Elon Musk, bitcoin and dogecoin have dominated the news in recent weeks, leaving some investors wondering how they can invest in cryptocurrencies. Bitcoin has grown exponentially over the last ten years, trading for more than $50,000 in recent months and gaining support from a wide range of institutional investors. However, the process continues to dumbfound retail investors as to how they should invest in digital assets.
What Is Bitcoin?
Bitcoin was launched in 2009 and is the world’s largest cryptocurrency in terms of market capitalization. Unlike traditional currencies, bitcoin is created, stored, traded and distributed through the use of a decentralized ledger system known as blockchain. Historically, it has been costly and volatile. Bitcoin paved the way for the creation of numerous other cryptocurrencies, including Ethereum, Binance Coin and litecoin.
3 Ways To Indirectly Invest In Bitcoin
Investors can invest in cryptocurrencies in a variety of ways without actually owning them. This is a better approach for people who want to learn about the crypto market without diving in headfirst.
Invest In Cryptocurrency-Holding Companies
An investor can gain indirect exposure to bitcoin by investing in companies that have them on their balance sheets or that offer digital currency-related services. People can choose from a large number of publicly traded companies that meet this criterion. MicroStrategy
Tesla purchased $1.5 billion in bitcoin and announced that it would accept it as payment for its products. The company, however, recently backed down from accepting bitcoin as a form of payment and it also sold the majority of its bitcoin holdings. Over the weekend, Elon Musk also speculated that Tesla may have sold its entire bitcoin position. His reason for not backing bitcoin anymore is because bitcoin mining is not environmentally friendly. He has backed dogecoin and speculations are that dogecoin could be his currency of choice as he consistently tweets in favor of dogecoin.
Virginia-based business analytics company MicroStrategy is known for its investment in bitcoin. The publicly traded company has spent more than $2 billion on bitcoin, and its stock price closely track the swings in bitcoin’s price.
Coinbase is the the first U.S. based crypto exchange which is listed on the U.S. stock market. The price of Coinbase is closely related to bitcoin and it is another way for investors to gain exposure to bitcoin without worrying about wallets or going through the difficult process of buying bitcoin.
Invest In Companies That Deal With Cryptocurrency-Related Technology
An investor can also profit from digital currencies by investing in companies that deal with the blockchain technology.
Investors can also put their money into companies that make the underlying hardware used by cryptocurrency miners, such as those that make graphics processing units, which are used in computers to…