Key takeaways
- As cryptocurrency’s popularity grows, more and more retail investors have considered adding bitcoin to their portfolios
- Cryptocurrencies offer unique diversification and profit potential, but these assets carry substantial risks
- Investing in bitcoin as a beginner requires time and research to understand the asset and set up a crypto wallet
- If you want to learn how to invest in bitcoin for beginners, Q.ai’s Crypto Kit simplifies the process
Cryptocurrencies like bitcoin have taken the world by storm, both as a digital currency and a unique investment opportunity.
Investing in crypto diversifies your portfolio with nontraditional assets that may not correlate to widespread market movements. They also open the gateway to emerging blockchain technologies, including NFTs and the metaverse.
However, cryptocurrencies are also notoriously volatile assets that may not be suitable for every investor. That’s because researching, selecting and managing these investments requires lots of time and technical know-how.
At least, it did – until Q.ai’s Crypto Kit came along (download the app to get it).
What is bitcoin?
To define bitcoin, let’s first talk about its broader asset class: cryptocurrency.
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What is cryptocurrency?
Cryptocurrency refers to virtual currencies that act as both cash and investments, depending on how you use them.
Unlike traditional currencies, cryptos aren’t issued or regulated by a central bank or government. Instead, these assets operate on internet protocols called blockchains, which encode rules regarding mining, verification and spending into their digital DNA.
Blockchains also securely record and encrypt every crypto transaction that occurs. This digital ledger is decentralized, meaning that it’s distributed across a network of linked nodes (computers).
This decentralization is a key component of the blockchain, providing digital assets with their notable speed, transparency and security.
A look at bitcoin
“Crypto is a catch-all term that refers to any virtual currency built on blockchain technology. The space has exploded in recent years, with over 22,000 currencies circulating as of January 2023.
But bitcoin is the OG: the first major cryptocurrency to become a household name and be accepted in popular use. (Technically, all cryptos aside from bitcoin are called “altcoins,” or bitcoin alternatives.)
Alongside a handful of other popular coins like ethereum, bitcoin enjoyed a surge in popularity (and price) in early 2021. By November, the price had topped out over $64,000 per coin. But when the market collapsed, bitcoin’s price plunged to $35,000 by January 2022, and under $22,000 by February 2023.
Since its turbulent pandemic years, bitcoin has become synonymous with both incredible profits and outstanding risk. Still, the coin continues to command an impressive user base – and the interest of beginning and veteran investors alike.
How to invest in bitcoin for beginners
Bitcoin investing is much more accessible than it used to be. You can buy and sell crypto on exchanges using fiat currency, such as USD, or by swapping one crypto for another. Many stockbrokers and robo-advising platforms now offer bitcoin investing, too.
If you’re interested in investing in bitcoin for beginners, here’s where to start.
Consider the risks and rewards
The first step to investing in bitcoin is to evaluate its risks and role in your portfolio. All cryptos, bitcoin included, carry substantial risk of loss (as 2022’s crypto winter proved).
Due to its incredible volatility, bitcoin may not be suitable for risk-averse investors. You’ll want to consider what large price swings could mean for your current finances and long-term investment strategy.
Choose your platform
Once you’ve weighed the risks, it’s time to find a platform that offers crypto trading. Cryptocurrency exchanges like Coinbase or Crypto.com, traditional stockbrokers and robo-advisors may all provide crypto access.
While many places facilitate such transactions, you’ll want to consider each option’s:
- Fees
- Minimum investment requirements
- Token availability
- Security measures
Choosing a reputable platform is essential, as smaller or newer platforms can present security or liquidity risks. (Though with the implosion of FTX, it appears that even large, reputable platforms can experience major issues.)
Weigh your storage options
Because crypto is a digital-only asset, you’ll need an encrypted location to store the passkeys that protect your coins. You have two basic crypto wallet options: hot or cold.
Hot wallets, or online wallets, are provided by crypto exchanges or software providers. All major trading exchanges offer in-house hot wallets, though some investors prefer third-party providers for added security. Because hot wallets are susceptible to hackers, selecting an insured, well-regulated provider is essential.
Cold wallets, by contrast, are encrypted devices that store your crypto passkeys offline. While they protect against hackers, they’re easier to lose – particularly if you’re the kind of person who can never find your keys.
Decide how much to invest
After linking your bitcoin wallet to your platform of choice, the next step is deciding how much bitcoin to buy. While a single token runs thousands of dollars, you can buy bitcoin in fractional shares, investing as much or little as you’re comfortable with.
As with any investment, your crypto investments depend on your risk tolerance and long-term strategy. Some experts recommend limiting your investment to under 5% of your net worth. But no matter what, you shouldn’t invest more than you can afford to lose, given the asset’s newness and volatility.
Manage your investments
Cryptocurrencies are unique in that they can be spent as currency or stored as an investment.
Some investors choose to day-trade bitcoin and attempt to take profits on every movement. However, even with such volatile assets, a long-term strategy may prove more fruitful for patient investors. (Especially since bitcoin taxes follow short- and long-term capital gains rules.)
Ultimately, your path should depend on your long-term strategy and financial goals. Weighing the diversification benefits that bitcoin brings to your broader portfolio is also important.
Bitcoin investing for beginners made easy
There’s no doubt that cryptos like bitcoin are popular investment opportunities. However, their extreme volatility makes balancing their diversification and risk more complicated than more traditional assets. (Not to mention, they require tons of time and energy to select and manage each investment.)
But with Q.ai’s Crypto Kit, you can take control of your bitcoin – without the hassle of navigating its complexity alone.
How does the Crypto Kit work?
Q.ai’s Crypto Kit provides easy access to a group of exchange-traded trusts. These trusts’ crypto holdings may shift periodically, but generally include big names like:
- Bitcoin
- Bitcoin Cash
- Ethereum
- Cardano
- Litecoin
- Solana
Better yet, you don’t need to set up a digital wallet, worry about security or manage your diversification. Our AI-backed Kit manages everything for you, including regular rebalancing to maintain an ample risk-reward profile.
That’s just another way Q.ai continuously works to help everyday investors build long-term wealth.
The bottom line on investing in bitcoin
Crypto is the new frontier for investors, a place where digital assets meet a chance to generate substantial wealth. But the space also crawls with risks, from security concerns to enormous volatility.
That’s why it’s critical to weigh bitcoin’s position in your portfolio before you leap headfirst. And once you’ve taken the plunge, remember to invest only what you can afford – and keep your emotions out of your investing decisions.
Fortunately, Q.ai’s Crypto Kit makes the process easier by doing the hard work for you. All you have to do is commit your capital – we’ll handle the rest.
Download Q.ai today for access to AI-powered investment strategies.
