3 Indirect Ways to Invest in Bitcoin

3 Indirect Ways to Invest in Bitcoin

by June 11, 2020

Bitcoin has established itself among investors as a formidable commodity in the last few years. While questions remain about its long-term purpose and just how much it could ultimately be worth, it has proven that it’s here to stay. As a result, more and more people appear to be interested in the idea of investing in it.

And yet, there are others still who are uncomfortable with the idea. For some, this is because the price of bitcoin is consistently volatile, and the idea of timing investments is daunting. For others, the process of setting up a bitcoin wallet and purchasing cryptocurrency is still too foreign or seems to complex. And for others still, lingering privacy concerns relating to crypto investment can make the market seem like more trouble than it’s worth.

If you’re interested in bitcoin investment but hesitating for one of these reasons though, there are some more indirect ways to capitalize on its value. The following methods don’t actually involve the purchase or sale of bitcoin, but they do constitute related investments.

1. Invest in Companies Using Cryptos

In past years this wouldn’t have been a viable option, simply because not very large companies were dealing in cryptocurrency. Now, however, there are numerous examples of such companies doing more and more to embrace bitcoin and its counterparts. To offer a recent example, Twitter CEO Jack Dorsey implied just a few months ago that he would help bitcoin grow and expand through his popular payments platform, Square. Square, incidentally, is a publicly traded company, and could become a major facilitator of real-world crypto transactions. So, it stands to reason, buying shares in Square could soon be an indirect way of investing in bitcoin (even if there are also other factors influencing the company’s share price).

Other examples of investable companies that deal, to some extent, in cryptocurrencies include Microsoft Corporation, Overstock.com, and PayPal, to name a few.

2. Trade Bitcoin Through CFDs

If you’d like to trade bitcoin directly, but you still don’t like the idea of setting up a crypto wallet and purchasing actual currency, CFDs can be a suitable alternative. CFDs, or contracts for difference, allow you to trade on the value of an asset without buying quantities or shares of it. You place a buy order if you believe bitcoin will gain value, and a sell order for the opposite, and the success of your investment depends on the direction of the price over time — not how much you’ve bought or when you choose to sell it. Additionally, trading bitcoin CFD involves some risk management strategies, such as orders to lock in positions at a profit, or to close a position at a maximum amount of loss. These can make some crypto investment newcomers feel more comfortable about the volatility of bitcoin.

3. Buy Other Cryptocurrencies

Image by WorldSpectrum from Pixabay

Buying other cryptocurrencies hasn’t always been easy for Asian investors, given fluctuating and occasionally strict regulations in some parts of the region. However, crypto markets have opened up somewhat in recent years. Singapore is known now as a crypto leader; South Korea has worked to bring cryptocurrency into the mainstream; and in Hong Kong, the crypto trade is regulated but legal. This means that many investors in these areas have the option of purchasing not just bitcoin but some of its counterparts, like litecoin, ethereum, and ripple. Granted, this sort of investment comes with some of the same concerns some people have with bitcoin. However, because these alternatives trade at lower prices, some crypto newcomers find them less daunting. And because they often move in patterns that are generally similar to bitcoin, buying and selling them can in a sense be related to trading bitcoin itself.

Buying bitcoin directly is of course still an option for those interested. But these alternatives can be the next best things given some common concerns with direct investment.

Featured image credit: Pixabay