If you want to invest in cryptocurrency, you must understand the fact that the crypto world has ups and downs. Some people consider digital currency investment as highly speculative due to its volatility. So before taking the first step, you must learn the basics of cryptocurrency investment to avoid mistakes and losses. This article will discuss cryptocurrency jargon, and most importantly, investing in crypto without buying crypto. How is it possible?
When you hear about cryptocurrency, probably, the first thing that comes to your mind is Bitcoin. The said cryptocurrency has gained popularity since it was first launched in 2009. Founded by a person or maybe a group of people under the pseudonym Satoshi Nakamoto, Bitcoin is the original and first-ever cryptocurrency. For the last ten years, Bitcoin has been gaining support from institutional investors, making it more known. Bitcoin utilises blockchain technology which serves as a decentralised ledger. This ledger records all digital asset transactions. To simplify how it works, Bitcoin is produced through solving cryptographic algorithms using powerful computers. A Peer-to-peer network allows all individual bitcoin miners around the globe to solve problems wherein these encrypted blocks of every data solved are chained together to produce a single source of truth. And from the birth of Bitcoin comes the emergence of approximately 10,000 cryptocurrencies in the market.
How To Indirectly Invest in Bitcoin
There are actually numerous ways on how to invest in cryptocurrency without owning one.
Purchase Stock in Crypto-Holding Companies
There are several reputable companies that hold long-term cryptocurrency investments. For instance, Tesla and MicroStrategy are companies that have made headlines recently with their significant amount of investment in the cryptocurrency world. Elon Musk, CEO and co-founder of Tesla, recently announced that they have already embraced Bitcoin as a payment mode. The company holds a long-term investment of $1.5 billion in bitcoin. MicroStrategy is also known for investing more than $2 million in bitcoin. Experts recommend that if you have some extra money and you are risk-tolerant, it is more advisable to allocate a small amount and have specialized index funds rather than buying individual stocks. Instead of buying shares in a single company, it helps to diversify your portfolio in identifying companies and make sure that their shares are included where your mutual funds are. Examples of well-known companies that have involvement or shares in Bitcoin are the following: MicroStrategy, Marathon Digital Holdings, RIOT Blockchain, Bitfarms, Tesla, Galaxy Digital, Paypal, Square, Coinbase etc.
Of course, if you do want to own crypto, then innovative trading platforms like Bitcoin Up are the choice of many new and experienced traders alike.
Grayscale Bitcoin Trust
Grayscale is another way of investing without buying cryptocurrencies. This company specialises in digital currency, which aims to manage your assets. It is publicly traded and will take care of buying, holding and protecting cryptocurrencies, so you won’t have to do it. Grayscale is made up of the two largest cryptocurrencies, Grayscale Bitcoin Trust(GBTC)and Grayscale Ethereum Trust (ETHE).
Some online shopping networks offer bitcoin as a reward. It is one of the easiest ways to acquire Bitcoin without having to purchase them. Some online shops such as Coinmiles and Lolli automatically reward shoppers with Bitcoin with every purchase of their items.
What is Crypto Stocks Investment?
Now that you have discovered simple ways to invest in crypto without holding cryptocurrencies themselves let us elaborate and learn more about cryptocurrency stocks investment. Before deciding to add this option to your investment portfolio, there are some things that you must consider.
To make it simple, crypto stocks investment simply means buying stocks in crypto-related companies. This will allow you to invest without direct exposure to Bitcoin itself, especially when you are one of the people who find cryptocurrency quite complicated and difficult to manage. You don’t have to be a computer geek nor a crypto expert because your chosen companies will take care of everything. However, you must create a wise strategy when it comes to indirect investing. The first thing you have to do is to choose the right company to invest in. Ask yourself. Is the company well-established? How long has it been in the industry? You must also be careful in investing all your money in just a single company. Experts advised investors to diversify their portfolios. You must also possess the ability to rebalance your portfolio to avoid making mistakes. And lastly, in every investment, you must always weigh the risk. Whether direct or indirect cryptocurrency investment, both are exposed to risks. You must have the high-risk tolerance and the knowledge to evaluate the risk involved in order to achieve your expected return of investment.