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Investing in Bitcoin in 2024
When investing in cryptocurrency such as Bitcoin (BTC), you need to keep several things in mind – such as the best places to buy Bitcoin, security for your transactions, and top payment methods to use when purchasing a cryptocurrency.
If you’re looking for a one-stop shop with all the information you need to invest in Bitcoin, you’ve come to the right place. We’ll show you the best providers to use to purchase Bitcoin in addition to explaining how the coin works and whether or not it’s safe to invest in. Keep reading to discover all you need to know.
Best Way to Invest In Bitcoin in 2024
When researching different ways to invest in Bitcoin, you’ll quickly notice that you have several choices. And while having a lot of options is often great, it can also serve as an annoyance and lead to indecision when finding the best way to invest in Bitcoin. Fear not though, because we’ve put together a list of the best providers below.
| Exchange | Why we like it | Best for |
|---|---|---|
| Coinbase | – User-friendly interface – Native crypto wallet – Earn interest on your crypto – Low account minimum | Beginners looking to trade large-cap coins. |
| eToro | – Access stocks and crypto in one place – Copy the trades of experts – Regulated by global bodies – Access Bitcoin Spot ETF | Investors who want to buy crypto and stocks. |
| Kraken | – Cold wallet storage – Trade with leverage up to 5x – Advanced traders can access – Kraken Pro with sophisticated trading tools – Over 200 cryptocurrencies available | Advanced traders who are interested in margin trading. |
| Crypto.com | – Excellent mobile app – Users can receive trading discounts by holding CRO – Native decentralized wallet – Over 250 cryptocurrencies available | Traders who want to manage their portfolio on their mobile phones. |
| Binance | – Over 500 cryptocurrencies available – Extensive range of educational materials – Automated trading | Users who are looking to build a diverse portfolio with lots of different cryptos. |
What Is Bitcoin?
Bitcoin was the first cryptocurrency ever created and revolutionized the world of finance and its possibilities. Here’s everything you need to know about this digital currency.
Key Facts About Bitcoin
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Year Launched: 2009
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Total Coins in Circulation: 19,842,050 (as of August 2024)
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Maximum Allowed Bitcoins: 21 million
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Distribution System Used: Blockchain
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Trading Opportunities: Cryptocurrency exchanges, brokers, P2P lenders, and more
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Items That Can Be Purchased with Bitcoin: There are a limited number of items that can be purchased with Bitcoin but the list is growing over time.
History
Bitcoin was created in 2009 shortly after the 2008 economic recession. The seismic events of 2008 had revealed a new concern for centralized financial systems and out of this grew the first truly decentralized peer-2-peer cash system: Bitcoin. This network was supposed to be able to simply send financial transactions and the value they hold to one another without the need for any centralized authority. The Bitcoin network would inherit its infrastructure from the community of miners that ran and verified its transaction, and get its security from cryptographic means.
It was this cryptographic element that also interested some users who saw Bitcoin as a store of value, as a comparable virtual gold. Today this is how we know Bitcoin; it now sets the bar and trends for the entire cryptocurrency market with a total market capitalization of over $1 trillion. Bitcoin also famously has no leader, instead, it is a mysterious figure known as Satoshi Nakomoto, a riddle yet to be solved by the community. You can find the Bitcoin white paper online written by Satoshi that sets out the core principle of how this technology works.
What Is the Bitcoin Network?
You can imagine the Bitcoin network as a big order book full of transactions, or a ledger. Users can send large amounts of Bitcoin to other users on this ledger by using a specific address, just like with a traditional bank transaction. But where a bank transaction is sent to the centralized network of that bank to be verified, Bitcoin is sent to the decentralized Bitcoin ledger. This is how funds are sent to users.
Miners make up an additional important part of this decentralized network as they provide the physical infrastructure for this platform to run on. Once they have verified the transactions and sorted them into blocks, users know that the funds they are sending and receiving are secure, and this is what creates a functioning financial network. These miners then receive rewards for completing this process in BTC which results in more BTC being added to the overall supply.
What is a Purpose of Bitcoin?
Bitcoin is famous for being the antagonist of the modern-day inflationary financial system. Although it originally sought to act as a peer-2-peer cash system it now seems to be more of an investment than a tool to send money to one another without the need for a centralized authority. Many now perceive Bitcoin’s primary function as a hedge against inflation in traditional economies for example, with some others seeing it as simply a long-term investment.
Some now even dub Bitcoin as the digital gold, meaning it acts as a stable and capped store of value that can act as a combatant to poor market performance or inflationary events.
How Does Bitcoin Work?
Here we will cover some of the core concepts to help conceptualize how Bitcoin works. We will look at the consensus mechanisms that underpin the entire network, how it nurtures its ecosystem, and how it remains a deflationary asset.
Proof-Of-Work
The blockchain consensus mechanism for Bitcoin requires miners to solve complex mathematical problems with extensive levels of computing power to verify transactions on the network and in turn, earns miners rewards.
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Very energy consuming
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Requires specialist hardware
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Mining is ongoing and indefinite in order to solve problems and verify blocks
Mining
There are two core concepts to understand about the nature and functions of Bitcoin mining that both hold incredible value to the wider system.
These two facets are:
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The process of new Bitcoin entering the overall supply via rewards for work.
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The process in which transactions become confirmed.
Supply and Rewards
When users send transactions to one another they are entered into an unconfirmed transactions pool to be sorted and verified by the network’s miners. This verification process is called mining and essentially consists of computers solving complex mathematical equations. You need a lot of computer power to complete these problems so miners are required to have special hardware to do so. But it’s the utility within this complex problem-solving process that holds the key to Bitcoin’s success.
Essentially, once a problem is solved it means a block has been created. A block represents a collection of verified and confirmed transactions that give the network security of trade. Miners all work on these problems to create verified blocks, and once connected to a chain they form the Bitcoin ledger and its blockchain network.
Once a miner successfully creates a block they are rewarded with Bitcoin and the overall market supply is slightly increased. These rewards are halved every four years as an anti-inflationary measure, so the supply tends towards a finite limit of 21 million BTC, which will never be exceeded. It is designed in this way to be a direct antagonist to the current financial system – but more on this later.
Transaction Confirmations
Bitcoin confirmations are one of the core pillars providing security to the financial ecosystem. When a user signifies that they want to make a payment in Bitcoin this is sent to an unconfirmed transaction pool and miners undergo the verification process. Once this verification process is complete the block is constructed – we can describe this as one confirmation. Once this group of transactions is confirmed and grouped into a block miners then begin working on the next block. Blocks are constructed, or chained, on top of one another so every time a new block is added to the chain it becomes harder to manipulate or change an old transaction. If a new block is built on top of an older block then the community can have faith that the transactions they are built on are valid and verified.
The degree of security you enjoy depends on how many Bitcoin confirmations there have been. Also, another influencing factor can be the value the transaction represents. Manipulating blocks requires an extreme amount of computing power, much more than just mining which is already energy-intensive, so it is unlikely to be undertaken for a small amount for example.
Halving
Halving is the deflationary element of the Bitcoin ecosystem. It is an inbuilt function within the network that means around every four years, or every 210,000 blocks mined, the rewards miners receive for mining blocks will be cut in half. Of course, this is not ideal for miners but in terms of tokenomics, it helps to reduce the inflation of the supply. This essentially increases the value of those BTC that can be mined as now there are half as many available; this can also have a direct impact on the market price of the coin as speculators can see that there is no dilution of value. Essentially, it’s a control of the supply.
Pros and Cons of Using and Investing in Bitcoin
When investing in and using Bitcoin, plenty of benefits exist. But at the same time, you’ll also run into a few drawbacks. Here’s an overview of them both:
- The most mature cryptocurrency with the longest history and information available for informed decision making
- Broad levels of circulation both for investing and using as a currency for purchasing items
- Almost all cryptocurrency exchanges and brokers allow users to trade Bitcoin
- Bitcoin is extremely volatile even when compared to other cryptocurrencies
- Bitcoin has already made astronomical gains, which could mean it has less price potential then newer coins.
- From a usage sense you still can’t use Bitcoin everywhere
Famous Backers
Bitcoin has taken the world by storm over the past several years, and unsurprisingly, the currency has a lot of famous backers.
Tesla and SpaceX CEO Elon Musk has invested heavily in Bitcoin, with Tesla even accepting the currency as a payment method for a while. However, Tesla stopped facilitating Bitcoin payments due to the perceived environmental impact. But Musk has since said that Tesla will “most likely” reintroduce accepting these types of payments.
Twitter co-founder Jack Dorsey is another well-known Bitcoin supporter. Dorsey has also dabbled in a few other crypto-related fields and even sold his first-ever tweet as a non-fungible token (NFT) in 2021.
Former boxer Mike Tyson is also a big Bitcoin backer and has himself invested in the currency. Tyson has also launched a wallet with Bitcoin Direct alongside Bitcoin ATMs.
Additionally, many within the music scene have backed the success of Bitcoin. For example, the rapper Logic invested in the currency just before it began rising again in 2020. Meanwhile, Snoop Dogg has accepted Bitcoin as a payment method for some of his albums in the past.
Famous Uses of Bitcoin
In its 12-year-long existence, Bitcoin has had several uses – both for individuals and within overarching infrastructures.
One of the most common uses of this cryptocurrency is for trading. Many individuals benefitted from getting in early before Bitcoin’s first big boom, and others continue to capitalize on its gains even having just invested more recently. A common misconception is that you need to buy a whole Bitcoin to start trading, but this is not true as you can buy parts of a single Bitcoin.
In addition to trading, many people around the world regularly use Bitcoin to pay for goods online. Some gambling websites have even dedicated their services to cryptocurrency users, and you can book hotels and more with cryptocurrency.
Bitcoin has also been crucial for businesses. When investing in startups, for example, some individuals choose to use this cryptocurrency instead of fiat currencies. In some cases, you’ll see initial coin offerings (ICOs) booming in popularity which is where companies can raise capital for the projects using cryptocurrencies to get their ventures underway.
Ways to Buy Bitcoin
When buying Bitcoin, you don’t need to worry about having limited options. Nowadays, you can buy this cryptocurrency both online and offline – so there is no wrong answer. Just choose whichever option is right for you.
Below are the most common ways to buy Bitcoin. We’ve broken them down into bullet points, so they’re easier to digest:
Cryptocurrency Exchanges:
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Cryptocurrency exchanges are the easiest way to buy Bitcoin. Exchanges are centralized platforms, and to buy a coin you simply need to put in a buying order. Rates and fees will vary depending on your choice.
P2P Marketplaces:
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P2P marketplaces work in a similar way to cryptocurrency exchanges. The primary difference is that they’re not centralized – you buy directly from the user. If you’ve got a dispute, you’ll need to go through the platform provider – but they’re relatively hands-off apart from that.
ATMs:
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Depending on where you live, buying Bitcoin from an ATM is a potentially viable option. You can use either your bank card or physical cash to make the purchase.
Also, if you would like to go deeper, here are some guides we created on some popular payment methods:
How to Invest in Bitcoin
There is no shortage of ways to invest in Bitcoin. Each of them works a little differently, so before you make a decision it’s worth thinking about both your investing strategy and the choice that best fits you.
Below is a list of different ways to invest in Bitcoin.
Bitcoin Brokers:
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You can buy Bitcoins directly from several cryptocurrency brokers and trade them on the market. If you’re looking at short-term investment strategies, Bitcoin brokers might be a smart place to begin.
Cryptocurrency Exchanges:
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Besides buying Bitcoin outright, you can also trade on cryptocurrency exchanges. In this sense, platforms of this kind don’t differ greatly from brokers — you buy and sell depending on your market speculation.
Bitcoin ETFs:
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You can also trade using Bitcoin ETFs, which could either result in you trading shares or not directly owning the coins.
Bitcoin Index Funds:
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Right now, no Bitcoin-specific index fund exists – but you can use cryptocurrency-dedicated ones. Index funds are a good idea if you’re looking to invest long-term.
Bitcoin Mutual Funds:
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You can also use Bitcoin mutual funds to invest. If you’re not interested in trading via a broker, you might find this a less risky alternative.
Bitcoin Trusts:
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In some cases, using a trust to buy Bitcoin shares might be more effective. The most popular Bitcoin trust is the Grayscale Trust.
Bitcoin Debit Cards:
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Several Bitcoin debit cards exist and allow you to use the currency in several places. Once you’ve got money on it, it’ll work no different from a standard bank card – only you use cryptocurrency instead of fiat currencies.
Bitcoin Apps:
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Several Bitcoin apps exist, ranging from exchanges and brokers to trackers and more.
Bitcoin Wallets:
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Once you’ve bought Bitcoins, keeping them in an exchange is a risky game – especially if a security breach occurs. Don’t worry, though, because plenty of Bitcoin wallets exist to mitigate this risk.
Using Trading Robots:
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You can trade Bitcoin using crypto trading bots.
Is It Safe to Invest In Bitcoin Right Now?
Cryptocurrency markets are volatile, and buying any coin carries risks. Rates can fluctuate dramatically, meaning that the value of your coin could drop in little time.
Bitcoin has enjoyed significant growth in 2024 and is the undisputed big dog in the cryptocurrency space. It’ll be around for a while, but there’s no guarantee that a crash won’t happen again.
At the time of writing, investors are bullish on Bitcoin due to support from US President-Elect Donald Trump. Trump has been vocal about his support for cryptocurrency throughout his campaign and many believe that his victory could send the price of BTC up.
However, there is no knowing whether Trump will win. The current state of the crypto market is volatile and investing comes with high risk.
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