Got questions about bitcoin? Looking for simple answers that don’t confuse you with technical jargon?
If so, you’ve come to the right place. This guide will help you to understand how people invest in bitcoin, how much they buy, and the risks involved.
How do I invest in bitcoin?
How much should I buy?
Is bitcoin safe?
What are the risks?
What do the experts say?
Should I invest in bitcoin?
Frequently asked questions
You need to understand the different options for buying and managing bitcoin before you can decide whether it’s a good investment for you personally. There are 4 main choices: crypto exchanges, spot bitcoin ETFs, bitcoin wallets, and bitcoin vouchers.
Some people use crypto exchanges like BinanceLink to: https://www.forbes.com/sites/qai/2022/10/09/what-happened-with-the-570-million-binance-bnb-hack-and-what-does-it-really-mean-for-crypto-investors/ or CoinbaseLink to: https://www.reuters.com/business/finance/coinbase-says-hackers-stole-cryptocurrency-least-6000-customers-2021-10-01/ when they want to invest in bitcoin. Cryptocurrency exchanges are online platforms that allow people to trade bitcoin and other digital assets.
If you want to use a cryptocurrency exchange to invest in bitcoin, you’ll need to start by opening an account and verifying your identity with a passport or utility bill. You may need to pay a monthly account fee and/or connect your bank account.
It’s important to remember that cryptocurrency exchanges have complete control over your bitcoin. If the cryptocurrency exchange gets hackedLink to: https://www.nytimes.com/2022/10/07/business/binance-hack.html or makes a mistake, other people can access your account and steal your bitcoin.
Some people use spot ETFsLink to: https://en.wikipedia.org/wiki/Exchange-traded_fund when they want to invest in bitcoin. Spot ETFs are funds that track the current (spot) price of bitcoin and are available from companies such as Grayscale.Link to: https://etfs.grayscale.com/gbtc
If you want to use a spot ETF to invest in bitcoin, you’ll need to start by opening an ETF account and verifying your identity with a passport or utility bill. You’ll also need to pay a monthly ETF fee and you may need to connect your bank account.
Spot bitcoin ETFs use a third-party custodian to hold the bitcoin for their fund. As at May 2024, approximately 80% of US spot bitcoin ETFs are using the cryptocurrency exchange CoinbaseLink to: https://www.bloomberg.com/news/articles/2024-01-15/coinbase-coin-at-center-of-bitcoin-btc-etf-machine-raises-concerns as their custodian.
Some people use a bitcoin walletGo to /wallets page when they want to invest in bitcoin. Companies like BitkeyLink to: https://bitkey.world?utm_source=azteco offer a secure smartphone app with a physical fingerprint device for extra security and control.
Some bitcoin wallet apps are known as “custodial” because they have full control over your bitcoin. Other bitcoin wallets are known as “non-custodial” or “self custody” wallets because they don’t have any control over your bitcoin.
The best bitcoin wallet apps don’t require you to verify your identity with a passport or utility bill. You can also buy bitcoin from anyone, anywhere and store it in your wallet app without paying any monthly fees.
Some people use a bitcoin voucherGo to /learn/articles/what-are-azteco-bitcoin-vouchers page when they want to invest in bitcoin. Bitcoin and crypto vouchers work just like digital gift cards and are available from companies like Azteco for as little as $10.
The best bitcoin and crypto vouchers don’t require you to create an account or verify your identity. They also allow you to redeem your bitcoin to any wallet or app of your choice.
Bitcoin vouchers are ideal for people who want to save a little bit of bitcoinGo to /stories page on a regular basis but don’t want to open an exchange or brokerage account.
All investments come with an element of risk. The greater the potential rewards, the greater the risk. You should always make your own decisions about how much you can afford to invest and consider carefully how much you can afford to lose.
If you’re looking for a risk-free investment, then stocks, bonds, and bitcoin are probably not the right choice for you. You might want to consider a low-risk (and low-return) savings account instead.
If you’re looking to invest in bitcoin by buying small amounts on a regular basis, then you might want to consider bitcoin or cryptocurrency vouchersGo to /learn/articles/what-are-azteco-bitcoin-vouchers page. These are available for as little as $10 and you don’t need to open an exchange or brokerage account.
If you’re looking to buy bitcoin as part of a large investment portfolio, you have two main options: cryptocurrency exchanges or spot ETFs. You can also use bitcoin vouchers and a bitcoin wallet if you want to avoid the custodial risk of exchanges and ETFs.
It’s important to remember that bitcoin was originally designed as an “electronic cash system”.Link to: https://github.com/bitsblocks/bitcoin-whitepaper It wasn’t designed as a speculative asset or store of wealth, although its value continues to increase as more people use it in their everyday lives.
Many people consider bitcoin to be a reliable long-term investment. It’s over 15 years old, it’s never had any security issues, and its usage continues to grow. However, the price of bitcoin (like the price of stocks and shares) can fluctuate in the short term.
Yes, bitcoin is safe if you take care.
First, you should always consider how your bitcoin is being stored and who has access to it.
If you’re using a cryptocurrency exchange or spot ETF, make sure you trust the company and that they don’t have a history of cybersecurity problems.Link to: https://www.nytimes.com/2022/10/07/business/binance-hack.html
If you’re using a bitcoin wallet app, make sure it’s a self-custody walletGo to /wallets page and that you keep your passwords private at all times.
Second, you should avoid using bitcoin as a speculative, short-term investment. Remember that the price of stocks, bonds, futures, commodities, and bitcoin all go up and down over time.
There are 3 main risks to consider when investing in bitcoin: market risks, regulatory risks, and cybersecurity risks.
Market risk affects all investments, from stocks and bonds to futures and commodities. Prices go up and down in response to different market factors, including the state of the economy, the rate of inflation, tax changes, ETF approvals, and investor confidence.
Bitcoin is no different. There are many rational reasons why the price of bitcoin will continue to increase in the long term. But there are also many less rational reasons why it might increase or decrease in the short term.
Regulatory risk can be a concern for cryptocurrency investors in some countries.
Governments and financial regulators have mixed, evolving opinions when it comes to deciding the rules for who can trade bitcoin, who can offer ETFs, and how it’s treated for tax purposes.
For example, the IRS currently considers bitcoin a taxable asset,Link to: https://www.bloomberg.com/news/articles/2024-02-27/irs-hires-former-binance-us-exec-to-beef-up-crypto-expertise even if it’s used as a payment method for your everyday expenses.
If you don’t manage your digital passwords carefully, someone could use them to hack into your bank accounts, social media accounts, email accounts, and more.
Bitcoin is no different. If you don’t manage your digital keys carefully, someone could hack into your account or wallet to steal your bitcoin.
Also, cryptocurrency exchanges that have control over your bitcoin can get hacked due to poor cybersecurity.Link to: https://www.nytimes.com/2022/10/07/business/binance-hack.html
You should always make your own decisions about investments but here are few “expert” opinions on investing in bitcoin.
Warren Buffet, CEO of Berkshire Hathaway, is not a supporter of bitcoin. He told his investors that “I wouldn’t pay $25 for all the bitcoin in the world”, arguing that it had no utility. Meanwhile, his business partner Charlie Munger described bitcoin as “evil”.
Buffet also once rejected the opportunity to make an early investment in Google because it was “outside his circle of competence”.Link to: https://www.fool.com/investing/2022/12/22/warren-buffett-isnt-buying-alphabet-google-stock/#:~:text=Key%20Points&text=He%20didn't%20buy%20Google,for%20Berkshire's%20other%20investment%20managers.
Jack Dorsey, founder of Twitter and CEO of Block, has recently committed to investing 10% of Block's monthly profits in bitcoin purchases.Link to: https://s29.q4cdn.com/628966176/files/doc_financials/2024/q1/Shareholder-Letter_1Q24_Block.pdf
Dorsey believes that bitcoin will eventually become the native currency of the internet. He considers an investment in bitcoin “an investment in a future where economic empowerment is the norm.”
Fidelity Investments is one of the largest asset managers in the US and one of the few brokers currently offering investors a spot bitcoin ETF.
A recent research reportLink to: https://www.fidelitydigitalassets.com/research-and-insights/bitcoin-first-revisited from Fidelity argued that bitcoin (BTC) was "fundamentally different than any other digital asset". It also concluded that other cryptocurrencies were unlikely to improve upon bitcoin in the future.
Only you can decide whether you personally should invest in bitcoin. And the answer depends on many things.
Even if you’re looking for a long-term investment asset, many advisors don’t recommend investing more than 5% of your portfolio in bitcoin.
But if you’re looking to make small, regular savings with bitcoin, you don’t need to use a cryptocurrency exchange or ETF with their expensive fees. Instead, you can buy a bitcoin voucherGo to /learn/articles/what-are-azteco-bitcoin-vouchers page for as little as $10 and redeem it to the bitcoin wallet of your choice.
Bitcoin (BTC) is generally considered to be a good investment in the long-term. It’s over 15 years old, it’s never had any security issues, and its usage continues to grow.
However, the price of bitcoin (like the price of stocks and bonds) can fluctuate in the short term, so it’s not recommended to use bitcoin for day trading or speculation.
Cryptocurrencies (apart from bitcoin and ethereum) are generally to be very risky investments. These “alt coins” are often used to trick investors with “pump and dump scams”.Link to: https://www.fool.com/investing/stock-market/market-sectors/financials/cryptocurrency-stocks/how-to-spot-crypto-scam/ Cryptocurrencies and “alt coins” are also prone to cybersecurity attacks.
Spot bitcoin ETFs are an easy way for people with a brokerage account to invest in bitcoin. However, smaller investors might find that the ETF account fees and identity requirements are too much for their needs.
Crypto exchanges are designed for easy trading of cryptocurrencies. However, short-term trading of cryptocurrencies is considered an extremely high-risk investment strategy.
The price of bitcoin (BTC) during 2024 is generally expected to increase in value as it becomes used more widely for everyday spending, saving, and sendingGo to /stories page.
Cryptocurrency exchanges have a mixed record of safety. For example, popular exchanges like FTXLink to: https://www.reuters.com/technology/sam-bankman-fried-be-sentenced-multi-billion-dollar-ftx-fraud-2024-03-28, BinanceLink to: https://www.forbes.com/sites/qai/2022/10/09/what-happened-with-the-570-million-binance-bnb-hack-and-what-does-it-really-mean-for-crypto-investors/, and CoinbaseLink to: https://www.reuters.com/business/finance/coinbase-says-hackers-stole-cryptocurrency-least-6000-customers-2021-10-01/ have suffered fraud, cybersecurity, and IRS problems in recent years.
Bitcoin wallets are safe if you manage them properly. You need to choose a wallet appGo to /wallets page that gives you full control over your bitcoin and you need to keep your passwords safe.
Here’s a quick, low-risk, low-cost way to try using bitcoin:
Step 1 - Download a free bitcoin wallet appGo to /wallets page to your smartphone.
Step 2 - Buy an Azteco bitcoin voucherGo to /buy page for $10.
Step 3 - Redeem your voucher to receive the bitcoin in your wallet.
You can then send small amounts of bitcoin to family and friends, or buy something online.
Satoshi Nakamoto. "Bitcoin: A Peer-to-Peer Electronic Cash System", https://github.com/bitsblocks/bitcoin-whitepaperLink to: https://github.com/bitsblocks/bitcoin-whitepaper
Wikipedia. “Bitcoin”, https://en.wikipedia.org/wiki/BitcoinLink to: https://en.wikipedia.org/wiki/Bitcoin
Wikipedia. “Cryptocurrency exchange”, https://en.wikipedia.org/wiki/Cryptocurrency_exchangeLink to: https://en.wikipedia.org/wiki/Cryptocurrency_exchange
Wikipedia. “Exchange-traded fund”, https://en.wikipedia.org/wiki/Exchange-traded_fundLink to: https://en.wikipedia.org/wiki/Exchange-traded_fund
Block. “Q1 2024 Shareholder Letter”, https://s29.q4cdn.com/628966176/files/doc_financials/2024/q1/Shareholder-Letter_1Q24_Block.pdfLink to: https://s29.q4cdn.com/628966176/files/doc_financials/2024/q1/Shareholder-Letter_1Q24_Block.pdf
Fidelity. “Bitcoin First Revisited”, https://www.fidelitydigitalassets.com/research-and-insights/bitcoin-first-revisitedLink to: https://www.fidelitydigitalassets.com/research-and-insights/bitcoin-first-revisited