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Bitcoin has had box office growth in the last decade, shooting up the price and even gaining the support of the big banks.
However, for many retail investors, it can be a complicated investment: it is historically expensive, volatile, cannot be bought through a brokerage account, and is not backed by a financial institution.
“There are things you can do for indirect exposure,” said Tyrone Ross, investment advisor and CEO of Onramp Invest, a digital investment platform. “If people do it, I think it’s better and safer before we start delving into it [bitcoin] rabbit hole “.
There are some ways in which people can invest in cryptocurrencies and even bitcoins, or in the technology behind them, without having any currency. While it may not fully protect investors from the volatility of the cryptocurrency brand, it can provide them with some protection against loss.
Invest in companies that have bitcoin or another cryptocurrency
One way to expose yourself to Bitcoin without holding it is to invest in shares of companies that have cryptocurrency-related services or that have the currencies themselves, Ross said.
This includes a wide group of companies listed on the stock exchange in different sectors that have added bitcoins to their balance sheet or have services to store or pay with cryptocurrency.
Recently, companies like Tesla and MicroStrategy have invested directly in bitcoin. Tesla bought bitcoin worth $ 1.5 billion and said it would soon accept digital currency as payment. MicroStrategy, a business software company, said it plans to sell $ 600 million in convertible debt and use the proceeds to buy bitcoin.
Look at companies with bitcoin or blockchain related technology
Another way investors can expose themselves to cryptocurrency is to invest in listed companies that have technology related to currency trading or that use blockchain, the technology on which Bitcoin is based.
Experts also called on companies like Square and Paypal to allow users to trade cryptocurrencies 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 use blockchain in different parts of their business.
There is also underlying hardware that people could invest in to have exposure to cryptocurrency without having coins.
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“Someone could also buy companies that manufacture graphics processing units (GPUs) needed for computers to solve the mathematical equations of blockchain technology,” said Anjali Jariwala, certified financial planner, CPA and founder of FIT Advisors in Torrance, California.
Investing in company stocks is much easier and probably safer than investing in a cryptocurrency. On the one hand, it can be done through a regular brokerage account that has a financial institution, which provides the user with additional security and ease of use. For example, if you forget the password for a brokerage account, you can reset it; don’t forget the key to your bitcoin wallet.
Still, it may not eliminate volatility, Jariwala said.
Check out a cryptocurrency fund
It is also possible to invest in funds that have bitcoins and other cryptocurrencies, according to Doug Boneparth, CFP and president of Bone Fide Wealth in New York.
Right now, there are some players creating bitcoin trusts, he said, pointing to companies like Grayscale and Osprey that help retail investors navigate cryptocurrency.
“Buying it in a fund wrap is probably more familiar to the retail investor than anything else,” he said. In addition, working with a fund means that you contact the fund management company for any information or account information you need, such as setting a password, tracking losses or gains, or gathering documents to present the funds. your taxes.
Of course, these services come at a cost: different funds will have different associated fees, which people should research before investing money in them, Bonaparte said.
Most people should spend more time learning than buying.
And people could also invest in funds that had exposure to cryptocurrencies and blockchain technology, such as the stock marketed fund by Ark Next Generation Internet, for example. The ETF has exposure to things like artificial intelligence, big data, cloud computing and blockchain.
Certainly, some investors will still want to keep digital currencies on their own. 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 another cryptocurrency, experts recommend learning as much as possible, just investing an amount that you are comfortable losing and keeping long-term.
“Most people should spend more time learning than buying,” Ross said, referring to the cryptocurrency.
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Disclosure: NBCUniversal and Comcast Ventures are investors Glans.