Learn and build Bitcoin Investment Strategy to Invest in Bitcoin, Bitcoin Stock, Bitcoin Investment Fund, Bitcoin Merchant Account, Bitcoin Futures & Mining Bitcoins. Investing in Bitcoin is not rocket science, see how to do that?

Investing in Bitcoins : A Prelude

The Ƀitcoin Investment is still a taboo today, even with ever-increasing Bitcoin exchange rate.

You probably heard of Bitcoin Mining, it’s a computing process through which you get bitcoin for the work you do toward the Bitcoin Network.

investing in bitcoinBut, mining bitcoins are NOT PROFITABLE in short-term and short scale operations. It is a long-term process and in the later part of the article, you will learn how and what is required to make mining profitable.

There have been incidences unfavourable to cryptocurrencies in general.

Like China’s ban on virtual currency in September 2017.  Soon after that, Indian police arrested cybercriminals selling credit card information for the cryptocurrency.

You, like most people, even if interested in investing in bitcoins are not investing due to lack of guidance.

And you are not to blame, I have made cryptocurrency program myself & I was dumbfounded when it came to Bitcoin Investment schemes.

Today I am sharing my research with you, these are my findings and my personal opinions only. These are not endorsements of any platform.

investing in bitcoin Bitcoin Risk Reward

Investing in cryptocurrencies and related schemes like the Bitcoin Investment Fund, Bitcoin Mining & Bitcoin Stock are something called High-Risk High-Reward Investments.

Such schemes usually pose high risk toward your investment, but also give high gain most of the time.

You can learn various INFORMED WAYS to invest in the BITCOIN  and related currencies here. Even if you are not up for investment in Bitcoins but just curious then go ahead, this article is for you.

What is Bitcoin? Working, Structure & value of Bitcoin

At this stage, you probably know what a Bitcoin is, and you can skip this section. But if you don’t, here is a brief introduction.

A man or a group who goes by the name “Satoshi Nakamoto” came up with a concept of a digital currency, now known as Bitcoin.

This currency is Decentralize, Unique, and 100% Counterfeit-proof. 

Bitcoin has shown tremendous growth, and you must look out for  The cryptocurrency trends in 2018.

A Bitcoin is a currency in digital format. Just like the money you have in your pocket, a Bitcoin has a certain value. This “Value” is interchangeable into material goods, other cryptocurrencies, physical currencies etc.

Bitcoin is manifested in a Digital Format that looks like this

0.12345678 BTC.

Standard bitcoin is divisible up into 8 places of decimal. The Smallest unit of bitcoin is 0.00000001 BTC or 1 Satoshi. However, the division of a bitcoin is changeable with the consensus of the network.

For example, suppose you have a single gold coin of 10 grams, and you decide that it only can be divided into 10 parts. But then other people came and decided to break the gold coin into 100 parts.

Now you need to store this Bitcoin of yours somewhere safe.

So, how do you store a bitcoin?

You put it in a Digital Wallet.

A digital wallet is an online/offline record of bitcoins or BTCs.

Wait ? isn’t bitcoin a decentralize currency! so how come we need to store it in a wallet? Isn’t wallet bit centralized?

NO, it’s not, that’s because of Blockchain, let’s see how?

 

Blockchain: Stuff that makes Bitcoin possible

 

Here a new concept called the Blockchain comes into the picture. It is a technology that keeps track of BTC since it’s inception.

investing in bitcoin Blockchain working
Working of Blockchain

Since the records are decentralized, every node that exists on the network has these records. So sheer size and redundancy of records make it impossible to hack a Bitcoin.

The blockchain is a chain of Blocks, Each Block contains Records. Each Record contains transaction information.

In every 10 minutes, a new block is created. Entire community tests the block before it adds it to the previous block.

In this way, you or anyone can verify the authenticity of a bitcoin you received.

You can keep your bitcoin or fraction of bitcoin in a Bitcoin Wallet that can be online or offline. Each wallet gets an address that may somewhat look like this

muhtvdmsnbQEPFuEmxcChX58fGvXaaUoVt.

One can add or subtract the amount of Bitcoin from the wallet using their private key and Bitcoin Wallet Address.

The Same thing can be done with bitcoins and other cryptocurrencies as well.

Well, what is the problem with conventional currency then?

The regular currency you have is approved by a Federal Bank. A Federal or Central Bank has complete authority over the legitimacy, supply, and control over currency it generates.

A conventional currency has limitations. The biggest limitations of such currencies are :

  • They are counterfeitable.

  • Limited by many regulations.

  • Surplus currency generation by a Federal Bank can result in High Inflation Rates.

  • Bitcoin is not a Fiat Currency. So it’s price variation does not depend on the economy or government policies.

Let us now see what are the avenues that we can explore for Investing in Bitcoins.

Risks Involved in Bitcoin Investments

Any kind of trading/investment has risks, there are cases where investors lost King’s ransom. Study the Bitcoin’s pattern and you will know how much volatile market is.

There are Risks for which you should account before you get into this business.

  • Assume the Money you invested is already lost. Only put an amount that you can afford to lose. Especially you haven’t done trading before.

  • Beware of fake news that can be used to sway market in a direction. Verify news before you take action on it.

  • Make sure you account for the variable change; Bitcoin market is changing by the day. Make sure your information is updated. Don’t trade on past information.

  • Always be ready to leave. In trading; the person who gets the cold feet is the guy who usually makes less money; but he survives in the long run.

  • Be aware of latest threats that can steal information like Kedi Rat.

You need to know about this, Infamous Mt. Gox Bankruptcy: Mt Gox was one of the earliest Bitcoin Exchange. About 800,000 of Bitcoins were stolen from Mt Gox Wallet. The exchange had to be shut down and no one got their money.

And Mt Gox is not alone, there have been many data breaches in 2017 alone.

The reason I mentioned Mt Gox here is that you need to know there are things beyond your control. And these are the risks of trading.

Investing in Bitcoin and Bitcoin investment strategy

Before we begin make sure following is a part of your bitcoin investment strategy.

  • Use Hardware Wallet or at least prefer Hardware Wallet.

  • Always cash out your bitcoins from Cloud or any mining service.

  • Check reviews the scheme or mining service before you put money in it.

Following are the prominent ways to make money off Bitcoin and related investment schemes.

1. Investing in Bitcoins using Bitcoin Trading

This is the simplest way for Investing in Bitcoins, it is riskiest yet most profitable at the same time. In such trading, you simply buy Bitcoins from an Exchange.

You should opt for Bitcoin Trading than Buying shares of Bitcoin Investment Funds if :

  1. You want immediate returns.
  2. Your budget is less than $ 10,000.
  3. You have absolutely no experience in shares, trading, or tech knowledge to setup miners.

When To Buy?

You buy when Bitcoin value is lowest and suddenly starts increasing & consistently exhibits growth. For example, if Bitcoin’s value is dropping till $ 7000 & then it started showing growth, $7010, $7066 & so on.

You buy when you feel the time is right, say at 7100,  and hold your position until it starts going down.

When to Sell?

Suppose the Bitcoin value reaches $ 8K, then it starts falling down to 7990, 7900 & follows drop pattern (Say you at 7800$). At this juncture, you will sell your position and earn a difference between your buy and sell ($7800 – $7100 = $700).

You can do this all day long, provided you have time, and enthusiasm.

Which Bitcoin Trading Platform to use?

There are plenty of Exchanges where you can do such simple Trading. We suggest you only chose those Exchanges or Platforms that have very good reviews.

Prefer bitcoin trading platform that has proper registrations in your country within some legal framework. Like Limited Liability Partnership, or Private Limited Company etc.

Organizations bound in legal frameworks are less likely to commit fraud than those who operate offshore beyond the reach of law enforcement.

Recommended Bitcoin Trading Websites are as follows

  1. Coinbase
  2. Zebpay

2 Investing in Bitcoin Stock or Bitcoin Investment Fund

One safe and low-risk high-gain way to invest in Bitcoin is to Investing in Bitcoin Stock.

A Bitcoin Stock is essentially a registered stock in a regular exchange, like NASDAQ. In Bitcoin Stock, there are a certain number of Bitcoins, and people can buy a share of these Bitcoins for a set price.

These websites or a Broker will charge you a certain percentage of your investment or profit depending on the platform you choose.

NOTE: – Usual Brokerage should range between 0.2 % ~ 0.5%, anything above this is suspiciously high. Make sure you do your research and read reviews about the firm you are investing in.

It is like your regular share market like trading, except the variables affecting bitcoin shares are very less in number.

There are few funds that are easy to invest in and had very good reviews in the past.

Bitcoin investment funds are volatile, look for insured funds that can give you protection from any sudden losses.

You may also Like 4 Cryptocurrency Trends to look out for in 2018

 

3. How to invest in Bitcoin Mining? buy bitcoin or mine it?

For small-scale operations, Bitcoin Mining is simply NOT PROFITABLE now. It’s not worth it if you are not willing to invest a large sum of money for a long period of time.

Having said that let me share my insights about mining and how it can be made profitable.

There are basically three ways you can make Mining Profitable, provided you have either dirt cheap or nearly free electricity.

Speaking of free electricity, do check out our piece on Renewable Energy Startups Ecosystem in India.

These companies are working on solar & wind energy solutions,  & provide really cheap electricity. You can learn from their example.

investing in bitcoin the Bitcoin miner icon

3.1 With ASIC Miners

Application-specific integrated circuit (ASIC) Miners are top in line hardware units for mining Bitcoin like cryptocurrencies.

Cost of Producing Bitcoin = Electricity Cost + Maintainance Cost + Pool Charges+backup generators cost. 

Assuming we are using Antminer s9 with theoretical hashing power 13 Tera Hash per Second. Antminer s9 has a power draw of 1372 Watts per hour.

Taking electricity cost, Maintainance Cost, and Pool Charges to be 0. You will get Ƀ 0.8745 in a year, provided that it runs 24×7 for a year.

investing in bitcoin Mining Rig
Bitcoin Mining Rig,
A small Mining farm operation
Image Credit: 99Bitcoins.com

So, now you know that why a single Antminer s9 rig or any rig in small scale operation won’t give you returns.

Bitcoin Mining is for mining farms nowadays.

Mining Farms setup 100 ~ 500 or more ASIC with free energy, like solar and wind energy.

There are many farms in colder nations, like Russia where people mine cryptocurrency in order to heat up their home.

The electricity is cheap as hell and there is added benefit of making money out of your designated heater.

I am not discouraging you to do mining, All I am trying to tell you is that you understand what you are getting into.

If you really want to make mining profitable, get free electricity, arrange s7 or s9 miners, more than 5 at least, and a designated clean room with AC, and proper ventilation.

Due to these reasons, mining has been nearly impossible for small operations. Although in China, and in Russia, the mining operations are blooming.

As China caters most of the world’s hardware market, including ASICs, and people can get them cheap there. Apart from that, there are technicians that can repair broken ASICs in China, same can not be said for US, Europe, India etc.

A Word of Caution: There is a common trend in ASIC Mining. Due to a spike in mining cultures, the company Bitman is unable to fulfil the high demand on a regular basis. They are often Sold out.

So you may want to buy second-hand Miner at a lower cost. Now, most of these miners are on sale because of two reasons,

  • either their owner has given up hope on mining (which is good for you)
  • Or these machines are so roughened up that they are done ( Not good for you )

Therefore before you try mining, I suggest you buy either a cheap miner, either old or new, just in working condition.

Get yourself familiarize with the Hardware, Software, and the whole setup. What are the difficulties you are going to face? How much investment you might need to put in.

Conclusion: 
  • The private mining operation is a high-risk area, probably riskier than bitcoin trading and bitcoin investment funds.
  • Bitcoin Mining with Bitcoin farm is the surest way to earn real Bitcoin, but not profitable if you have to pay for electricity.

3.2 Cloud Mining

Invest in Bitcoin cloud miningThere are many websites that claim that mining in Cloud way cheaper than mining on the physical rig.

Now let’s understand what exactly is Cloud Mining.

Cloud Mining is basically a computing for hire service, you make a contract with a website for a fixed term.

During this term cloud, the miner will mine the coin on your behalf. If everything goes right, you will get daily returns on your investment.

Having said that, let me warn you about a popular scam that is in trend in Cloud Mining.

There are a plethora of mining websites that claim that they actually mine something. But in reality, most of these websites are running a Ponzi Scheme.

Before you invest in any cloud mining service, I strongly recommend you to research their background. Strong points for a Mining Websites are

  • Longer Presence, if a Mining Service is operating for years then it might be safe, you can check their reviews throughout the years.
  • Good Reviews, Check for reviews for the website on Quora, Reddit, and any other forum. Do your research before investing. Anything less than 4 stars and hundreds of reviews is shady.
  • Cash Out Scenario, Make sure that the cloud service you hire, pays you back in a way that you can cash out.
  • Search for Scams, Before investing, just google the website’s name and scam as keywords, and you will get relevant results. If the website has been scamming people you will know it beforehand.

Genesis Mining is the most popular with maximum positive reviews, I am trying it right now and you can try it as well.

3.3 Mining Alt Coins

Alt Coins are the cryptocurrencies other than Bitcoin. Bitcoin’s popularity makes it hard for small miners like us to mine. However, there are 1000+ Altcoins, out of which we can mine 20 ~ 30 on consumer hardware.

investing in bitcoin
Diverse your portfolio
concept art by Techscoop.in

There are coins like Monero, Dash etc which you can mine with one or two Ant Miners, with a great profitability.

 

4. Making money using Bitcoin Merchant Account

There is a Bank Account type called “Merchant Account”. A merchant account is a type of bank account that enables businesses to receive amounts in many ways.

Here you can use your Merchant Account to accept payments in Cryptocurrencies, especially Bitcoins. You see, the pattern Bitcoin has is much better than the USD and Euro.

If you have a business, and if you can accept currencies in Bitcoin, you should do that. There won’t be a lot of customers that will pay you in cryptocurrency, but even if there are a few it will make you worthwhile.

The Exponential growth of Bitcoin is proof of that.

There are many Bitcoin Merchant Accounts providers like BitPay, CyoGate.com etc. that can help you set up your own Bitcoin Merchant Account.

5. Bitcoin Futures

Bitcoin Investment is still a taboo today, even with ever-increasing Bitcoin exchange rate.

Future and Options are a great way to invest. Now you can have Bitcoin Options and Bitcoin Futures.

Before we dive into the subject, let’s get the basic Idea & Terminology of Options and Futures.

Futures: Producers & Farmers needed a sure shot return for their crops. So an investment called “Futures” was introduced.

Buying Futures: Basically, in Futures, You buy a specific quantity of a certain product at a future date. And this process is called “Buying Futures Contract”.

This way producers/farmers protect their investment by securing a price, unaffected by volatility in prices.

The Buyer of futures contract reserves the right to sell or transfer the futures at a price decided among the Buyer (you) & Seller (website/exchange) of contract.

Going short and Going Long: If the price of the commodity goes up, the buyer goes short and the seller goes long. Going short implies that a person can sell a commodity at a lower price than the market rate.

For example, if you bought a futures contract for 1 Bitcoin for $10k and after one year 1 Bitcoin raised to $ 20K, you still get to have that Bitcoin for $10k only. And the Seller has to sell it for a price that was agreed upon.

In this case, you went short, and seller went long.

Vice Versa, if the price of futures that you bought goes down, you the buyer will go long and the seller will go short.

To reduce the counterparty risk, the party that is facing loss has to post money in Escrow.

Buying Bitcoin Futures: When you buy the Bitcoin futures, you fix the price of Bitcoins that you want to buy in future.

You are not Buying Bitcoins, rather you are Buying a Promise that seller will sell the Bitcoin at the promised price.

So, how about buying more than one Bitcoin, why not buy 20? Here is how you do that!

Leveraging Position: It’s a high-risk high gain situation again, you need to post collateral to leverage your position. When you buy leverage your position for 20 to 1 or 10 to 1, you expose yourself to profit & loss of 20 or 10 Bitcoins.

 

Conclusion

Concluding this article, I want to you to know that in every once in a while we got to do something we never did, for achieving something we never had.

Bitcoin is a Risky Investment, but what Investment isn’t? Direct Stocks will give you pure profit if you show a little proactiveness.

Bitcoin Mining is a far-fetched idea now, and only viable in China and Russia. In your country, if you can get free electricity then open up a Mining Farm. Be very careful when investing in Cloud Mining because of the scams and Ponzi schemes that are going all over the Internet.

Bitcoin Futures and Bitcoin Investment Funds are a great way of investing in Bitcoin. Invest in these schemes only if you have experience in Futures and Investment Funds.

Knowledge is Power, and more power you have more tides you can turn in your favour.

Hope you enjoyed reading this article as much as I enjoyed writing it. If you have any suggestions, views, or questions please feel free to ask.

Keep yourself updated with latest developments of Tech world, follow the Techscoop.in on Facebook, Twitter and Google+.

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