5 Sensible Ways to Invest in Bitcoin

John Williams

Nov 16, 2020 — 3 min read

Bitcoin has been attracting investors for years, from experts and professionals to those who are merely curious about the idea. With the cryptocurrency having performed extraordinarily well throughout 2020 though, it’s likely that there will be even more Bitcoin investors moving forward.

Because this is likely to be the case, we’re going to go over some of the sensible options people who wish to invest in Bitcoin have available to them.

1. Direct Bitcoin Trading

The simplest and most straightforward way to invest in Bitcoin is simply to buy and sell it directly. While it has taken some new investors time to get used to cryptocurrency exchanges and wallets, the process is ultimately quite simple. People can use their own money or other cryptocurrencies to purchase any quantity of Bitcoin they like from exchanges, and then hold that Bitcoin in a wallet until it’s time to sell. It is effectively a form of commodities trading, and one people can begin practicing with ease through an app or software program.

2. Long-Term Bitcoin Investment

Another option building off of direct trading is to purchase Bitcoin with the intention of holding it for the long term. This essentially means that when Bitcoin goes up, you don’t necessarily have to sell it. With an asset that can swing $1,000 or more in value in very short time, there’s often a temptation for investors to sell and capitalize on trades. But long-term Bitcoin investment is popular as well, and many believe that buying Bitcoin and essentially forgetting about it — possibly even for years — may well pay off down the road.

3. Bitcoin CFDs

The process of CFD trading is something that’s more commonly associated with stock shares, or in some cases commodities. The way it works is simple: If an investor predicts that a stock will go up, he or she can create a contract to that effect. Then, if the stock has gone up at the end of the contract, the investor earns a return amounting to the difference between the end price and starting point. That more or less explains it (except that CFD trading can also work in the same way if there’s a prediction that an asset will lose value). And CFD trading is now available for cryptocurrencies like Bitcoin also. It’s an interesting method in that it allows investors to effectively trade Bitcoin without buying any.

4. Bitcoin Futures

Futures trading is a very similar option to CFDs, though strictly speaking it still involves the purchase of a resource. In futures trading, an investor agrees to purchase an asset — a stock, commodity, or in this case cryptocurrency — at a certain price, at a certain date. Given this sort of arrangement, if the asset’s price rises after the trade is set in stone, the investor effectively ends up being able to buy it at a reduced value, and then sell it for its new, higher price. Though purchases and sales are made in futures trading, this is still more or less a way to invest in Bitcoin without ever holding it for a significant length of time.

5. Blockchain Investment

Blockchain advancement does not directly reflect the price of Bitcoin, so this is an indirect option to say the least. But there are blockchain startups — some that have already established themselves and others that are emerging on a continual basis — that are in some cases investable. For the most part their success or failure depends on their own business. But the growth of some blockchain companies and technologies can at least loosely relate to broader cryptocurrency news, and for that reason this is an idea prospective Bitcoin investors may at least want to look into.