Before considering investing in Bitcoin, you should first understand what the digital currency is, and then see if you have enough cash to spare. With Bitcoin prices currently being volatile, it is very easy to be able to invest in Bitcoin. In fact, the best time to buy Bitcoin is when the price is relatively low. At the moment because of Mt. Gox’s fall and transaction malleability issues, the price of Bitcoin is lower than $600 at Bitstamp. Thus right now is one of the best times to invest in Bitcoin. The following are three methods you can use to invest in Bitcoin.
The Bitcoin Investment Trust
The Bitcoin Investment Trust (BIT) is an easy, but expensive way to invest in Bitcoin. BIT was launched in 2013 and is a
“private, open-ended trust that is invested exclusively in bitcoin and derives its value solely from the price of bitcoin.”
In addition to this, BIT allows investors to be able to see Bitcoin’s price without the normal challenges of “buying, storing, and safekeeping bitcoins.” This roughly translates to: BIT will do everything for you; all you need to do is give your money to the investment trust.
In more detail, the Bitcoin investment trust allows you to get bitcoins by buying shares in the trust at a set weighted price that is a reflection of the current market. In addition, instead of worrying about how you can secure your coins, BIT offers a unique solution: the investment trust will store your bitcoins for you. According to BIT’s website,
“The BIT utilizes state of the art security protocols to store bitcoin on behalf of BIT shareholders.”
This is done so you do not have to worry about being hacked or getting your wallet stolen. However, this approach requires a great deal of confidence in BIT. You should consider getting in touch with the investment trust before deciding to invest in Bitcoin through BIT. In addition to all of this, if you would like to invest in Bitcoin through BIT, a minimum of $25,000 is required. That’s quite a bit of money especially if you are only tentatively thinking of investing in Bitcoin.
Invest in Bitcoin Through a Bitcoin Exchange
Another way you can invest in Bitcoin is by buying the digital currency from an exchange. The best time to do this is when the price of Bitcoin is pretty low. However, with the current issue at Mt. Gox and the whole transaction malleability bug in the Bitcoin protocol, you might think twice before looking at any exchange.
Coinbase is not an exchange, but seems like a reliable source to buy bitcoins from as it has reportedly not been affected by transaction malleability. In addition, Bitstamp, a very popular Bitcoin exchange is bouncing back into the Bitcoin community as it has restored “fully automated processing for Bitcoin withdrawals” after “rigorous” testing. In addition to Bitstamp, BTC-e, a Bulgarian Bitcoin exchange is also working fine now. It is able to process withdrawals again. This is great news, especially if you happen to be one of the people looking to invest in Bitcoin.
After buying from an exchange the second thing you are going to need is a place to securely store your bitcoins. This could seem a bit daunting, however, like with a regular wallet you need to safeguard your virtual Bitcoin wallet so that your coins do not get stolen or lost. In addition, unlike the Bitcoin Investment Trust, you are the one who is responsible for protecting your coins.
Invest in Bitcoin Through Mining
Mining Bitcoin is another way you can invest in the dynamic digital currency. Unlike BIT and Bitcoin exchanges, with mining, you get the coins directly without having to go through a third party. This seems like a pretty good idea; however, mining is becoming increasingly difficult to do as the demand for Bitcoin increases. This means that the rate at which you might get a Bitcoin through mining is becoming less and less as the days move on.
Firstly, if you’d like to invest in Bitcoin through mining, you need to get the latest and efficient hardware. These can be pretty pricey and if you mine alone, you might not get your money’s worth by simply mining. In addition to this, you also need a strategy for how you plan to mine. Ask yourself: How long will I mine for? What equipment will I use? Should I mine in a pool? These are the questions you should consider before thinking about investing in Bitcoin by mining.
You should also consider how you plan to mine. If you are thinking of mining form your apartment or home, it might become harder to do in the future because of the energy usage you need. However, if you stick to mining whether in a mining pool or by yourself, you need a place to store your bitcoins. Again, unlike BIT, you will be the one responsible to safeguard your coins.
Right now is one of the best times to invest in Bitcoin because the price of the digital currency is pretty low. In addition, as Bitcoin gains momentum and becomes popular in the masses, the price is bound to go up. This means not only will you be investing in Bitcoin, but your investment will also bear you fruit; you’ll be making a substantial profit from it.
Whether you decide to invest in Bitcoin through BIT, if you have the money to spare, or through an exchange or even through mining, you need to consider all of the options beforehand. In order to successfully invest in Bitcoin, review all of your choices and decide which one is the best and most suitable for you. Consider how much money you’ll be willing to put in and then decide the most affordable method for you. And of course, always remember the risks involved with investing, and choose whether the good out ways the bad.
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