After initially acquiring Bitcoin from a Bitcoin broker or cryptocurrency trading platform, most cryptocurrency owners tend to either simply hold into their investment hoping that it will appreciate in value, or use it for their day-to-day transactions.
However, despite being a relatively new asset class, there are already a myriad of legitimate Bitcoin investment opportunities, allowing Bitcoin holders to earn a stable return on their BTC investments with little to no risk.
As with all investments, your risk appetite will largely dictate how much you stand to make trusting your money with cryptocurrency investment companies. With that said, let’s dive in and take a look at both how, and why you should invest in Bitcoin.
Bitcoin Brokerages and OTC Markets
For a complete outsider to cryptocurrency investments, buying Bitcoin for the first time can seem like a daunting task. Setting up a wallet, avoiding scams and safely storing your Bitcoin are just some of the concerns that you may encounter when first learning how to invest in Bitcoin.
In short, there are three major ways to get your hands on Bitcoin for the first time. The most common method is by purchasing it using a credit or debit card through one of the various Bitcoin brokerage sites, such as Coinbase, Coinmama or CEX.io.
These benefit from being the easiest to use but do tend to come with higher fees, since Bitcoin brokers usually charge a small commission for each sale.
The second most common way to buy Bitcoin is over the counter (OTC), where a trustworthy Bitcoin brokerage will match Bitcoin buyers and sellers together under secure conditions to execute the trade.
These can be either through corporate brokers such as Circle or Genesis Trading who typically handle transactions in excess of 100 BTC, or online platforms such as LocalBitcoins for smaller face-to-face trades. Convenience is just one of the benefits of dealing through a Bitcoin broker, meaning more profit for you, and less time wasted.
Lastly, the final way to acquire Bitcoin is by trading it for another cryptocurrency through one of the many cryptocurrency exchange platforms. These are becoming the most popular way to acquire Bitcoin, and are further discussed later in the article.
Although most BTC investment sites are legitimate, and will genuinely provide a good return on your investment, it is wise to split your capital over several different BTC investment sites. Over time, you will learn what best works for you, and we recommend regularly reshuffling your portfolio based on current trends to really maximize your ROI.
Best Bitcoin Investment Platforms
While buying and simply holding Bitcoin for the long term is likely to be an effective strategy, it is certainly not optimal, since it is quite possible to see much greater gains by investing your Bitcoin in one or more Bitcoin investment sites.
As part of your Bitcoin investment strategy, we strongly recommend keeping your funds distributed over a variety of platforms to both hedge your risks, and diversify your portfolio.
That being said, finding legit, paying Bitcoin investment sites can be a challenge, and navigating the market to avoid scams can feel like running an obstacle course. However, with proper due diligence, research and a keen eye for profit, it is quite possible to generate a healthy return on even modest Bitcoin sums.
To help set you on your way, we have identified three key areas with legitimate Bitcoin investment opportunities. Of course, this is just a starting guide and is by no means an exhaustive list of available opportunities.
Cryptocurrency Trading
If you find yourself asking “should I invest in Bitcoins, or something else?” then you are not alone. The fact is, the great majority of new investors entering the cryptocurrency space struggle to determine which cryptocurrency is worth their time and investment.
With many cryptocurrencies experiencing impressive gains throughout the course of a year, and many of these even exceeding the growth of Bitcoin, missing out is commonplace. However, with the advent of dozens of Bitcoin exchange platforms, it is now easier than ever to exchange your BTC for a cryptocurrency you expect will perform better in the coming days, months or even years.
For a first time trader, after purchasing Bitcoin through one of the myriad cryptocurrency brokers available, you would then deposit this onto a Bitcoin exchange to begin trading it against one of the other supported cryptocurrencies. After all, why invest in Bitcoin when other cryptocurrencies are performing better at the time?
Generally, those first getting to grips with cryptocurrency trading will first begin by trading one cryptocurrency for another by using a simple market or limit order, e.g. trading Bitcoin (BTC) for Ethereum (ETH) at the market rate. However, more advanced traders will often looking to trade Bitcoin with leverage, multiplying their potential gains (or losses.)
Beyond this, you will need to consider that not all cryptocurrency exchange are reputable, so it is wise to do your research before using one. We have provided a list of some of the most well-rounded and trustworthy platforms available to get you started:
Where to Trade Cryptocurrencies
Binance: Easily the most popular cryptocurrency in operation, Binance is well-regarded as the first choice exchange platform for new Bitcoin investors. Featuring well over 100 supported cryptocurrencies and more liquidity than any other cryptocurrency exchange, Binance is easily one of the best Bitcoin investment sites around.
BitMEX: For more experienced cryptocurrency traders, BitMEX is a cryptocurrency derivatives trading platform. Unlike most other exchanges which simply offer spot trading, BitMEX allows users to open positions with in up to 100x leverage on a variety of different cryptocurrencies. With very relaxed KYC requirements, BitMEX is immediately accessible to almost any BTC holder.
Coinbase Pro: Although Coinbase is a simple Bitcoin brokerage site, its sister site Coinbase Pro is a full-fledged cryptocurrency trading platform. Although it doesn’t feature the largest selection of digital assets to trade, with only around a couple dozen high quality cryptocurrencies available to trade, this is made up for by its impressive liquidity and flawless reputation.
Cryptocurrency Funds
Just like stock funds and index funds are commonly use traditional investment vehicles, similar funds also exist for cryptocurrencies, allowing investors to easily gain exposure to a variety of cryptocurrencies at once.
That said, finding the best cryptocurrency funds can be a challenging endeavor, since they can vary quite significantly both in the cryptocurrencies they track and the frequency at which they are updated.
For the most part, cryptocurrency funds will have a substantial minimum investment requirement, usually somewhere in the order of $10,000 to $100,000, but may be lower or higher depending on the fund.
Unfortunately, the best cryptocurrency funds tend to have a higher minimum investment, but are often managed by a more reputable firm with better performance. Despite this, though the absolute best Bitcoin investment opportunities may be reserved for high net worth individuals, even more accessible crypto funds can generate a great return on your investment.
There are several types of cryptocurrency funds, including index funds, basket funds and potentially soon — exchange traded funds (ETFs). These differ based on how they track the performance of the underlying assets, and how these assets are bundled together or settled.
In simple terms, these funds allow investors to gain exposure to cryptocurrencies without actually having to go through the hassle of receiving, securing and eventually selling these cryptocurrencies. This means by investing in a cryptocurrency fund, you avoid having to research how to invest in Bitcoin.
As of writing, there are only a small handful of cryptocurrency funds available, so the choice is rather limited. With that said, here is a selection of some of the best still active cryptocurrency funds:
3 Promising Funds for Beginners
Amun Crypto Basket Index (HODL 5): Billed as the “the world’s first crypto index exchange-traded product (ETP), the HODL ETP tracks an index comprised of 5 popular cryptocurrencies, allocating almost half of its funds to Bitcoin (BTC), with the remaining split between Ripple (XRP), Ethereum (ETH), Bitcoin Cash (BCH) and Litecoin (LTC). Amun is one of the most reputable cryptocurrency investment companies, with a flawless record in the space.
Bitwise 10 Index Offshore Fund: The Bitwise 10 is an index fund that tracks the performance of 10 of the most popular digital assets, including Bitcoin (BTC), Ethereum (ETH) and several other slightly smaller cryptocurrencies. The asset manager promises monthly rebalancing of the portfolio based on current opportunities, but the fund does come with a $100,000 minimum investment.
Bloomberg Galaxy Crypto Index: Offered by Bloomberg and Galaxy Digital Capital Management, this index only tracks cryptocurrencies that are traded in USD, and will only consider those in the top 12 by market capitalization. In its current form, the index is heavily weighted towards Bitcoin (BTC), Ethereum (ETH) and Ripple (XRP) and is rebalanced monthly.
Bitcoin Lending Sites
In addition to cryptocurrency trading and investment funds, Bitcoin lending is another highly profitable Bitcoin investment strategy. This can be either through peer-to-peer loans on a lending platform, or by providing margin to margin traders.
As it stands, there are a large number of reputable cryptocurrency lending sites, allowing investors to easily form a lucrative Bitcoin investment plan. High interest loans tend to come with the highest risk and lowest collateral requirements, so you will need to choose the risk level you are comfortable with.
On P2P Bitcoin lending sites, your loan is almost always covered by collateral worth in excess of 120% of the loan amount. If the borrowing party defaults on the loan, this collateral will be liquidated and your loan amount plus interest will be returned to you, making lending an excellent way for you to invest Bitcoin.
Margin loans are slightly different from P2P loans, since the borrowing party usually doesn’t have enough equity to offer as collateral. However, the margin trading platform itself will have controls in place to ensure you do not lose your money.
Forex brokers that trade cryptocurrency will likely already be aware of how this works, since the process is essentially the same when trading the forex markets on leverage.
Cryptocurrency traders looking to borrow money on margin are essentially looking to magnify their exposure to a cryptocurrency by using leverage to increase their gains. Usually, this margin is covered by the platform itself, however, a small number of Bitcoin investment platforms such as Poloniex and Bitfinex allow users to provide the margin and earn a small interest amount.
If used correctly, margin funding can be one of the best Bitcoin investment strategies, since it can be almost risk free thanks to the margin call functionality implemented by most lending platforms.
Although margin lending is unlikely to offer the incredible returns that might be possible with another Bitcoin investment strategy, it does offer an excellent risk to reward ratio, allowing you to generate a stable return for the long term.
Suggested Bitcoin Lending Sites
Nebeus: As a popular peer-to-peer crypto lending platform, Nebeus has strict approval policies, only approving loans if borrowers can front sufficient collateral. Besides this, with stringent AML and KYC checks performed for borrowers, and tight margin call requirements, lending on Nebeus can be considered a relatively safe Bitcoin investment plan.
Nexo: To keep your bitcoins safe, investments in Nexo are covered by an extensive lender protection policy, with strict margin call practices to ensure your loan is repaid in full. Beyond this, Nexo also allows users to invest their stablecoins, earning as much as 6.5% interest per annum with no withdrawal restrictions.
Poloniex: Arguably the most well known Bitcoin margin lending platform, Poloniex has been around since 2014 and has since become one of the largest cryptocurrency trading platforms. Offering a daily interest rate of 0.05%, equivalent to 20% yearly when compounded, there are few other trusted Bitcoin investment sites that can match these rates.
Cred: As one of the leading credit providers, Cred allows users to both take fiat-based loans using cryptocurrency as collateral, and earn as much as 10% yearly interest on digital asset investments. Unlike many other platforms, Cred sets itself apart by offering this with no minimum investment size and an extremely transparent fee schedule, making it suitable for beginners.