How To Invest In Cryptocurrency And Bitcoin In 2024

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Last updated May 07, 2024 | 10:22 AM UTC
By R.R.H.

Throughout the years, investing in cryptocurrencies has grown in popularity. Purchasing them on an exchange and keeping them in an exchange wallet is perhaps the most popular — and best — way to do this. 

Fortunately, there are alternatives available in case cryptocurrency exchanges aren't suitable for you. In this article, we will discuss about how to invest in cryptocurrency through: 

  • Crypto exchanges.
  • Crypto/Bitcoin ETFs.
  • Cryptocurrency futures.
  • Crypto/Bitcoin Trusts.

Key takeaways

  • Crypto exchanges like Binance and Coinbase allow direct buying and selling of cryptocurrencies.
  • Bitcoin ETFs, such as Grayscale Bitcoin Trust (GBTC), provide a way to invest in Bitcoin without directly owning the coin.
  • Bitcoin futures enable traders to speculate on price movements without owning the underlying asset.
  • Crypto trusts, like Grayscale Bitcoin Trust (GBTC), offer traditional investors exposure to Bitcoin through familiar investment structures.
If you’re a total beginner, we suggest you first read: What Is Bitcoin

How to invest in crypto and Bitcoin – an in-depth guide

Investing in Bitcoin and other cryptocurrencies provides a number of ways to be exposed to this new asset class. Direct cryptocurrency buying and selling is made possible by cryptocurrency exchanges like Binance and Coinbase. Bitcoin ETFs provide regulated investment vehicles that track the price of Bitcoin, such as the Grayscale Bitcoin Trust (GBTC).

With Bitcoin futures, traders may make predictions about market trends without holding the underlying commodity. Last but not least, traditional investors can gain exposure to Bitcoin through well-known investment structures thanks to crypto trusts like GBTC. 

Every approach has a unique combination of benefits and drawbacks to suit varying risk tolerances and investment styles. Discover how to start investing in crypto in this comprehensive guide.

  Crypto exchanges Bitcoin ETFs Bitcoin Futures Crypto trusts
Description Direct buying/selling of crypto Bitcoin exposure on exchanges Contracts for future trades Investments funds holding Bitcoin
Ownership Direct ownership of crypto Own ETF shares, not Bitcoin No direct Bitcoin ownership Direct Bitcoin ownership
Trading hours 24/7 Standard exchange hours Specific contract hours Varies by trust

Invest in cryptocurrency with crypto exchanges 

A crypto exchange is a virtual or an online platform where you can trade (both buy and sell) cryptocurrencies like Bitcoin (BTC), Ether (ETH), and more.

  • Step 1: Choose which crypto to invest in

The first steps involved in trading cryptocurrencies via an exchange is to decide which cryptocurrency you want to invest in. For example, search "how to invest in Bitcoin" for guidance, if you're interested in Bitcoin.

  • Step 2: Choose a reliable exchange

Selecting a reliable cryptocurrency exchange is essential for both a seamless trading process and safeguarding your funds. While choosing an exchange, here are some of the factors to keep in mind:

Security: Ensure the exchange has strong security measures in place to safeguard your funds and confidential details.
License: Choose a licensed and regulated exchange to ensure accountability and compliance with the appropriate authorities. 
Stability: Choose an exchange that has a track record of stability by checking reviews and feedback from other users to reduce the possibility of malfunctions or outages.
Fees: Consider the trading, withdrawal, and deposit fees. These can affect your profitability and differ greatly between exchanges.

  • Step 3: Register and purchase

Create an account before registering and buying cryptocurrencies on a reputable exchange. Prove your identity by providing the necessary data in accordance with the exchange’s policies. Use your chosen payment method, such as a credit card or bank transfer, to add funds to your account when it has been validated. 

Once the money has been deposited, go to the exchange's trading section and choose the cryptocurrency you wish to buy. After entering the desired purchase amount, complete the transaction. Following the purchase, the cryptocurrency will be credited to your exchange wallet and available for management or transfer as needed.

  • Step 4: Store your cryptocurrency

You have a few choices for safely storing bitcoin after you've bought it on an exchange. Keeping your bitcoin on the exchange itself is one choice. This is a 'hot wallet' that makes trading simple but can be more vulnerable to hackers. Also, don’t forget that 'not your keys, not your coins'.

Transferring your cryptocurrency to a hot wallet operated by a third party is an additional choice. Compared to exchanges, these wallets, which are offered by a number of companies, offer more security. Still, they are connected to the internet, so funds may fall prey to the hands of hackers.

Alternatively, you can move your cryptocurrency to a cold wallet for the utmost security. Cold wallets are offline storage devices — like paper or hardware wallets — that aren't internet-connected. This lowers the likelihood of hacking significantly and is widely used for long-term storage of significant sums of cryptocurrency.

Invest in Bitcoin ETFs

An investment fund that is exchanged on stock exchanges, much like stocks, is called an exchange-traded fund (ETF). Investing in Bitcoin ETFs allows investors to get exposed to the cryptocurrency without having to buy or hold the coin directly. As an alternative, investors can purchase shares of the ETF, which stand in for actual Bitcoin ownership.

How to invest in Bitcoin ETFs:

1. Choose a brokerage account: Create an account at a brokerage that provides access to exchange-traded funds for Bitcoin (e.g., Grayscale). Verify the brokerage's legitimacy and compliance with regulations.
2. Research available Bitcoin ETFs: Explore various Bitcoin ETFs available for purchase. Take into account elements like the management team, past performance, and expense ratio of the fund, while choosing a specific ETF.
3. Fund your account: Choose the amount of money you wish to put into Bitcoin ETFs. Think about your overall investing plan, risk tolerance, and investment goals. 
4. Place your order: Place an order to purchase shares of the Bitcoin ETF of your choosing by logging into your brokerage account. Before completing the order, check it and indicate how many shares you wish to buy.
5. Pay attention to your investment: Maintain a record of your Bitcoin ETF investment. Keep an eye on its performance and stay updated on any news or events that might have an impact on the price of Bitcoin and, thereby, the return on your investment.

Invest in Bitcoin Futures

An agreement to buy or sell Bitcoin at a fixed price on a given future date is known as a Bitcoin futures contract. Through Bitcoin futures, investors may make price predictions without holding the cryptocurrency themselves. This enables investors to profit from fluctuations in the price of Bitcoin as well as increases in value.

How to invest in Bitcoin Futures

  • Choose a futures trading platform: Work with a trustworthy futures trading platform that provides contracts for Bitcoin futures. Verify that the platform is regulated and supports all the features and tools required for futures trading.
  • Open a futures trading account: Open an account on the futures trading platform of your choice. Fulfill the platform's requirements for identity verification and finish the registration procedure.
  • Fund your account: Use your chosen payment method to make a deposit into your futures trading account. When trading Bitcoin futures, be careful to deposit enough money to meet the margin requirements.
  • Research and analysis: Ensure you do a lot of research and analysis before trading Bitcoin futures. Keep yourself updated on news, events, and market trends that could affect the price of bitcoin.
  • Place your trade: Choose the Bitcoin futures contract you wish to trade and indicate whether you want to buy or sell when you're ready to make a trade. After entering the quantity and any other pertinent information, check and complete your deal.
  • Monitor your trade: Pay special attention to your Bitcoin futures trade. Keep an eye on Bitcoin's price and any changes that might have an impact on the market. To minimize risk and increase profits, think about putting stop-loss and take-profit orders.

Invest via crypto trusts

An investment instrument known as a crypto trust gives investors access to cryptocurrencies without requiring them to hold the underlying assets. Financial institutions usually oversee crypto trusts, which store cryptocurrency on behalf of investors. Through standard brokerage accounts, these trusts can offer investors a straightforward option to invest in cryptocurrencies.

How to invest via crypto trusts:

1. Choose a crypto trust: Do your homework and pick a trustworthy crypto trust that gives you access to the cryptocurrencies you want to invest in. Think about things like the trust's history, costs, and the cryptocurrency it owns.
2. Create a brokerage account: If you don't already have a brokerage account, create one with a reliable financial company that provides access to cryptocurrency trusts.
3. Fund your account: Use your chosen payment method to make a deposit into your brokerage account. Make sure your deposit covers the crypto trust's minimum investment requirements.
4. Purchase shares: Go to the trading site and look for the cryptocurrency trust you wish to invest in when your account has been financed. To submit your order, enter the amount of shares you want to buy and check your selections.
5. Monitor your investment: Pay attention to what you've put into the crypto trust. Keep an eye on its operations and be updated on any events or news that might have an impact on the value of the cryptocurrency the trust owns.

Investing vs trading cryptocurrencies: What’s the difference?

Cryptocurrency has become a popular investment option for many people seeking to diversify their portfolios and capitalize on the potential for high returns. 
However, there are two primary methods by which individuals can add cryptocurrencies to their portfolios: trading and investing. Despite the fact that these terms are frequently used synonymously, they refer to two separate strategies with different objectives and timelines.

Investing in cryptocurrency 

Purchasing digital assets with the goal of keeping them for a long time—many years—is the standard procedure for investing in cryptocurrencies. Profiting from long-term price growth is what crypto investors want to achieve. In the hopes that their value would rise over time, people hold (also called hodl) onto their coins after they have been purchased, regardless of any temporary price swings.

Believing in the long-term potential of the technology and the assets itself is one of the fundamental tenets of cryptocurrency investing. The use cases, technology, development team, and market demand of the cryptocurrencies that interest investors are generally the subject of in-depth investigation. Their goal is to find projects that show promise and have room to grow significantly in the future.

In general, investors are less worried about sudden changes in price and volatility in the market. Rather, they take a "buy and hold" approach, being patient and self-assured in their investing thesis even in times of market declines. By assembling assets that are predicted to appreciate in value over time, the objective is to create wealth over the long run.

Trading cryptocurrency 

Trading cryptocurrencies entails frequently purchasing and selling digital assets, frequently on a daily or weekly basis, with the goal of making short-term profits. Traders are not interested in keeping onto their coins for a long time, in contrast to investors. Rather, they aim to capitalize on price fluctuations in order to benefit from the volatile nature of the cryptocurrency markets.

Technical analysis, chart patterns, and market trends are just a few of the trading tactics that traders employ to help them decide when to buy and sell cryptocurrencies. They might also utilize leverage and margin trading to increase their possible gains (or losses). 

Arbitrage is a popular trading strategy where traders take advantage of price differences between several cryptocurrency exchanges or between cryptocurrency and fiat money. Traders might profit from these price differences by purchasing low on one exchange and selling high on another.

The long-term fundamentals of the assets they trade are less important to crypto traders than they are to investors, who are more concerned with making large profits quickly. They keep a close eye on the markets, searching for chances to enter and exit positions when the timing is right.

Investing vs trading cryptocurrencies: Key differences

  Investing Trading
Time horizon Hodl assets for a long time. Often buy and sell in short-term
Goal Long-term wealth creation and price appreciation Profiting in the short term from price changes
Strategy Buy and hold strategy, less active Frequent purchasing and selling, active trading
Risk tolerance Tolerant of market swings and committed to long-term profits Reduced risk tolerance and a focus on quick outcomes
Market analysis  Fundamental analysis, long-term trends Market volatility, short-term trends, and technical analysis

It's critical to comprehend these variations and select an approach that fits your investing style, risk tolerance, and financial objectives.

Is cryptocurrency a good investment?

With the rise in its popularity, cryptocurrency has attracted both seasoned investors and those who are new to the financial markets. But the concern still stands: Is cryptocurrency a good investment? Let's examine the benefits and drawbacks of cryptocurrency investing so you can decide wisely.

Pros of investing in crypto

  • High potential profits: The possibility of earning large profits is one of the most alluring features of investing in cryptocurrencies. Throughout the years, the value of cryptocurrencies has increased significantly, with some generating exponential profits. Early adopters of cryptocurrencies like Bitcoin and Ethereum made significant profits, which attracted high-return investors to the market.
  • Diversification: Investors can diversify their investing portfolios by using cryptocurrency. Cryptocurrency is a relatively new and independent asset class, in contrast to established asset classes like equities and bonds, which are influenced by traditional financial markets. Investors can potentially increase their overall profits and diversify their risk across many asset classes by including cryptocurrencies into their investment portfolios.
  • Innovation and disruption: Blockchain technology and cryptocurrencies have the power to completely transform a number of sectors, including supply chain management, healthcare, and banking. Those who invest in cryptocurrencies can contribute to the advancement of cutting-edge technology that could upend established markets and open up new avenues for investment and growth.

Cons of investing in crypto

  • Market volatility: The prices of cryptocurrencies are prone to abrupt and volatile changes, making them extremely volatile. This volatility raises the possibility of large losses even as it might offer opportunities for significant gains. When making cryptocurrency investments, investors should be cautious and ready for the possibility of rapid market changes.
  • Regulatory uncertainty: The laws and regulations pertaining to cryptocurrencies are continually changing and differ greatly between nations. Government actions and changes in regulations may have a big effect on the cryptocurrency market, influencing investor mood and price movements. Investing in cryptocurrencies might be risky due to unclear regulations and uncertainty about upcoming regulatory developments.
  • Safety concerns: Exchanges and wallets for cryptocurrencies are susceptible to hacking attempts and security lapses. The platforms and services used to purchase, sell, and store cryptocurrencies may be vulnerable to cyberattacks, even though blockchain technology itself is safe. Investors who utilize an exchange or wallet that has been compromised run the risk of losing their money. Investors must take safety measures to safeguard their capital, like utilizing reliable exchanges and putting strong security in place.

We deal with such scams every day on our Facebook page
 

How much should you invest in cryptocurrency?

Investing in cryptocurrencies to increase your wealth may be an ideal choice, but choosing how much to invest means carefully weighing your objectives, risk tolerance, and financial status. Here is a guide to help you calculate how much, depending on your circumstances, you should invest in cryptocurrencies:

  • Single with no dependents: If you're single, have no children, and have little financial responsibilities, you could be able to allocate a bigger percentage of your salary to bitcoin investments. Depending on your risk tolerance and financial objectives, you should think about investing somewhere between 5% and 20% of your portfolio in cryptocurrencies.
  • Married with no kids: When deciding how much to invest in cryptocurrencies, married people without kids should take their spouse's risk tolerance and financial objectives into account. A more cautious strategy may be to allocate 5% to 10% of your investment portfolio to cryptocurrencies.
  • Married with kids: Having children adds another layer of responsibility to your financial obligations. Prioritizing your family's future needs and financial stability is essential. Think about putting between 1% and 5% of your investment portfolio into cryptocurrencies, and instead concentrate on more diversified and dependable investing possibilities.
  • Paying off a house or other debt: It's important to prioritize paying off your debt before making a sizable cryptocurrency investment if you have a lot of debt, such as a house or student loans. If you have high-interest debt, it should be paid off before you think about making riskier investments like cryptocurrencies. You can begin investing a modest portion of your salary, say 1% to 5%, in cryptocurrencies once your debt is under control.

Such returns should always raise a flag.

General guidelines to invest in cryptocurrencies

It is imperative to adhere to certain general standards when investing in cryptocurrencies, regardless of your personal circumstances:

  • Diversify your assets: Refrain from investing all of your funds in cryptocurrencies. To lower risk, diversify your investing portfolio by holding a variety of asset classes, including bonds, equities, and real estate.
  • Only invest money you can afford to lose: The cryptocurrency markets are incredibly erratic and volatile. Don't invest more than you can afford to lose without jeopardizing your long-term objectives or financial security.
  • Start small and grow over time: If you're just getting started with cryptocurrency investing, start small and progressively grow your investment as you get more knowledgeable and comfortable with the market.
  • Keep up with current events and do your research: Before making any investment decisions, make sure you are well-informed about the most recent happenings in the cryptocurrency market.

Ultimately, how much you should invest in cryptocurrencies will depend on your personal financial circumstances, aspirations, and risk tolerance. 

Read more: 7 reasons why Bitcoin is a good investment.

#1. The three best sites to invest in Bitcoin

Let’s start with the concrete stuff, such as the three best sites to buy Bitcoin, their pros and cons, and how they compare.

After all, the best site to buy Bitcoin is different for each person. 

Different countries in the world have different laws, fees, and bonuses. 

And the three best sites are, in my opinion, Coinbase, eToro, and Kraken.

Disclaimer: This ad promotes virtual cryptocurrency investing within the EU (by eToro Europe Ltd. and eToro UK Ltd.) & USA (by eToro USA LLC); which is highly volatile, unregulated in most EU countries. No consumer protection. Tax on profits may apply. Investments are subject to market risk, including the loss of principal. Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment and you should not expect to be protected if something goes wrong. Take 2 mins to learn more.

A) Coinbase

Coinbase is one of the best places to buy and invest in Bitcoin around the world. 

It was founded in 2012 and have a long list of accomplishments over the years.

They also help you learn how to invest in Bitcoin and other cryptocurrencies through their educational platform Coinbase Earn, which lets you earn cryptocurrencies in exchange for watching 1-2 minute videos.

Source: Coinbase.com
 

Pros:    

  • Coinbase is insured. This brings incredible peace of mind.  
  • Coinbase is legal and regulated in every country it operates from.    
  • Easy to use interface. The site and mobile app are quick to understand and use.   
  • Coinbase supports more than 240 cryptocurrencies and is growing!

Cons:    

  • You can use Coinbase at its full potential only if you’re a US, UK, or EU resident.    
  • The fees are standard. You may find cheaper options.

Countries:

Coinbase is available in the US, UK, Canada, Australia and almost every major country in the world except for China and Russia. 

B) eToro

eToro is a recognizable name.  

Disclaimer: This ad promotes virtual cryptocurrency investing within the EU (by eToro Europe Ltd. and eToro UK Ltd.) & USA (by eToro USA LLC); which is highly volatile, unregulated in most EU countries. No consumer protection. Tax on profits may apply. Investments are subject to market risk, including the loss of principal. Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment and you should not expect to be protected if something goes wrong. Take 2 mins to learn more.

Did you know you can also use it to buy, sell, and trade Bitcoin?

Source: etoro.com
 

Pros:    

  • eToro is licensed and regulated by every government it operates under.    
  • eToro fees are low and all deposits are free.     
  • Social trading. You can automatically copy the trading strategies of the best traders. 

Cons:    

  • Only 21 cryptocurrencies available.   
  • Fees are higher for altcoin trading. 

Countries:

You can’t use eToro if you’re from Canada, Israel, Japan, and Turkey.

But if you’re from the US, UK, or the EU, then you can sign up and begin trading in minutes.

Disclaimer: This ad promotes virtual cryptocurrency investing within the EU (by eToro Europe Ltd. and eToro UK Ltd.) & USA (by eToro USA LLC); which is highly volatile, unregulated in most EU countries. No consumer protection. Tax on profits may apply. Investments are subject to market risk, including the loss of principal. Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment and you should not expect to be protected if something goes wrong. Take 2 mins to learn more.

C) Kraken

Kraken launched in September 2013 after two years of testing and development. 

Since then, they’ve grown into a world-class Bitcoin exchange offering high security and plenty of cryptocurrencies.

Source: Kraken.com
 

Pros:    

  • 24/7 customer service that is reliable
  • More than 30 cryptocurrencies and growing!    
  • High security.   
  • A pro trading platform for those with more experience.

Cons:    

  • Lengthy KYC process

Countries:

Kraken is not available for residents of Washington and New York in the US – through every other state in the US does allow Kraken trading.

Likewise, if you’re from Japan then you can’t use Kraken either. But if you’re from the UK or anywhere else in the EU, you’re good to go!

Now, let’s get back to learning how to invest in Bitcoin through a simple tutorial.

We'll explain practically how to invest in Bitcoin in minutes – using Coinbase.

Want more sites to buy Bitcoin and more in-depth information on the topic? Check out our ultimate guide on the Best Ways to Buy Bitcoin.

#2. Tutorial: How to invest in Bitcoin quickly

The process of investing in Bitcoin is similar, whichever website you decide to pick.  

To show you how to invest in Bitcoin with an actual tutorial, we chose Coinbase

Coinbase is available pretty much worldwide. It’s globally renowned as the go-to solution for beginners to purchase their first Bitcoin and offers a solid insurance policy. 

Which makes it perfect for this tutorial.

Step 1: Sign-up & bonus

IFrame

Smooth sign-up on Coinbase
   
  • First, visit Coinbase. Use our special link to open an account. This link will allow you to earn an additional $10 if you deposit a minimum of $/€/£100 on the platform.    
  • Fill in the fields at the bottom. Choose a secure password, confirm that all of your details are correct, and click on “Create an Account.”    
  • Go to your mailbox, and click on the link for validation to confirm your email address.    
  • Enter your phone number, and enter the SMS code you received to complete validation.    
  • On the next page, enter your personal information. 

Important note: 

The country of residence you enter will be crucial for two reasons:    

  • The deposit and withdrawal methods you will gain access to in the future will depend on the country of residence you entered.    
  • In future steps, you will be required to provide two documents of photo ID to access all of Coinbase’s functionalities. These two IDs need to be issued by the country of residence you have chosen.
      

Step 2: Prove your identity

Coinbase is a regulated financial service company that is required to identify its users. 

To do this, they need to collect some of your personal information.

IFrame

Verifying your identity is easy
    
  • Log in to your Coinbase account, click on “Dashboard” and then on “Verify your identity.”  
  • Provide one of the following three documents: a driver’s license, a passport, or an ID card. You can even try with a student card (we tried, and it worked). Choose one of them and you are good to go. Make sure all corners of your ID are visible in the picture.    
  • Your webcam will ask for permission to activate because they want to capture a selfie of you to make sure you match your ID card.    
  • Identity verification is quick with Coinbase. You should be notified within two to ten minutes upon submission.

Useful links:    

  • Go to this page to submit your ID.    
  • Experiencing problems with getting your ID verified? Check this page.
         

Step 3: Add a payment method

The last thing you need prior to investing in your first Bitcoin is to add a payment method.

There are multiple deposit methods, and each has its pros and cons. 

Basically, bank and wire transfers are cheap and slow while card payments are nearly instant but expensive, generally ~4%.

In order to avoid waiting for days to take action, I strongly advise you to make your first purchase using your debit/credit card. 

Plus, purchasing a minimum of $100 will release your $10 bonus, which will cover more than the fee associated with your purchase. 

Given that you used the signup link we provided.

Here are the steps to add your card:

IFrame

Adding a payment method
    
  • Log in to Coinbase, go to your dashboard and select “Add a payment method.”    
  • Select “Credit/Debit Card.”    
  • Enter your information as requested and click on “Add Card.”

And now, it’s time for some excitement: I’ll show you how to invest in Bitcoin for the first time.

Note: the video shows the process in a different way than described.
 

Step 4: Buy Bitcoin

Now that you have completed the previous steps, buying your first piece of Bitcoin will be easy.

Same process for buying Ethereum and Bitcoin
   
  • Go to “Buy/Sell” at the top of the page.  
  • Choose Bitcoin as the asset you want to purchase.   
  • Select your card as the payment option.    
  • Choose the amount of fiat you want to convert. Make sure to buy more than $/€/£100 to get your $10 bonus.    
  • Click on “Buy Bitcoin instantly.”

You should be all set and see your purchase in your balance.

Congrats!

#3. Move your crypto to a wallet YOU control

Now comes one of the most important lessons as you continue learning how to invest in bitcoin: 

Moving the Bitcoin you just purchased into a wallet you control.

After all, there’s a strong saying in the bitcoin community: “Not your keys, not your Bitcoin.”

Not your keys, not your Bitcoin: myth or reality?

This phrase is simple: if you don’t control the private key to your Bitcoin wallet, then it’s not your coins.

The reason this phrase is so strong among the crypto community is because of events like Mt. Gox.

Mt. Gox was the biggest cryptocurrency exchange from the very start. But in 2014, it folded and declared bankruptcy and almost no one got their Bitcoin back.

A more recent example happened in 2018 with a Canadian exchange called Quadriga. The founder traveled to India and, unfortunately, passed away.

$190 million worth of bitcoin and crypto was lost because apparently, the founder did not share the private keys of the wallets to anyone. 

Times have changed.

These days, if you use an exchange like Coinbase, your cash is pooled in accounts with US banks that may use the FDIC, and consequently its pass-through insurance may apply.

Source: Coinbase
 

Coinbase also has other very high security measures such as:    

  • Multisig wallets. They keep your Bitcoin in wallets that need signatures from multiple highly trusted people to open.    
  • Cold wallets. Coinbase stores Bitcoin offline to prevent hacks.   
  • KYC verification. Coinbase requires you to verify yourself. This way if you lose your password or 2FA, you can go through a verification process to regain access.

Considering the insurance and security of the top cryptocurrency exchanges, I recommend you move your Bitcoin to your own wallet ONLY if you are happy to take more responsibility.

And if you are comfortable with the technology to make the move safely. 

These days, keeping some of your money on a secure, insured exchange is no big deal. 

Plus, if the price reaches a point where you want to sell your bitcoin, then it’ll be easier for you to do so. 

The best wallets to store your crypto

Now, if you still want to store all or part of your bitcoin on a wallet you control, the next step is to choose a Bitcoin wallet before you invest in Bitcoin.

Here are some of the best bitcoin wallets to consider.

Blockchain.com (free).

They provide one of the most secure digital wallets for Android and iOS.

Source: Blockchain.com
 

Pros:   

  • Easy to set up   
  • Highly secure    
  • QR code scanner to send and receive crypto quickly and easily

Cons:    

  • Your funds are accessible online. This makes it easier for hackers to steal them.

Ledger (paid)

This is one of the best hardware wallets on the market today. 

It fits in the palm of your hand and keeps over 70+ cryptocurrencies.

Source: Ledger.com
 

Pros:  

  • The best security    
  • You crypto is stored completely offline    
  • Better than Trezor wallets (its main competitor, which have been hacked)

Cons:    

  • Not nearly as convenient as a digital wallet or exchange.    
  • Paid; Between 60$ and 120$ depending on the model you choose.

Transferring your crypto to your wallet

Now that you’ve chosen your wallet, it’s time to transfer your crypto for the first time.

The process is similar, whatever the destination of the transfer.

It goes like this: 

  1. Generate an address (or copy an existing one) on the destination wallet and copy it.
  2. Initiate the transfer from the exchange (section “withdrawal”).
  3. Paste the destination address and set the amount for the transfer.
  4. Double check the information for the transfer. You wouldn’t be able to recover your funds if you sent them to the wrong address.
  5. Click “Send”. 

To make sure I send funds to the right recipient, I always copy and paste the destination address. 

Then, before finalizing the transfer, I double-check that the first two characters and the last three characters are correct.

While we haven’t created a tutorial to show how to actually transfer Bitcoin yet, check out our article on how to send Bitcoin from Coinbase

It shows the different steps mentioned above.

#4. Learn these security tips

You’re not done learning how to invest in Bitcoin just yet.

The crypto space is still quite dangerous. 

After all, it’s a new financial technology. Those who developed it are still improving it. So is it too late to invest in Bitcoin? No, it's not! 

Part of that improvement is learning from their mistakes and patching the hacks caused by those mistakes.

Here at CryptoManiaks, we really care about your safety. After all, this is your hard earned money; and we’ve fallen victim to hacks, scams, and mistakes before.

So learn from our experience!

A) Never share your private keys

This may sound like a no-brainer; who would share their private key?

Well, a private key and public key can look awfully similar.

However, private and public keys have different uses. 

Your public key is similar to your bank’s account number. You need to give it to people so that they can send money to you.

Your private key is like your login password. Only you should know it so that only you can access your account and withdraw funds.

If you make the mistake of copy/pasting your private key when you should have shown your public key...then you will expose your whole wallet.

B) Enable 2FA

2FA stands for 2-factor authentication. 

It basically means that you have two independent methods of verifying your ability to access your account or wallet. 

The first method is your password. The second method is a 2FA app like Authy or Google Authenticator.

These generate a new special code of six numbers every 10 seconds.

You input the six numbers along with your password to unlock your account.

This is extremely important, as it makes your account much more difficult to hack.

C) Watch out for Ponzi schemes

If you fall for a Ponzi scheme, then you haven’t mastered how to invest in Bitcoin properly. 

The Russian saying “don’t trust, verify” is important; there are too many scammers out there, especially with a new asset class like Bitcoin. 

If someone approaches you with an investment scheme, please verify everything they claim.

Verify who they are, who runs the company, when and how they pay.

Three clear indicators of a Ponzi scheme are:

  1. Incredible returns on your investment that seem unreasonable   
  2. No risk. This is always a big red flag. There are always risks with everything.
  3. A compensation scheme if you share it with your friends and family.     

D) Use secure connections

If you don’t use a secure connection when you’re buying, selling, or transferring your Bitcoin, you may lose it.

Take, for example, the “man-in-the-middle” attack.

In Bitcoin, a man-in-the-middle attack (MITM) is an attack where the attacker secretly eavesdrops on the information you are sending or receiving.

IFrame

Source: iluli by Mike Channel
 

An attack like that could take your private keys and passwords.

Verify that your connections are secure. Always.

E) Use a separate email address for crypto

Your exchange accounts, like your Coinbase account, are tied to the email address you use. 

It’s how you receive newsletters and verifications. 

If you lose access to your account, your email is also the first thing you’ll need to regain access.

But if a hacker hijacks your email, then they could get into your account too.

Using a separate email address for your Bitcoin accounts will make it harder for hackers to find your important email account.

F) Use strong passwords

Did you know that over half a billion private passwords have been exposed via data breaches? 

All those passwords are now stored in databases that hackers can use.

You can even check if your password is part of them by going here.

Most of these passwords are made from people who use their birthdate, favorite pet, or other pieces of data that could be guessed from social media and when you invest in Bitcoin you should avoid those practices.

Source: Trendhunter.com
 

That’s why the best idea is not to come up with your own password.

Instead, use a strong password generator and manager, like Lastpass. 

G) Backup your keys, 2fa, etc.

There are three secrets to recovering your information in case you lose it or get hacked.

  1. Backups  
  2. Backups
  3. Backups

No, we didn’t stutter. 

Imagine putting all your gold in a safe, writing down the combination to the lock, but then forgetting your combination AND losing the paper you wrote it down on.

Well, losing access to your Bitcoins is much worse than that. 

Because at least, a locksmith might be able to help you unlock your safe. 

If you forget your private keys and lose your backup to your keys … 

No locksmith on earth will be able to help you break into your Bitcoin wallet. Nobody can. 

Backing up your keys, your 2FA codes, anything and everything you use to access your accounts is of paramount importance.

Back them up in two or three places and keep them safe.

One in a fireproof location. One in an offsite location. One somewhere else secure.

Reread those security tips

At the end of the day, you are responsible for your hard-earned money.

Do yourself a favor and reread those security tips. 

Your future self (who loses the info or thinks twice before buying into a scheme) will thank you because you did this before investing in Bitcoin.

Read more: Bitcoin investment strategy: the 50 mistakes investors make.

#5. Use the right tools to keep track

Learning how to invest in Bitcoin also means learning how to use the right tools. 

  • Investing in stocks requires tools to track them. 
  • Investing in gold requires tools to store it properly. 
  • Investing in real estate might even require physical tools (home improvement!)

Here are the most important tools to put in your belt for investing in Bitcoin.

A) CoinMarketCap

Source: CoinMarketCap
 

Everyone who begins figuring out how to invest in Bitcoin will eventually stumble upon this site.

Because CoinMarketCap is the most accurate and comprehensive database of cryptocurrency prices, all while being easy to use. 

It’s the perfect way to figure out the numbers of the crypto space.

If you want to know the current price of Bitcoin or any other cryptocurrency – you go to CoinMarketCap. 

If you want to know the circulating supply of any cryptocurrency or on which site it’s sold – you go to CoinMarketCap. 

It’s a handy tool and well worth your time to get to know.

Read our full Coinmarketcap tutorial for more guidance and tips on how to use CoinMarketCap. 

B) CoinStats – Keep track of your portfolio

Source: Coinstats.app

CoinStats supports more than 400 crypto platforms, including Binance and Coinbase.

It is an all-in-one platform for managing your crypto and DeFi assets.

The company cares about security by using military-grade encryption.

CoinStats tracks and manages more than 500 million transactions.

By using the platform, you can track, analyze and get insights into Bitcoin and more than 9,000 coins.

The company also manages more than $100billion in portfolios.

You can manage DeFi and crypto from the same place.

You can receive up to 20% APY (Annual Percentage Yield) on your crypto assets.

Setting up your account is possible in a few steps, and you can start managing crypto, DeFi, and NFTs instantly.

C) CoinTracking – Your crypto tax report, easy.

Source: Cointracking
 

If you’re in the US or in most developed countries these days, then you’re required to report any money you make from cryptocurrencies.

In fact, for the 2019 tax year, every US citizen who files must consider answering the question: “Have you purchased, sold, or held any cryptocurrencies in 2019?”

It’s best to be truthful because the IRS has signed contracts with nine different agencies that specialize in cryptocurrency forensics to figure out who is using cryptocurrencies and if they are reporting them or not.

If you plan on investing in Bitcoin, then you should use a tool like CoinTracking.

CoinTracking will save you from a lot of headaches and misery calculating profits and losses. 

All you have to do is plug the numbers into the software. 

D) Blockchain explorers

It’s important to keep track of your cryptocurrency transactions. 

Let’s say you sent a payment from one wallet to another. 

The transaction might take 10 minutes, or it may take two hours. Sometimes more.

You can watch its progress by using an explorer, like blockchain.com

If, for example, your Ethereum transaction is taking too long, you can check to see if the transaction didn’t use enough gas.

Source: Blockchain.com
 

Blockchain explorers can also be useful to find out all your transactions when filing your tax return. 

To find your transaction history, put your public address into the explorer.

It will then show you the date, time, and amount of all the deposits and withdrawals from that address.

The right tools = The right trades

There are plenty of more tools that can be put in your belt. 

So make sure you check out our checklist of all the best crypto tools

You won’t need to use all of them, but some might be exactly what you’re looking for. 

Like using a flathead screwdriver to assemble a bookshelf.

[Bonus] How much should you invest in Bitcoin?

“If you’re a true adventurer and you really want to throw the Hail Mary, you might take 10 percent [of your savings] and put it in Bitcoin or Ethereum.”

That quote comes directly from Mark Cuban, legendary billionaire investor and one of the stars of hit business show Shark Tank.

But he goes on to add a warning: “But, if you do that, you’ve got to pretend you’ve already lost your money.”

Mark Cuban makes an excellent point. Bitcoin is a new and risky asset class.

You might lose your hard-earned money because the price plummets, or you get scammed, or you make a mistake and get hacked.

It’s important to therefore invest and amount that: 

  • Has the potential to make you enough money.
  • Won’t make you depressed or suicidal if you lose it.

If you invest $5 (the minimum deposit in some exchanges), then you won’t be depressed if you lose it, but you also won’t gain much if it goes up.

If you invest too much and the smallest price swing down makes you panic and sell it all at a loss (and then it goes up), then it’s not OK either to invest in Bitcoin with this mindset too.

Take some time to read our guide on how much to invest in Bitcoin

[Bonus] Choose your timing

Investing in Bitcoin depends heavily on three things: timing, timing, and timing.

I repeat myself because I need to emphasize the point.

If you learn how to invest in Bitcoin at the top of a bull cycle, then you might be so excited by the shiny new technology that you buy right in. 

The correct thing to have done would be to learn first. Soak up everything you can about Bitcoin. Then use that knowledge to ask yourself: 

“Is this the right time to buy?”

But be warned: timing is tricky.

You don’t know when a bull cycle is at its peak or a bear cycle is at its bottom until they have passed.

So instead of trying to time the perfect entry or exit, make sure you’re not entering (buying) right after big uptrends or exiting (selling) after major downtrends.

If a coin has been gaining 5% or more day after day without a dip for a while, it’s in a clear uptrend that will likely correct sooner or later. 

So try not to buy in unless you have very good and rational reasons to believe the Bitcoin price will go higher.

And if a coin has been going down 5% or more for days without bouncing up, it’s in a clear downtrend. 

Try not to panic sell, because you could miss the price rally back up. So is it too late to invest in Bitcoin? No, if you respect what we said here!

[Bonus] Investing in other cryptocurrencies

“Diversification is the practice of spreading your investments around so that your exposure to any one type of asset is limited. 

This practice is designed to help reduce the volatility of your portfolio over time.”

That’s the best way to explain the benefits of investing in other cryptocurrencies besides Bitcoin.

And if you use Coinbase, you have access to the top cryptocurrencies on the market.

First, of course, read about them and make sure to find one that fits your investing goals and strategy of investing in Bitcoin.

Then once you find one you feel comfortable with, check if it is available on Coinbase.

If they’re not, think about using Binance.

Binance is one of the world’s largest crypto to crypto exchanges. It has over 150 cryptocurrencies to choose from!

[Bonus] Earn interest on your Bitcoin

Once you have all your Bitcoin tools, portfolio, and wallets set up, it may be time to start exploring how to earn interest from your Bitcoin.

People in the Bitcoin community are big-time believers in holding onto your bitcoin. 

After all, the big peaks seem to happen every three to four years.

But there’s no sense in just holding your Bitcoin when you could be earning interest from it.

The best Bitcoin lending sites let you store your crypto with high security while also earning interest from it; sort of like a savings account. 

You earn annual interest depending on which cryptocurrency you store (generally Bitcoin, Ethereum, or USDT). 

The interest can be paid out daily, weekly, or monthly. And you can withdraw at any time and you should consider this when investing in Bitcoin.

Give it a shot!

More awesome resources:

We hope you enjoyed reading this definitive guide on how to invest in Bitcoin. 

Now, we'd like to hear from you: Which exchange from the list are you going to use? Which of the recommended tools is most helpful?

Let us know by leaving a comment on our X or Instagram right now, and we'll make sure to reply.

Disclaimer: This ad promotes virtual cryptocurrency investing within the EU (by eToro Europe Ltd. and eToro UK Ltd.) & USA (by eToro USA LLC); which is highly volatile, unregulated in most EU countries. No consumer protection. Tax on profits may apply. Investments are subject to market risk, including the loss of principal. Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment and you should not expect to be protected if something goes wrong. Take 2 mins to learn more.

Frequently Asked Questions

How do I start investing in Bitcoin?

Open an account with a reputable cryptocurrency exchange platform that supports bitcoin trading. Next, complete the necessary verification process to ensure compliance with regulatory requirements. Once your account is set up, deposit funds into your account using a secure payment method. Now, you're ready to buy Bitcoin! 

What are the risks involved in investing in Bitcoin?

The volatility of the cryptocurrency market can lead to significant price fluctuations, which may result in potential losses. Additionally, since Bitcoin operates independently from any central authority, it is susceptible to regulatory changes and government interventions that could impact its value. Another risk to consider is the potential for cyber attacks and hacking incidents targeting Bitcoin exchanges or individual wallets, which could lead to the loss of funds. 

Where can I buy Bitcoin?

To buy Bitcoin in 2024, there are several reputable platforms you can consider, such as Coinbase, Kraken, eToro or Binance (depending on where you reside). 

Written by

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