How To Invest In Bitcoin [In 2021]

By now, we all know the radical history of Bitcoin, which emerged in 2008 in the middle of that year’s big economic crisis.

Bitcoin pioneers wanted to eliminate the banks’ power, cut fees, and make transactions more transparent, building a decentralized system where individuals have full control of their money.

Bitcoin is a digital currency – or better, an exchange of digital information that allows you to buy or sell goods, through a secure transaction that runs on a peer-to-peer computer network, thanks to the blockchain technology, which allows bitcoin to be decentralized, transparent, and immutable.

It’s clear, therefore, that the current Covid-19 crisis has created another economic situation that is truly benefiting from blockchain: the pandemic, indeed, gave a boost to digital transformation in many business areas, especially through blockchain and distributed ledger technology.

That’s why Bitcoin has already become one of the most attractive investment assets of 2021.

What is Bitcoin exactly?

As mentioned above, Bitcoin is the first-ever decentralized global digital currency, as it:

• Can be quickly, securely, and digitally sent from any country to another;
• Is decentralized and its protocol is based on the encrypted blockchain technology, whose digital addresses are scattered throughout the Internet;
• Is decentralized, which means that no single entity, bank, or government can own its network. Anyone can create a Bitcoin wallet account, without dealing with any bank policy, and granting the complete control over their money;
• Is an open-source project, since different developers keep contributing and developing its code;
• Is stored in digital wallets, each of which has a public digital address – a string of numbers and letters – where coins can be received. Anyone can create as many free wallets as they want, just by downloading an app;
• Is secure, as the funds are locked through a key cryptography system that’s known just by the owner.

Why you should invest in Bitcoin in 2021

It’s truly easy to use

Even if Bitcoins’ daily use isn’t still as common as FIAT, in 2021 more and more businesses are going to adopt it as a powerful payment method, as it can be easily linked up with your debit cards in a click.

In fact, as we’re going to see in the next section of this article, setting up your wallet and starting buying/selling products – or investing your money – is simpler than it seems.

Allows high liquidity

Bitcoin is one of the most liquid investment assets ever, thanks to:

• The worldwide presence of several trading platforms, exchanges, and brokers;
• The possibility to easily trade it for cash or other assets for very low fees;
• The current high market demand.

Therefore, its high liquidity makes Bitcoin be one of the best investments of this new year, when it comes to both short-term and long-term profits.

Grants several new opportunities

On top of that, cryptocurrencies trading is a relatively new practice for investors: so, as it offers unpredictable swings in terms of price and volatility, there will be always new opportunities for productive investments, above all in 2021.

In fact, Bitcoin’s price has already increased massively in 2020, mainly due to:

• The recent support from Wall Street and some of the world's biggest investors;
• The upcoming launch of Facebook's Libra digital currency;
• The first attempts to define the US cryptocurrency regulations.

Assures a straightforward trading process

Bitcoin offers also a truly intuitive and simple trading process, where you don’t need to hold any traditional stock trading certificate or license, nor you have to rely on a broker to trade a company’s shares.

Conversely, Bitcoin trading just consists of:

• Buying or selling them from exchanges;
• Placing them in your digital wallet;
• Benefiting from instant transactions – unlike traditional stock trading orders that could take days.

Offers a low inflation risk and great returns

Not being regulated by governments, Bitcoin is immune to inflation, and you won’t need to worry about your cryptos losing value.

It turns into unrivalled returns, as – in recent years – Bitcoin has outperformed every financial marketplace: for instance, the S&P 500 Index has improved from 2,090 to 3,629 points, growing by 73%.

How to successfully invest in Bitcoin

1. Choose your onboarding platform or broker

First and foremost, you should know that there are two main ways to invest in Bitcoin:

• You can set up an account with one of the many dedicated cryptocurrency exchanges;
• Or you can opt for an investment platform that includes cryptocurrencies, like Cash App or PayPal.

Yet, the easiest and most cost-effective way to invest in Bitcoin is through an online regulated broker, by simply opening an account and making a deposit with a debit/credit card, e-wallet, or bank transfer.

2. Buy your bitcoin wallet

Then, it’s worth talking about the two main types of bitcoin wallets, namely:

• Hardware wallets: if you're planning to hold large sums, you should transfer them into your own hardware wallet – such as Ledger and Trezor, which are offline software that store your bitcoin funds’ private keys;
• Digital wallets: as we’ve already mentioned, they are wallets where you can virtually store your cryptos and keep track of the transactions, by also connecting them with your bank account to purchase bitcoin.

3. Set your financial goals

As any other kind of investment, you should also ask yourself why you want to do it: for instance, to make a quick profit, or to gain long-term returns.

In any case, you should always set some straightforward, SMART, and realistic financial goals before investing.

4. Invest only what you can afford to lose

Another great step is to decide how much you’d afford to lose, and invest accordingly: this is a wise piece of advice that works for any investment, and Bitcoin is no exception.

Therefore, your business holdings can both increase or decrease in the short-term, so don't invest any more funds that you might afford to lose.

5. Be careful when it comes to taxes

Another pivotal point to think about is taxes: in the United States, for example, Bitcoin is taxable.

Hence, pay attention to your country’s regulations, and – if needed – keep record of all your transactions and interactions with cryptocurrencies.

6. Understand the risks

We’ve just seen all the benefits and simple steps to invest in Bitcoin.

Yet, it is not an all-rounder, since there are also some risks you should be aware of before investing in it, such as the fact that:

• Any investment and assets can decrease and increase in value over time;
• There is numerous fake news about cryptocurrency online: so, be sure of reading and relying on reputable sources;
• There are several cryptocurrency scams all over the Internet, and it can be difficult to figure out it’s a scam until it’s too late: they go from a fake giveaway, to misleading promotions, or complex malware attacks to steal funds.

7. Protect your asset

Last but not least, calling back to risks, you should always protect your company’s assets in the blockchain decentralized environment.

The first rule is that only you must own your own private key: in fact, even if the rate of custodial applications is growing, the so-called ‘custodial wallets’ are not just a convenient way to store your coins, but also a big risk in case of a hacker attack, as it would be impossible to recover your funds.

Therefore, to be sure your digital assets are protected, opt for:

• Hot Wallets: such as Exodus, Coinbase Wallet, Metamask;
• Hardware Wallets: like the already-mentioned Ledger and Trezor;
• Private Keys: as Paperwallet.

Conclusions

As we’ve seen today, Bitcoin and cryptocurrencies are becoming one of the most valuable investing assets in 2021.

Therefore, just be sure you set your main business goals, plan each aspect of your investment, and understand how to protect it in the long-term, by relying also on a serious partner for your blockchain projects.