It is no secret that bitcoin is the largest cryptocurrency in terms of market capitalization. Interestingly, it has had blockbuster growth in the last decade as its price broke numerous records.
However, for many retail investors, it can be a complicated investment. As a reminder, it is historically expensive, volatile. Moreover, it is not possible to purchase bitcoin through a brokerage account and it does not have backing from a financial institution.
Interestingly, there are a few ways that people can invest in cryptocurrency and even bitcoin or the technology behind it, without holding any coins themselves. It is not possible to completely eliminate risk factors. Nevertheless, investors have the opportunity to reduce risk factors. Let’s have a look at the world’s most famous cryptocurrency.
Interestingly, one way to have exposure to bitcoin without holding it is to invest in the stocks of companies that have cryptocurrency-related services or hold coins themselves. For example, that includes a wide group of publicly traded businesses throughout different sectors. We are talking about companies that have either added this cryptocurrency to their balance sheet or have services for storing or paying with cryptocurrency.
Tesla, as well as MicroStrategy, directly invested in this cryptocurrency. As a reminder, Tesla bought $1.5 billion worth of the world’s largest cryptocurrency. Moreover, it plans to start accepting payments in bitcoin in exchange for its products.
Bitcoin and crypto-related companies
Let’s have a look at another interesting way. Investors can get exposure to cryptocurrency by investing in publicly traded companies that have technology related to trading coins or use blockchain, the technology that bitcoin is built on. For instance, it makes sense to have a look at Square and PayPal. They allow users to trade cryptocurrency on their platforms.
Moreover, companies such as Riot Blockchain and Galaxy Digital focus on cryptocurrency and the underlying technology. This is not the end of the story, big technology companies such as Microsoft, IBM, Google, SAP, and Amazon all use blockchain in different parts of their business.
Moreover, there is underlying hardware that people could invest in to have exposure to crypto without holding coins. Interestingly, someone could also buy into companies that make graphics processing units (GPUs). As a reminder, GPUs are necessary for computers to solve the math equations for blockchain technology.
People should keep in mind that investing in company stock is much easier and likely safer than investing in a cryptocurrency. It can be done through a regular brokerage account that’s held by a financial institution, giving the customer added security and ease of use. Moreover, if this customer forgets the password to a brokerage account, it is possible to reset the password.
Cryptocurrency fund and interesting details
Furthermore, it also possible to invest in funds that hold cryptocurrencies. At the moment, there are a few players that are creating bitcoin trusts. For instance, companies such as Grayscale and Osprey help retail investors navigate cryptocurrency.
However, those services do come with a cost. Interestingly, different funds will have different fees associated with them. People should spend some time gathering more information about their services.
Moreover, people could invest in funds that have exposure to cryptocurrencies and blockchain technology.
Last but not least, it is desirable to learn as much as possible about cryptocurrencies. This way, it will be easier to deal with various challenges. Despite all problems, some investors will still want to gold digital coins on their own. It is not surprising as cryptocurrencies gained popularity all over the world and people are ready to spend thousands of dollars to buy cryptocurrencies. As can be seen from the information stated above, there are several ways and it is up to the customers to choose the best option.