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Bitcoin has been growing tremendously in the last decade, going up in price and even gaining support from big banks.
But for many retail investors, it can be a complex investment – historically expensive, volatile, cannot be purchased through a bankruptcy account and is not backed by a financial institution.
“There are things you can do for indirect disclosure,” said Tyrone Ross, investment advisor and CEO of Onramp Invest, a digital investment platform. “If people do that, I think it’s better and safer before they start exploring into the [bitcoin] rabbit hole. “
There are a few ways in which people can invest in cryptocurrency and even bitcoin, or the technology behind it, without holding any coins themselves. While it may not completely protect investors from cryptocurrency trademark volatility, it can provide them with some protection from loss.
Invest in companies that hold bitcoin or other cryptocurrency
One way to be open to bitcoin is not to keep investing in the stocks of companies that have cryptocurrency-related services or hold their own coins, Ross said.
That includes a wide group of public commercial businesses across different sectors that have either added bitcoin to their balance or have services for storing or paying with cryptocurrency.
Recently, companies such as Tesla and MicroStrategy have invested directly in bitcoin. Tesla bought $ 1.5 billion worth of bitcoin and said it would soon accept the digital currency as payment. MicroStrategy, an enterprise software company, said it plans to sell $ 600 million in convertible debt and use the profits to buy bitcoin.
Take a look at companies with bitcoin or blockchain related technology
Another way investors can gain knowledge of cryptocurrency is by investing in public trading companies that have technology related to trading coins or using blockchain, the technology on which bitcoin is built.
Experts have also named companies such as Square and Paypal that allow users to trade cryptocurrency on their platforms. In addition, companies such as Riot Blockchain and Galaxy Digital are focusing on cryptocurrency and the underlying technology. And, big tech names like Microsoft, IBM, Google, SAP and Amazon are all using blockchain in various parts of their business.
There is also basic hardware that people can invest to be open to crypto without holding coins.
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“Someone could buy into companies that make graphics processing units (GPUs) needed for computers to solve the mathematical equations for the blockchain technology,” said Anjali Jariwala, a financial designer with certified, CPA and founder of FIT Advisors in Torrance, California.
Investing in company stocks is much easier and probably safer than investing in cryptocurrency. For one, it can be done through a regular bankruptcy account maintained by a financial institution, giving the user extra security and ease of use. For example, if you forget the password to a hacking account, you can reset it – not so if you forget the key to your bitcoin wallet.
However, it may not eliminate volatility, Jariwala said.
Take a look at cryptocurrency assets
It is also possible to invest in funds that hold bitcoin and other cryptocurrencies, according to Doug Boneparth, CFP and president of Bone Fide Wealth in New York.
Currently, there are a few players that are creating bitcoin securities, he said, pointing to companies such as Grayscale and Osprey that help retail investors get over cryptocurrency.
“It’s probably more familiar to the retail investor than anything else to buy it in an asset package,” he said. In addition, working with an asset means that you will be dealing with the company that manages the fund for any queries or account information you may need, such as being setting a password, tracking profit and loss or collecting documents to file your fees.
Of course, there will be a cost to these services – different funds will have different fees associated with them, which people should check before investing in them, Bonaparte said.
Most people should spend more time learning than buying.
And, people could invest in funds that are familiar with cryptocurrencies and blockchain technology, such as Ark Next Generation’s internet commerce fund, for example. The ETF has gained experience in things like artificial intelligence, big data, cloud computing and blockchain.
To be sure, some investors will still want to keep digital coins to themselves. More than a quarter of Americans plan to invest in cryptocurrency this year, according to a February survey of more than 30,000 people conducted by Piplsay Research. In addition, half said they believe investing in cryptocurrency is safe, according to the report.
If you want to invest directly in bitcoin or other cryptocurrency, experts recommend learning as much as possible first, just invest an amount that you are comfortable losing and maintain in the long run .
“Most people should spend more time learning than buying,” Ross said, referring to cryptocurrency.
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Disclosure: NBCUniversal and Comcast Ventures are investors Dearcan.