• Helen Raleigh

How to Invest in Bitcoin?

piles of bitcoins

Currently there are several ways to invest in bitcoin:

  • Trade through a bitcoin exchange, a place where you can buy and sell bitcoin or trade bitcoin you own for other traditional currencies like US Dollars. The provides a list of all bitcoin exchanges around the world.

  • Buy bitcoin from a digital currency dealer such as Coinbase, a company that will sell you bitcoin and several other types of digital currencies with a 1% or also markup. You can link your bank accounts with your digital wallet at Coinbase.

  • If you want to buy or sell bitcoin offline, one popular website, Local Bitcoins, like a Craigslist for bitcoin, pares potential buyers and sellers.

  • Trade through derivative products such as futures contracts. Most recently, Cboe Global Markets launched the first bitcoin futures contracts. CME group, the largest derivatives trading platform launched a similar product on December 18th. Nasdaq is looking to do the same in 2018. If you don't understand futures contracts, this probably isn't a good option for you. The beauty of the launch of bitcoin futures contract is that it will attract more sophisticated investors such as investment banks into bitcoin trading, which will increase the demand and supply of the bitcoin market.

Another way to invest in bitcoin, which isn't currently available but is in working stages, is bitcoin exchange traded funds (ETFs). An ETF is "a marketable security that tracks an index, a commodity, bonds, or a basket of assets like an index fund. Unlike mutual funds, an ETF trades like a common stock on a stock exchange (Investopedia)." Several companies are either in the process of or have already filed applications to the U.S. Securities and Exchange Commission (SEC), in order to start an ETF that tracks bitcoin futures. Given the high valuation of bitcoin right now, a bitcoin ETF will make it easier and cheaper for average Joes to invest in bitcoin.

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