How Do You Invest in Bitcoin?

With all the buzz surrounding Bitcoin, the decentralized cryptocurrency released in 2008 by a person or persons known as Satoshi Nakamoto (we now know that Satoshi Nakamoto is in reality Australian entrepreneur Craig Wright), you may be considering whether Bitcoin is a good investment product for you and how you might get started investing in Bitcoin. Let’s examine how to get started in Bitcoin and what that means to an investor.

Getting Started

The easiest way to invest in Bitcoin is simply to buy some. Open a Bitcoin Wallet and use regular USD to purchase a Bitcoin or a portion of a Bitcoin. That’s it. There are other opportunities to invest in Bitcoin, but they are on the level of corporate venture capital, and here we are looking at investments for the average Precious Metals buyer. A Google search can get you started using Bitcoin in just a few minutes.

What Experts Say About Cryptocurrency Investing

Bitcoin is notoriously volatile, which can happen to a currency in its infancy. This may look like growth potential—for example, Bitcoin gained over 300% from 2011 to 2012, and are worth about $8200.00 each as of this writing—but volatility is something we know to avoid in investing. Several experts in the field, including analysts from Wells Fargo and the Wall Street Journal, point to volatility, regulatory concerns and tracking risks as major detractions to investing in Bitcoin. Tracie McMillion, head of global asset allocation at Wells Fargo Investment Institute, says “It’s almost like cash, and if you lose your cash, you can’t really trace it.” Bitcoin is decentralized and not backed by anything. If it goes belly up, it is not insured. Experts advise over and over not to put more into Bitcoin than you can afford to lose.

This is not meant to dissuade you. Decentralized cryptocurrency is exciting, and many people would like to get in on the ground floor of something new and revolutionary in investment products. However, Bitcoin and other cryptocurrencies were not meant to be investment products. Think about where you really are in your long-term savings and investment goals, and consider how much you can truly afford to risk. If you are debt-free and on track for major goals such as helping your children with college and funding your retirement, you may feel you have some latitude. If you are not quite at that level but on the right path to those goals, you may feel you can play with small sums just to feel Bitcoin out. Even the earliest adopters of Bitcoin advise to only keep as much capital in your Bitcoin Wallet as you are prepared to lose at any moment, so think it over.

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