Bitcoin investment is any type of online investment, made using cryptocurrency such as bitcoin (btc) among other digital currencies.
It is otherwise known as bitcoin investing in which an investor earns an interest on his or her investment within a period of time.
Bitcoin investment can be made through several means.
1. Investing in BTC currency
Bitcoin went up to nearly $20,000 around 2017 and ever since then, the world has become obsessed, with Google searches for ‘buy Bitcoin’ having more search volume than the keyword for ‘buy gold’.
The value of Bitcoin has shot up tremedously, and has risen more than tenfold in value over the year – sometimes going up hundreds of dollars each passing day.
According to Yahoo, if you had bought £1,000 of Bitcoin in 2012, your coins would now be worth £909,000.
Most individuals who buy bitcoins are no longer aiming to sell it, but hoping it’ll be an investment.
2. Investing in Bitcoin Investment Sites
As you know, Bitcoin is not a physical form of currency, nor is it a company or a private owned corporation.
Bitcoin investment sites are generally known as Investment platform where you can put in your bitcoin to be used to earn interest for you.
The bitcoin investment platform helps you invest your bitcoin securely in the right channels, which could be loaning services, trading cryptocurrencies, investing in startup companies etc.
3. Short Selling
Mostly during a bitcoin craze, some people may want to bet on bitcoin’s value declining.
Short selling an asset involves borrowing the asset at a certain price ($500, say)so that you can sell it to someone else at the same price.
Then, should the asset decrease in value (let’s say to $250), you can buy it back at the lower price in order to give it back to your lender.
You make a profit on the difference between the original price when you borrow the asset, and the lower price when you purchased it to pay back the lender.
You can short bitcoin via trading platforms, which finds lenders willing to give you bitcoins for a certain period.
You can also use derivatives trading sites.
Of course, there’s always the danger that the market will move against you, and you may end up losing the money that you put up.
Any trader should understand the concepts of leverage and margin calls before implementing a shorting strategy.
4. Bitcoin Futures
Another way of investing in bitcoins, is Bitcoin futures allow you to essentially bet on the cryptocurrency’s value in the future; if you think the price of BTC will go up in the future, you could buy a futures contract.
Should your instinct be right, and the price goes up when the contract expires, you’re owed an equal amount to the gains.
Notable places that offer bitcoin futures contracts are the Chicago Board Options Exchange, or CBOE, and financial market CME Group.
Contracts are leveraged in that you’re paying a fraction of bitcoin’s actual price when you buy futures, giving you a chance to profit off them.
However, the contract has an expiration date in the near future. If the price is down when it expires, you can’t simply hold and wait to see if it bounces back; you just lose.