There are two main ways to make money off Bitcoin using binary trading: by betting on BTC price, or by depositing Bitcoin to your trading account and using it to trade. Learn more about options and other traditional stocks here. Being a Masternode. Another way how you can make money from Bitcoin is by running a masternode.

1. How Do People Make Money With Bitcoin
2. How To Make Money Trading Bitcoin
3. How Do You Make Real Money From Bitcoin For Beginners
4. How Much Money Do Bitcoin Miners Make
5. How Do You Make Money From Bitcoin Trading
6. How Do You Make Real Money From Bitcoin Online
7. How Does Bitcoin Make Money

Dummies Guide to Making Money from Bitcoin & Crypto 2021 1. Two main ways to make money. There are two ways to make money with crypto. The first is by maximising how much of. Buying cryptocurrency directly 💸. Buying cryptocurrency directly is still one of the easiest and safest ways to. SET UP YOUR COINBASE ACCOUNT: HOW TO EARN WITH CRYPTOCURRENCY: BEGINNER’S GUIDE we’re t.

Disclaimer: The opinion expressed here is not investment advice – it is provided for informational purposes only. It does not necessarily reflect the opinion of U.Today. Every investment and all trading involves risk, so you should always perform your own research prior to making decisions. We do not recommend investing money you cannot afford to lose.

In 1999, Professor Milton Friedman, a Nobel Prize winner in economics said:

I think the internet is going to be one of the major forces for reducing the role of government. The one thing that’s missing but that will soon be developed is a reliable e-cash.

Nine years after that, Bitcoin was created.

Upon its appearance on the horizon, Bitcoin has turned the tables in favor of digital investment. Only a lazy trader didn’t try to make riches with crypto. Indeed, there’s a myriad of ways Bitcoin can generate income for you – both humble or grandiose. So, how exactly does Bitcoin make money? We will observe the most common ways of earning the asset.

What is Bitcoin?

Bitcoin is the first decentralized currency in the world – it means that there’s no central authority controlling it (for instance, a bank or a government). The idea behind Bitcoin was explosive: it was the first financial asset that couldn’t be harnessed by any organization or person. Besides, the Bitcoin blockchain, the fundamental technology underlying it, ensures transparency of transactions – operations are impossible to manipulate. That makes data fraud simply impossible.

Thanks to the blockchain, every transaction can be verified without a central bank involved: it is processed with the help of computing power donated by the users. They help to process transactions and generate blocks that form the ‘blockchain’ and get rewarded for that in BTC token.

Where did it come from? The cryptocurrency’s father is the mysterious Satoshi Nakamoto – up to date, no one knows who this person, or group of persons, really is. Anyway, Bitcoin and cryptocurrency itself have become a revolutionary way of making investments and performing transactions – digital money has the potential to change the global economic landscape seriously and irreversibly.

Here’s what Peter Diamandis, Founder, and Chairman of the X Prize Foundation, stated about Bitcoin:

At its core, Bitcoin is a smart currency, designed by very forward-thinking engineers. It eliminates the need for banks, gets rid of credit card fees, currency exchange fees, money transfer fees, and reduces the need for lawyers in transitions… all good things.

Why does Bitcoin have value?

Okay, if Bitcoin is a digital currency that has appeared out of nowhere, how come it has any value? Many ponder this very question. The lynchpin of Bitcoin’s success is the blockchain technology and the possibilities it provides us with. Here are a few points to consider:

1. Bitcoin can be used as both medium of exchange, and a store of value (the second depends on the first).

2. The Bitcoin supply is limited: it’s restricted by 21 million, and not all coins are emitted yet. As we know, deficiency adds to the price. So when all Bitcoins get mined, its value will only grow.

3. Even though volatile, Bitcoin contains legitimacy, investors, and wide adoption – the more people get involved, the more Bitcoin’s hype drives its price.

4. It should also be mentioned that Bitcoin’s current value is impacted by speculative interest. Although some believe it’s a bubble, price ups and downs don’t discourage traders.

5. Bitcoin will never use fractional reserve banking – that means that Bitcoin money is backed by Bitcoin money only.

All in all, it’s us, people, making a fuss around Bitcoin and raising its price. In 2017, the crypto community has driven hype through the roof – that’s why prices edged lower.

As the value goes up, heads start to swivel and skeptics begin to soften. Starting a new currency is easy, anyone can do it. The trick is getting people to accept it because it is their use that gives the “money” value. Adam B. Levine

Now that the stage is set, let’s figure out how you can reap financial benefits from Bitcoin yourself.

1000 and 1 model of making money with Bitcoin cryptocurrency

Digital currency is a stomping ground awashed with opportunities and people seeking them. We will discuss the most widespread ways of generating Bitcoin profit or earning fiat with the help of crypto assets.

1. Crypto trading

One of the fastest, simplest, and riskiest ways to make BTC is trading on an exchange. In other words, you buy Bitcoin when its price is low, and sell it when the price rises. This works the same way as with fiat currencies.

However, if you do it by relying on luck or guesswork, your efforts are doomed from the start. Professional traders dedicate a lot of time to learning how to avoid risks and predict the pricing trends. Truly successful investors know that they might lose money in the short term but win in the long term as they invest into their experience and education.

So be sure that you keep improving your trading skills – don’t just buy money blindly believing in ‘signals’ and predictions.

2. Investment in ICOs/IEOs

This is a lengthy and relatively risky way that won’t necessarily make you rich. We all know that cryptocurrency taps into untouched markets; the number of projects driven by blockchain is enormous. Some focus on healthcare and genetics, while others leverage crypto payments to pay for lawyers’ and financial consultants’ services.

Every project develops its own token and launches an ICO or IEO – a crowdfunding campaign for early contributors to donate fiat/BTC/ETH and other currencies to invest in development of the project. Using their money, contributors buy the proprietary tokens. If the project becomes successful and makes its way to the crypto exchange market, you can sell those tokens for Bitcoin. Besides, the value of the coins can increase exponentially.

Unfortunately, the practice shows that 90% of projects don’t make it to the exchange market even after successful ICOs. Therefore, monitor your potential investment opportunities closely. Look at the following aspects:

1. The team behind the project: their experience, previous projects.

2. Advisors and sponsors.

3. The idea and its technical implementation. It should be something outstanding and useful for the community.

4. Roadmap and plans for the nearest and long-term future.

Do your homework before buying some new coins. Otherwise, your money will disappear with the company.

3. Lend your Bitcoins for interest

If you already have a few extra Bitcoins to spare, grow your wealth through Bitcoin lending platforms. These websites connect crypto owners and lenders for an interest rate. However, this is a risky venture: although borrowing seems to be a sure-fire way of earning money, there is a danger that you won’t get your coins back. Since there’s no collateral that makes the borrower liable for the loan, sometimes lenders are left with nothing in the result.

4. Organize a Signature campaign on Bitcoin Talk

BitcoinTalk is a website that unites content creators and their potential readers. You can use your account signature to advertise campaigns and get paid for the content you create. The list of signatures is present on the website.

Seems easy-breezy? Don't rush into making conclusions. To start earning money, you should become a full member of the website (because those who are not get paid less, if not paid at all). Full members are those who have at least 120 articles posted. Besides, there's a large number of limitations on a post, such as length, original content, and so on. There's also a minimal weekly post number limitation, that's why such method of earning isn't the simplest one. An average full member of BitcoinTalk gets about $5 per hour depending on how much is written and the membership level.

5. Be a cryptocurrency writer

You've got journalistic talent? Love writing? Then why not try creating posts, interviews, and analytic articles dedicated to Bitcoin and crypto? Find a company to work for – there’s a myriad of offers on Upwork and platforms alike, and some of them can reward you with Bitcoins instead of the usual fiat currency. Forums are nothing to sneeze at, too: find specialized Bitcoin forums and offer your services.

Alternatively, you can write for ICOs and crypto-related startups for Bitcoins. Note that regular work is different from participation in bounty programs – in the second case, you will be rewarded by other tokens.

6. Sell a product or service

If you aren’t into copywriting, perhaps there’s another service you can offer. The above-mentioned BitcoinTalk features a wide range of services you can render in exchange for Bitcoin:

• development of websites;

• online marketing;

• escrow agents for BTC transactions;

• and so much more.

P.S.: Since Bitcoin allows for anonymous transactions, digital payments have become widely adopted by eCommerce stores. But, on the flip side, anonymous Bitcoin payments started being accepted as payment for drugs, weapons, and other illicit goods – the operations are done on the so-called ‘darknet’ – the Internet where users’ activity cannot be so easily tracked. We do NOT recommend selling illegal stuff and services via the darknet for at least two reasons: it’s risky and unethical.

7. Alternative: Introduce Bitcoin payments in your business

If you have a well-established business but want to invest in Bitcoins, why not try introducing Bitcoin payments for users? Some eCommerce stores and websites have already added such options, so stay ahead of tech curve and reinforce the exclusivity of your business, too.

It doesn’t matter what you specialize in: food delivery (remember the Papa John’s pizzas bought for 10,000 Bitcoins eight years ago?), clothes, consulting services, or real estate – potential Bitcoin users are everywhere, so don’t miss out on the opportunity to attract them.

8. Paid-to-Click websites

As you may guess, these websites pay users BTC for visiting some websites or viewing advertisements. There’s a myriad of PTC websites, and Ads4BTC is probably the most popular one. You may choose between 5, 10, or 20 second videos and be rewarded for watching them. However, if you calculate your revenue, even if you watch 20 second ads on Ads4BTC all day long, you will make less than $10 a day, so it’s not a profitable option and is not worth your time, and, probably, even the electricity costs.

9. Owning a faucet

While working for faucets is a pointless venture (you can spend an hour clicking on different ads and earn some 5-40 cents), having your own faucet is a different story. You can build your own cryptocurrency faucet without supernatural efforts and start earning money soon. Such a website can earn you Bitcoins worth $1,000 and more. However, you will need to maintain the website, protect it against attacks and malware, and manage users. It requires a lot of time and effort, not to mention technical knowledge and initial capital.

10. Micro Jobs

This option is similar to PTC websites, but in this case, you can complete small tasks for a few satoshis. Such websites as Coinworker offer a large variety of such tasks: they can start from simply testing a plugin to check whether it works correctly, or retweeting a post. It’s little money, but there is potential to earn more than faucets and PTCs can offer.

11. Promotion of Bitcoin affiliate programs

This method is often overlooked, which is a mistake, as affiliate Bitcoin programs are a great chance to create your riches. Affiliates pay users some certain commission for attracting paying customers to their service.

A lot of Bitcoin exchanges, startups and companies have affiliate programs. You can enroll and get a personal link for people to click and get involved.

There are many ways you can share your affiliate link:

• make posts on Facebook;

• leave it in the comments on forums;

• run your own campaigns;

• create your website where you will share links.

Being a successful affiliate marketer is a hard task: you need to have some experience and knowledge of how marketing works.

12. Playing in a Bitcoin casino

Gambling has always been a risky way of earning, and it’s not an exception when it comes to Bitcoin. But in this case, blockchain will be the warranty of a fair game.

Find reliable Bitcoin gambling websites. As a rule, such casinos give players the opportunity to check the results and make sure they were random. Decent Bitcoin casinos have enough 'house edge' and are ready to show players that they don't manipulate the results.

Although it's the simplest way of making money, everything depends on your luck which, as you know, is an unstable thing.

13. Mining is the matter of the past

If several years ago ‘mine and hodl’ was the easiest and sure-fire strategy of becoming a millionaire (you could mine coins even with your smartphone), today the situation has changed completely. The difficulty of mathematical calculations required for mining continues growing with the time and number of miners involved. The truth is that now Bitcoin mining requires such sophisticated mathematical computations that usual crypto miners stand no chance – home mining rigs cannot do it. There’s a 99% chance that your hardware investments won’t be covered, even if you join a mining rig.

So if you have a few GPUs and ASICs at your disposal, it’s better to switch to another cryptocurrency.

As an alternative to classic mining, today there is a cloudy one. Its essence lies in the fact that you do not need to buy expensive equipment, set up and maintain it. It all comes down to the purchase of computing power, and the equipment will be located in the data center of the cloud mining company. Your budget directly determines the computing power, and hence the estimated daily profit. As an example, it is possible to get acquainted with the prices and special offers of the cloud mining company IQMining.

14. Grow your Bitcoins through HYIPs and coin doublers

This is a highly risky way of earning. What is a High Yield Investment Program? Those are the sites that promise to double your coins in a few days or give you some very high interest rates. What they really do is take money from new subscribers and pay off the old ones. Due to the growing buzz, a website starts off seeming legit. Besides, HYIPs always have referral programs – users are rewarded for attracting their friends.

The truth is that HYIPs deploy typical Ponzi schemes. They exist for some 3-4 months before suddenly going offline with the users’ money disappearing. No more payments are made, and people understand they have been scammed. At the moment, there’s no such website that would be called reliable – 100% of them appear to be only a cover for criminals to steal coins. If you still want to hop on the investment train and give it a try, read reviews and use Bitcoin scam test tools to check out websites.

15. Claiming Bitcoin forks and airdrops

Since 2017, Bitcoin started forming ‘forks’, or other coins. In layman’s terms, a fork is a ‘coin clone’ that emerges from the existing cryptocurrency. Every person who used to have Bitcoin before the form can also claim a new coin. The first successful Bitcoin’s fork was Bitcoin Cash, but soon Bitcoin Diamond, Bitcoin Gold, and other forks were introduced.

The process of claiming forked coins is pretty common, but you need to have some basic understanding of how Bitcoin works. Without technical knowledge, this method isn’t likely to work. Alternatively, you can work with companies that claim coins for you and take some certain commission. However, there’s a threat that they can just take your money and disappear. As soon as you claimed a forkcoin, you can sell it in exchange for Bitcoin.

All in all, airdrops and forks can bring you the highest value in the short term but are too risky. We would recommend using these methods only after learning the nooks and crannies of the claiming process.

Also, watch this 99bitcoins review before you start:

Tips for getting the biggest bang for your buck

Mind these aspects before you start your investment experience and try to get Bitcoins:

1. Do your homework. Be prepared to make any purchases and trading steps. Find information about the project/ICO/website, read online reviews and join groups to ask questions.

2. Focus on security. Like physical cash, Bitcoin should be thoroughly protected. That means you should keep your wallet backed up, use anti-virus solutions and 2-step authorization. Ideally, you should have an official wallet of the cryptocurrency you’re going to earn.

3. Keep tabs on fluctuations. Since Bitcoin and cryptocurrencies are still at their infancy, investing money doesn’t guarantee you success because the price is ever-fluctuating. While crypto is at the early stage of its development, it’s volatile. Therefore, you should be prepared for more gambling than investing.

4. Bet on the fundamentals. At the end of the day, the winners will be the cryptocurrencies that have the most superb underlying technologies. So even if you don’t buy Bitcoin directly, choose the altcoins that are likely to get to the top. Look at the fundamentals, ideas, and technological implementation of blockchains.

Bottom Line

Bitcoin and cryptocurrencies are being introduced in different spheres of our life, steadily replacing fiat currencies and traditional investment ways – this is a spiral of development with no way to reverse the trend. While digital money creates a new era for the global economy, you should keep up with the time. Find suitable ways of earning Bitcoins, and you will enjoy financial stability in the long term.

Key Takeaways

What is Bitcoin? | What do you need to invest in Bitcoin? |
How to invest in Bitcoin in 5 steps | Is Bitcoin a good investment? | Different ways to invest in Bitcoin

Over the last several years Bitcoin has become increasingly popular amongst today’s investors. During that same time, there’s been a lot of debate about Bitcoin and other cryptocurrencies—Its proponents argue that it’s the future of currency and investing, while its detractors argue that it’s a risky investment option that may not generate big returns.

To better understand its true value in the marketplace, we must look to its latest movements. Most recently, Bitcoin’s valuation has increased more than 763% in just one year, easily outpacing traditional gains in the stock market. More people are buying into Bitcoin becoming a decentralized, global currency. One tailwind, in particular, is the acceptance of Bitcoin by several high-profile individuals and businesses.

Elon Musk, the mind behind both Tesla and SpaceX, recently announced his automotive empire would not only purchase $1.5 billion in Bitcoin, but it also intends to accept the cryptocurrency as payment in the future. Several popular FinTech (financial technology) companies like Square and PayPal also announced their intentions to start supporting cryptocurrencies moving forward. Despite all of that, however, the most important development for Bitcoin may be the recent IPO (initial public offering) of Coinbase Global, Inc. (NASDAQ: COIN), today’s leading cryptocurrency exchange platform.

There’s no doubt about it: momentum in Bitcoin is certainly building. Recent developments have contributed to Bitcoin’s meteoric rise in value, and proponents of the asset are convinced this is just the beginning.

So, what exactly is Bitcoin, and how can you determine whether it’s the right investment for you? Read our beginner’s guide on how to invest in Bitcoin.

What is Bitcoin?

Bitcoin was created by a programmer or group of programmers using the name “Satoshi Nakamoto.” But the real creator(s) of Bitcoin is still unknown to the public.

Bitcoin is one of the most widely used types of cryptocurrency. In a cryptocurrency system, virtual “coins” or “tokens” are used instead of physical cash. Coins have no intrinsic value, and they aren’t backed up by gold or silver.

Bitcoin was created to solve a couple of big cryptocurrency flaws. First, it was designed to prevent crypto coins from being fraudulently duplicated. Think about how easy it is to make copies of your computer’s data—documents, photos, files, etc. Cryptocurrency wouldn’t be possible if anybody could duplicate a coin and create an unlimited amount of currency for oneself. You can’t just make copies of a $20 bill, right? Likewise, there’s a need to prevent people from reproducing crypto coins.

Understanding Blockchain Technology

Bitcoin uses a digital technology called “blockchain,” an advanced coding mechanism that disperses a single code over thousands of different computers. For example, let’s say that your coin is built from the code, “XDA146DDS.” Blockchain segments the code into smaller pieces and stores the pieces of code across many computers. If a hacker wanted to access the code, they’d have to hack various computers to access the entire code.

Blockchain also employs a “public ledger,” which uses thousands of computers (referred to as “nodes”) to keep track of coins and their owners. If a coin’s data is changed, the nodes will cross-reference each other’s records to verify whether the change is accurate and that the coin’s owner initiated it.

What is Bitcoin used for?

Once you purchase coins, you can use them in online transactions wherever they’re accepted. Remember, when you make a transaction with a coin, there’s no actual money being pulled from your bank account. Money only leaves your bank account when you purchase the coin itself—not when you make purchases with a coin.

Like cash currency, the value of a coin may fluctuate. That’s why some investors are getting excited about Bitcoin and other types of cryptocurrency. Investors speculate that Bitcoin’s value may rise significantly if there’s a surge in the market. I’ll explain the arguments for and against cryptocurrency investment later on.

For now, investors should pay special considerations to the rate by which Bitcoin and other relevant cryptocurrencies are being adopted. Not unlike traditional equities, Bitcoin increases in value when more people are interested, and more people are interested in buying Bitcoin today than ever before. Whether it is pure conviction or an inherent fear of missing out on what many predict to be the greatest transfer of wealth in American history, trading volume continues to increase exponentially. For the better part of a year, in fact, Bitcoin trading volume has steadily increased. As a result, Bitcoin is regularly testing new highs.

What Do You Need to Invest in Bitcoin?

You don’t need very much to invest in Bitcoin! You only need the following:

• Personal identification documents

• Bank account information

• A secure internet connection

Keep in mind—if you’re going to be purchasing coins through a stockbroker, you may not need to supply your personal information or financial information because your stockbroker will likely have all that on record.

How to Invest in Bitcoin in 5 Steps

Are you ready to take a dive into cryptocurrency? You’re in luck as buying Bitcoin is simpler than you might think. Here’s how to invest in Bitcoin, in 5 easy steps:

1. Join a Bitcoin Exchange

2. Get a Bitcoin Wallet

3. Connect Your Wallet to a Bank Account

4. Place Your Bitcoin Order

5. Manage Your Bitcoin Investments

1. Join a Bitcoin Exchange

First, you’ll need to determine where you want to make a Bitcoin purchase. Most Bitcoin investors use cryptocurrency exchanges. There’s no official “Bitcoin” company because it’s an open-source technology, but there are several different exchanges that facilitate Bitcoin transactions. These exchanges are the middlemen of cryptocurrency investing, like a stock brokerage.

If you decide to purchase from an exchange, you’ll have to decide which exchange you want to buy from. Here are a few of the most popular options:

• Coinbase: A very popular crypto exchange that insures losses in the event of a security breach or fraudulent transfers

• Binance: Founded in 2017, Binance is a crypto exchange with a strong focus on altcoins

• Kraken: This San Francisco-based exchange allows you to invest in Bitcoin using various currencies from around the world

• Gemini: Launched in 2015 by Cameron and Tyler Winklevoss, Gemini offers services for casual and veteran Bitcoin investors with different user interfaces and fee structures for both

• Bitfinex: The longest-running cryptocurrency exchange that’s optimized for advanced traders and lenders (unfortunately, Bitfinex doesn’t currently accept US customers)

As you might have guessed, choosing a Bitcoin exchange is becoming more difficult for investors as more options begin to popularize. Find everything you need to know about Binance vs. Coinbase and start investing, today.

2. Get a Bitcoin Wallet

When you purchase a coin, it’s stored in a “wallet,” which is where all your cryptocurrency is stored. There are two types of wallets you can get: a “hot wallet” or a “cold wallet.”

A hot wallet is a wallet that’s operated by either your cryptocurrency exchange or by a provider. Some exchanges will automatically provide you with a hot wallet when you open your account. In any case, hot wallets are convenient because you’ll be able to access your coins through the internet or a software program.

Some notable hot wallets are:

• Electrum: Software that enables you to store your coins on your computer

• Mycelium: A mobile-only app for Android and iPhone users

However, hot wallets are not the most secure form of coin storage. If the hot wallet provider is hacked, then your coin information may be at risk.

A cold wallet is the safest storage method for your coins. A cold wallet is an actual piece of hardware that stores your coins, usually, a portable device that’s similar to a flash drive. Most cold wallets cost between $60 to $100. Some popular cold wallets are:

• Trezor

• Ledger Nano

If you’re only going to purchase small amounts of coin, then you might be fine using a hot wallet with an insured crypto exchange. But if you’re going to be trading large amounts of coin, then a cold wallet would be well worth your investment.

Need help deciding which wallet is right for you? Take a look at our picks of the best bitcoin wallets.

How Do People Make Money With Bitcoin

3. Connect Your Wallet to a Bank Account

When you’ve obtained your wallet, you’ll need to link it to your bank account. This enables you to purchase coins and sell coins. Alternatively, your bank account may be linked to your cryptocurrency exchange account.

4. Place Your Bitcoin Order

Now you’re ready to purchase Bitcoin. Your cryptocurrency exchange will have everything you need to buy. The big question is, how much Bitcoin should you purchase?

Some coins cost thousands of dollars, but exchanges often allow you to buy fractions of a single coin—your initial investment could be as low as $25.

Investing in Bitcoin is very risky, and it’s important that you carefully determine your risk tolerance and review your investment strategy before you purchase any Bitcoin. We’ll go over this in the next section.

5. Manage Your Bitcoin Investments

After you’ve purchased bitcoin, you can:

• Use your coins to make online transactions

• Hold your coins for a long period in the hopes it’ll appreciate in value

• Perform day trading with your coins—that is, buying and selling coins with other Bitcoin owners, which can be facilitated on the cryptocurrency exchange

Your cryptocurrency exchange will provide you with everything you need to buy and sell coins.

Is Bitcoin a Good Investment?

Here’s one of the most commonly asked questions about Bitcoin: is Bitcoin a good investment?

Well, the real answer is no investment is inherently “good” or “bad.” It depends entirely on your risk tolerance, your investment strategy, and your financial goals. Before you consider Bitcoin as an investment, you should carefully consider your own goals and determine what you want to accomplish in your investment activities. Do you want to develop a passive income? Become a full-time investor? Save for retirement? Answering these questions will help you figure out whether Bitcoin is the right investment option for you.

How To Make Money Trading Bitcoin

Bitcoin is a very high-risk investment because it’s a volatile asset. That means that Bitcoin values may rise or fall dramatically in value over a very short period—even as quickly as a few hours or days.

Like all cryptocurrencies, Bitcoin has no intrinsic value. It’s not backed by any physical asset, like gold or silver, and there’s no central regulator to ensure that the value remains stable. Furthermore, Bitcoin value isn’t linked to the profits of any one corporation. The value of Bitcoin is dependent on market demand. When there are more people buying Bitcoin, the value will increase. When there are fewer people buying Bitcoin, the value will decrease.

To make a significant profit on Bitcoin, you may need to rely on “timing the market,” which is a difficult and generally ill-advised investment strategy. Nonetheless, there’s a potential for profit.

Bitcoin vs. Other Investments

Choosing which investments to jump on and which to avoid can be a very confusing decision. Your choice will decide whether you enjoy great returns for years to come, or you lose it all. It is impossible to turn on the TV or read an investment blog without hearing about Bitcoin. It is one of the hottest topics in the world right now, but it’s not the only way to invest your money, which begs the question: How does Bitcoin stack up against other wealth-building vehicles?

While Bitcoin is its own investment vehicle, it’s important to note that it can actually transcend investing borders. In fact, Bitcoin can be used concurrently with some of today’s greatest assts. Real estate, in particular, could benefit immensely from what’s known as “tokenization”. According to Tom Winter, CRO & co-founder of DevSkiller, “tokenization is the process of creating a virtual token representing ownership of an interest in real estate that exists on a blockchain (The core technology behind Bitcoin).” Winter suggests “tokenization has the potential of revolutionizing the global real estate market. It offers investors many advantages over existing investment options.”

The unique convergence of real estate and Bitcoin may award investors with attractive profits, but how do the two investment vehicles compare to each other by themselves?

Bitcoin:

• Many experts believe that Bitcoin is a bubble, meaning it is overvalued and could crash at any moment.

• Bitcoin’s value is volatile; it is equally prone to massive spikes and drops in price.

• Bitcoin is entirely digital, meaning it is more vulnerable to security breaches than a tangible asset.

Real Estate:

• Real estate is an investment that is backed by a strong historical record and the security of a tangible asset.

• Rising home values and rents are an excellent hedge against inflation.

• Depreciation, utilities, insurance, and repairs all allow real estate investors to qualify for valuable tax benefits.

• Rental properties provide consistent monthly cash flow you can rely on.

[ Interested in diversifying your investment portfolio beyond the stock market? Register for our FREE online real estate class to learn why real estate investing is the perfect compliment to any portfolio. ]

The Pros of Bitcoin Investing

The main benefit to Bitcoin investing is that you may be able to generate a huge return on profit, perhaps as high as 200% or more. Of course, that’s an extremely difficult thing to accomplish, but it’s possible.

If you purchase a large amount of Bitcoin, you may be able to capitalize on a market surge and sell your coins for a much higher value when there are lots of buyers. There’s also a slight possibility that Bitcoin will truly become the currency of the future or a more popularly traded asset, and you could hopefully generate returns from long-term holdings. It should be noted, however, that Bitcoin values are generally decreasing every year.

Your success may depend on properly “timing the market.” In other words, you’ll buy coins when they’re at a low price and sell them when they’re at the highest possible price. High-risk investors who pay close attention to the market may be able to generate massive returns when employing that strategy. They might even generate returns that are highly improbable in the world of corporate stocks or government bonds. To that end, Bitcoin is incredibly liquid. According to Shaun Heng, VP of growth and operations at CoinMarketCap, “Bitcoin is one of the most liquid investment assets you can have and is more liquid than any other cryptocurrency.” As a result, any realized can can actually be realized almost immediately.

The Cons of Bitcoin Investing

Unfortunately, the high volatility of Bitcoin makes it a hazardous investment, and you could lose money if you’re not careful.

Bitcoin and other types of cryptocurrency are at high risk of “pump-and-dump” schemes. Predatory investors will reach out to amateur or unassuming investors and convince them to pour a lot of money into Bitcoin. The resulting surge causes Bitcoin prices to increase rapidly.

The predatory investors are smart, and they sell all of their holdings before the buying surge ends, making a huge profit. But when investors stop buying, the value of the coins falls to extremely low prices. A coin bought for $200 could wind up having a valuation of just $30. The unknowing investors would be throwing their money away.

You could always make a profit by selling your coins before the price collapses, but it’s impossible to predict when the buying surge is going to stop—prices could fall 50% in only a matter of hours. That’s why any volatile asset, like cryptocurrency and penny stocks, are considered high-risk investments.

You should also know that pump-and-dump schemes and pyramid schemes are illegal. While it’s not necessarily illegal to capitalize on a market surge—whether it’s natural or artificially created—you might not want to be associated with such practices. You could be the target of an IRS audit or a criminal investigation, even if you’ve done nothing wrong.

Different Ways to Invest in Bitcoin

There are several different ways to invest in Bitcoin, both directly and indirectly.

First, you can invest in a company that utilizes Bitcoin technology. Although Bitcoin is a risky investment, plenty of companies sell successful products that incorporate Bitcoin and blockchain technologies. You can find several exchange-traded funds (ETFs) that include shares from various blockchain-related companies, like the Amplify Transformational Data Sharing ETF (BLOK). You’re not directly investing in cryptocurrency but in corporate stocks of companies that utilize Bitcoin. It’s safer, and most ETFs in this category outperform the market.

Second, you can participate in Bitcoin mining. Bitcoin mining is simply allowing your computer to be used as a node for the public ledger. It’s a topic worthy of its own blog post, but you should know that Bitcoin miners are rewarded with actual Bitcoin for their contributions. You could receive free Bitcoin without actually ever purchasing it.

Outside of what was just discussed, let’s take a look at some of the most popular ways people are investing in Bitcoin today and what they mean for investors.

Purchasing Standalone Bitcoin

The most obvious Bitcoin investment strategy is purchasing standalone Bitcoin. Buying Bitcoin directly from an app like Coinbase allows investors to take “physical” ownership of the asset. That’s an important distinction to make, as Coinbase allows investors to actually buy Bitcoin and store it in their own encrypted wallets. In doing so, investors will simultaneously gain access to the asset’s price performance and use it as a currency to make subsequent transactions. Owning standalone Bitcoin isn’t all that different from owning any other currency, less the incredibly volatile swings in value.

It is important to note that not every online platform or application allows investors to own standalone Bitcoin. Online trading platforms like Robinhood, for example, allow people to invest in Bitcoin, but they do not go as far as to let investors own Bitcoin (or its respective keys). Whereas Coinbase grants investors the “keys” to their own Bitcoin holdings so that they may transfer the assets to their own wallets, Robinhood does not. As a result, investing in Bitcoin on Coinbase will allow investors to own the asset and treat it like a currency. On the other hand, Robinhood investors can only take advantage of the price movements in their accounts and can’t transfer holdings to an encrypted wallet. Investors who intend to purchase standalone Bitcoin need to know their trading platforms’ limitations before committing capital to any cryptocurrency.

Greyscale’s Bitcoin Investment Trust (GBTC)

Founded in 2013, Greyscale’s Bitcoin Investment Trust has become a leader in the cryptocurrency industry. In becoming a trusted name in a rapidly growing sector, Greyscale emphasized democratizing Bitcoin for the masses. While Bitcoin is already decentralized, Greyscale gives more people more access to the up-and-coming digital currency. More specifically, Greyscale is an investment platform on the capital market that builds transparent, familiar investment vehicles for a growing asset class with unlimited upside.

Greyscale owes its current success to making Bitcoin more accessible to everyone. In fact, Greyscale helped bridge the gap between the informed and the uninformed. To do so, Greyscale made it easier than ever to invest in Bitcoin. For example, Greyscale allows investors to hold Bitcoin in certain IRA, Roth IRA, and other brokerage and investor accounts.

Amplify Transformational Data Sharing ETF (BLOK)

As its name suggests, the Amplify Transformational Data Sharing ETF is an exchange-traded fund traded on the stock market. Investors may purchase shares of BLOK on the secondary market and increase their exposure to Bitcoin. More specifically, however, BLOK is an actively managed ETF that specializes in blockchain technology. That means fund managers constantly seek out businesses that focus on blockchain technology and investing in them. Therefore, anyone investing in BLOK is invested in a basket of blockchain technology companies. While BLOK may not give investors access to standalone Bitcoin, it does give them access to the companies which use blockchain and its transformational media='(min-width: 750px)' alt='how to invest in bitcoin stock'>

Tips For Investing In Bitcoin

If you do decide that you want to try Bitcoin investing, be sure to heed the following tips:

• Understand your risk tolerance: As mentioned before, Bitcoin is a high-risk investment, and you should carefully review your risk tolerance before you invest. If you don’t feel comfortable investing in volatile assets or only have a small sum of money to invest, you may want to consider other investment options.

• Diversify Your Portfolio: The best way to protect yourself from investment losses is to diversify your investment portfolio. Your primary investments should be low-risk, like government bonds or index funds. Next, you should go for medium-risk investments, like real estate or corporate stocks. High-risk investments, like penny stocks or Bitcoin, should be your smallest and least-prioritized investments. Bitcoin is essentially the “icing on the cake:” the investment that could yield substantial profit but which you could still do fine without.

Strategies For Investing In Bitcoin

How Do You Make Real Money From Bitcoin For Beginners

Despite the many differences between buying Bitcoin and buying other equities like stocks, there are inherent similarities that must be addressed. In fact, the actual strategies for investing in Bitcoin aren’t all that different from their stock counterparts. That said, many of the strategies for buying Bitcoin have to do more with investment timeframes. In particular, investors may exercise one of the three most popular Bitcoin investment strategies:

• Buy and ‘Hodl’ Bitcoin

• Hold Bitcoin Long Term

• Trade Bitcoin On Short-Term Volatility

Buy and ‘Hodl’ Bitcoin

Those familiar with Bitcoin are probably already aware of the concept between Buy and ‘Hodl.’ Those who aren’t, however, can get caught up quickly. ‘Hodl’ (an intentional misspelling of hold) is merely an investment philosophy. Short for “hold on for dear life,” ‘hodl’ suggests the best Bitcoin investment strategy is to hold it forever. Those who subscribe to this strategy are more than aware of the asset’s volatility but have a strong conviction for its prospects. Therefore, this strategy will require investors to weather the many ups and downs of Bitcoin price fluctuations without selling.

Hold Bitcoin Long Term

Not all that different from the first strategy, investors who want to hold onto Bitcoin for the long term are convinced it will appreciate over long periods of time. However, unlike the ‘hodl’ strategy, long-term holders may be inclined to sell once they are satisfied with returns. These investors are convinced Bitcoin will increase in value, perhaps as serving as a new store of value (like gold), but aren’t against selling for a profit when the time is right.

Trade Bitcoin On Short-Term Volatility

One of the most popular strategies for investing in Bitcoin relies on the asset’s volatility. If for nothing else, Bitcoin has become synonymous with violent swings in valuation. Simply looking at a one-year chart will identify just how volatile Bitcoin can be, which bodes well for short-term traders. Not surprisingly, this strategy will have investors ride the ups and downs, selling at the peaks and buying on the dips. Of the strategies discussed, this is definitely the hardest and exposes investors to the most risk; however, it may also compound gains faster than those previously mentioned.

How Much Money Do Bitcoin Miners Make

Summary

How Do You Make Money From Bitcoin Trading

Bitcoin is a popular type of cryptocurrency that utilizes a large chain of interconnected computers to store and protect your digital assets. Bitcoin is a highly volatile asset that’s prone to large and fast swings in value, which presents an opportunity for large returns but also poses a tremendous risk. It is critical that you learn how to invest in Bitcoin responsibly before making any decisions. Be sure to diversify your investment portfolio to protect yourself from marketplace volatility.

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