How to Invest in Bitcoin for Beginners

Important takeaways

• As the cryptocurrency’s popularity grows, more and more retail investors have considered adding bitcoin to their portfolios
• Cryptocurrencies offer unique diversification and profit potential, but these assets carry significant risk
• Investing in bitcoin as a beginner requires time and research to understand the asset and set up a crypto wallet
• If you want to learn how to invest in bitcoin for beginners, Q.ai’s Crypto Kit simplifies the process.

Cryptocurrencies such as bitcoin have taken the world by storm, both as digital currency and as a unique investment opportunity.

Investing in crypto diversifies your portfolio with non-traditional assets that may not correlate with widespread market movements. They also open the gate to new blockchain technologies, including NFTs and the metaverse.

However, cryptocurrencies are also notoriously volatile assets that may not be suitable for every investor. That’s because researching, selecting and managing these investments requires a lot of time and technical knowledge.

At least it did – until Q.ai’s Crypto Kit came along (download the app to get it).

What is bitcoin?

To define bitcoin, let’s first talk about its broader asset class: cryptocurrency.

What is cryptocurrency?

Cryptocurrency refers to virtual currencies that act as both cash and investments, depending on how you use them.

Unlike traditional currencies, cryptos are not issued or regulated by a central bank or government. Instead, these assets operate on internet protocols called blockchains, which encode rules regarding mining, verification and spending into their digital DNA.

Blockchains also securely record and encrypt every crypto transaction that occurs. This digital ledger is decentralized, meaning it is distributed over a network of linked nodes (computers).

This decentralization is a key component of blockchain, giving digital assets their remarkable speed, transparency and security.

A look at bitcoin

“Crypto is an umbrella term that refers to any virtual currency built on blockchain technology. The space has exploded in recent years, with over 22,000 currencies circulating as of January 2023.

But bitcoin is OG: the first major cryptocurrency to become a household name and accepted in popular usage. (Technically, all cryptos except bitcoin are called “altcoins” or bitcoin alternatives.)

Alongside a handful of other popular coins like ethereum, bitcoin enjoyed a surge in popularity (and price) in early 2021. By November, the price had reached over $64,000 per coin. But when the market collapsed, bitcoin’s price plunged to $35,000 by January 2022, and below $22,000 by February 2023.

Since the turbulent pandemic years, bitcoin has become synonymous with both incredible profits and unprecedented risk. Nevertheless, the coin continues to command an impressive user base – and the interest of novice and veteran investors alike.

How to invest in bitcoin for beginners

Bitcoin investing is much more accessible than it used to be. You can buy and sell crypto on exchanges using fiat currency, such as USD, or by exchanging one crypto for another. Many stockbrokers and robo-advisory platforms now offer bitcoin investing as well.

If you are interested in investing in bitcoin for beginners, this is where you should start.

Weigh the risks and benefits

The first step to investing in bitcoin is to evaluate the risk and role in your portfolio. All cryptos, including bitcoin, have a significant risk of loss (as 2022’s crypto winter proved).

Due to its incredible volatility, bitcoin may not be suitable for risk-averse investors. You should consider what large price fluctuations can mean for your current finances and long-term investment strategy.

Choose your platform

Once you’ve weighed the risks, it’s time to find a platform that offers crypto trading. Cryptocurrency exchanges like Coinbase or Crypto.com, traditional stockbrokers and robo-advisors can all provide crypto access.

While many sites facilitate such transactions, consider each option:

• Fees
• Minimum investment requirements
• Token availability
• Security measures

It is important to choose a reputable platform, as smaller or newer platforms may pose security or liquidity risks. (Though with the implosion of FTX, it seems that even large, well-established platforms can experience major problems.)

Weigh your storage options

Because crypto is only a digital asset, you need an encrypted location to store the access keys that protect your coins. You have two basic crypto wallet options: hot or cold.

Hot wallets, or online wallets, are provided by crypto exchanges or software providers. All major trading exchanges offer in-house wallets, although some investors prefer third-party providers for added security. Because hot wallets are vulnerable to hackers, it is important to choose an insured, well-regulated provider.

Cold wallets, on the other hand, are encrypted devices that store your cryptopasskeys offline. While they protect against hackers, they’re easier to lose—especially if you’re the type of person who can never find your keys.

Decide how much to invest

After connecting your bitcoin wallet to your chosen platform, the next step is to decide how much bitcoin to buy. While a single token goes for thousands of dollars, you can buy bitcoin in fractions, investing as much or as little as you are comfortable with.

As with any investment, your crypto investments depend on your risk tolerance and long-term strategy. Some experts recommend limiting your investment to less than 5% of your net worth. But no matter what, you shouldn’t invest more than you can afford to lose, given the newness and volatility of the asset.

Manage your investments

Cryptocurrencies are unique in that they can be used as currency or stored as an investment.

Some investors choose to trade bitcoin during the day and try to profit on every move. But even with such volatile assets, a long-term strategy can prove more fruitful for patient investors. (Especially since bitcoin taxes follow short- and long-term capital gains.)

Ultimately, your path should depend on your long-term strategy and financial goals. It’s also important to weigh the diversification benefits that bitcoin brings to your broader portfolio.

Bitcoin investing for beginners made easy

There is no doubt that cryptos like bitcoin are popular investment opportunities. However, their extreme volatility makes balancing diversification and risk more complicated than more traditional assets. (Not to mention, they require tons of time and energy to select and manage each investment.)

But with Q.ai’s Crypto Kit, you can take control of your bitcoin – without having to navigate the complexities alone.

How does Crypto Kit work?

Q.ai’s Crypto Kit provides easy access to a group of exchange-traded trusts. These trusts’ crypto holdings can change periodically, but usually include big names such as:

Even better, you don’t need to set up a digital wallet, worry about security or manage your diversification. Our AI-backed suite manages everything for you, including regular rebalancing to maintain an ample risk-reward profile.

It’s just another way Q.ai continually works to help everyday investors build long-term wealth.

The bottom line about investing in bitcoin

Crypto is the new frontier for investors, a place where digital assets meet a chance to generate significant wealth. But the space is also crawling with risk, from security concerns to enormous volatility.

That’s why it’s important to weigh bitcoin’s position in your portfolio before jumping in headfirst. And once you’ve taken the plunge, remember to invest only what you can afford – and keep your emotions out of your investment decisions.

Fortunately, Q.ai’s Crypto Kit makes the process easier by doing the hard work for you. All you have to do is commit your capital – we’ll take care of the rest.

Download Q.ai today for access to AI-powered investment strategies.

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