So you want to get into the Bitcoin market, why not learn how to to invest in Bitcoin stock instead. You have heard of it, Bitcoin is the new investment kid on the block. It is revolutionary and is set to disrupt and change the world as we know it. It provides an exciting opportunity to dive into an entirely new asset class.
Reasons to Invest in Bitcoin Stock
Bitcoin like any other cryptocurrency in the market can be extremely volatile, today up 5%, tomorrow down 5%. If you cannot stomach the roller coaster ride, then investing in other assets that are associated with Bitcoin might be a good idea.
Most Bitcoin exchanges require proof of identity such as a national ID or a bank account statement as part of their Know-Your-Customer (KYC) procedures. If you are not comfortable with this arrangement, then buying cryptocurrency directly might not be your cup of tea.
Get this. At the moment, there is no such thing as Bitcoin stock, because Bitcoin is not a company or entity. When you buy stock from the stock exchange, you buy shares in a company or you own a percentage of the company proportional to the amount of stock you bought. However, Bitcoin is a form of digital currency and you cannot just buy a share in that directly.
But there are ways to dip your toes in.
An ETF called GBTC
An Exchange Traded Fund or ETF is an open-ended investment fund that tracks the performance of an underlying index or asset class. It is traded on a stock exchange, hence its name. Grayscale, a company that owns tons of Bitcoins, sells stock to investors that equals to the proportion of bitcoins they own. So if you invest into GBTC stock, you are owning Bitcoin indirectly. If Bitcoin prices go up, the price of the ETF goes up and vice versa. This is great if you are well versed in stock buying and selling and do not want the hassle of owning and storing Bitcoins.
Just like any ETF in the stock market, there is a management fee of 2% per year. Prices of the ETF can also fluctuate not due to Bitcoin itself, but to other investors plowing in or fleeing from the fund, which can over inflate or deflate the price.
Please do your necessary due diligence when investing.
Futures are financial contracts that allows a buyer to purchase Bitcoin in this case and the seller to sell Bitcoin at a predetermined price and at a future date. So if you think Bitcoin’s price will rise, then you can buy Bitcoin futures contract at the current price and sell it later at a higher price. Bitcoin futures can also serve as offsets to reduce losses if the price is unfavorable in the market.
Bitcoin One Tracker offers US investors another way to invest in Bitcoin related stock. This exchange-traded note (ETN) offers an easy entry point for those who want to invest in bitcoin without buying BTC itself.
Not exactly Bitcoin, but some other stocks track prices of altcoins or other cryptocurrency beside Bitcoin. Ether Capital (ETHC on the NEO exchange), provides investors with exposure to Ethereum and assets built on its blockchain.
Companies That Use Blockchains and Cryptos
Alternatively, you can try investing in companies that pushes the blockchain and cryptocurrency envelope. Technology companies like Nvidia (NVDA) and CISCO (CSCO) implement blockchain and cryptocurrency into their services and products. Nividia and AMD are companies that are well-known in Bitcoin mining as well and have also implemented cryptocurrency payments.
- Longfin Corp (LFIN) is a fintech company that utilizes blockchain and cryptocurrency technologies to enable finance solutions for companies.
- Overstock.com (OSTK) is a company that allows customers to pay for their products in Bitcoin. They sell surplus and returned merchandise.
- Shopify (SHOP) is an e-commerce platform that allows its merchants to accept bitcoin as payments. It has more than 400,000 merchants, so this could grow into a big Bitcoin source.
- New Egg is another popular online store that accepts Bitcoin.
- Facebook is looking to launch its own cryptocurrency also known as Libra. Check out the other companies that are involved in it as well and make an informed decision.
- Microsoft also accepts Bitcoin as payments for its products and services. It allows users to use Bitcoin to add money into their Microsoft accounts.
Should You Invest in Bitcoin Stock?
Regardless of which type of investment class mentioned above, you are basically getting the same thing with these opportunities. That is, the exposure to a new asset class, Bitcoin and cryptocurrency, but in a form familiar to the rest of your investment portfolio. As Bitcoin and cryptocurrency continues to grow, you are well positioned to ride this ever growing opportunity.
But please do your necessary due diligence before investing.