing into the $10 area until it peaked at US$250 in April 2013. Since then, bitcoin’s price has risen dramatically, reaching a high of slightly over $67,500 in August 2021.
Because of its decentralized nature, future speculations, volatility, and other factors, Bitcoin and other cryptocurrencies have proven attractive investment options for investors. Investors have taken advantage of the rapid growth in the cryptocurrency sector and are looking to take good advantage and make profits.
How to Invest in Cryptocurrency
The most common option for consumers to invest in cryptocurrency assets is to acquire and hold them directly. Regardless of this choice, you may invest in cryptocurrencies in a variety of methods, five of which are detailed below.
- Directly Buying Cryptocurrency: As an investor, the most frequent method of investing in cryptocurrency assets is to buy and hold them directly. This involves opening an account with a popular cryptocurrency exchange, depositing fiat and making a choice on which crypto you wish to invest in. You can also buy crypto directly from someone else using p2p or you can choose to buy via decentralized exchanges.
- Crypto Mining and Validation: Another way to invest in cryptocurrencies is by becoming a miner or a validator. This is considered a direct mode of investment in cryptocurrencies because as a miner or a crypto validator, you interact directly with the blockchain. Cryptocurrency miners and validators are paid in cryptocurrency, which they can keep or swap for other currencies.
- Invest in Cryptocurrency Exchange-Traded Funds (ETFs): An ETF is a collection of assets whose shares are traded on a stock market. They blend the characteristics and potential benefits of stocks, mutual funds, and bonds. ETF shares, like individual stocks, are exchanged throughout the day at varying prices based on supply and demand.
You may invest in a variety of exchange-traded funds (ETFs), including index funds and futures funds, as well as cryptocurrency investment trusts. Some crypto-focused funds invest directly in cryptocurrencies, while others put their money into crypto-focused firms or derivatives like futures contracts.
- Investing in Companies Involved in Cryptocurrencies and their Development: You can choose to invest from a range of companies that focus partly on cryptocurrency or firms that go all-in on cryptocurrencies like crypto mining firms. The major way to do this is by buying their stock as most of these firms’ shares are already publicly traded.
Cryptocurrency stocks refer to shares in firms that run cryptocurrency exchanges, engage in cryptocurrency investments, manufacture crypto mining equipment, or are directly involved in mining cryptocurrencies.
- Investing in a cryptocurrency IRA: A cryptocurrency IRA is a good option if you wish to invest in cryptocurrencies while still benefiting from the tax benefits of an individual retirement plan (IRA). Using a crypto IRA provider can also help you store your Bitcoin assets in a safe manner.
While the most popular way many people invest in cryptocurrencies is through direct investment by buying them from a platform like BoundlessPay or via p2p, there are other ways you can choose from to invest in cryptocurrencies. You may need to assess the available options to discover the cryptocurrency investment option that best suits your needs.