How to Start Investing in Bitcoin & Build Wealth in the Digital Age

Jan. 24, 2025

Author: Bitcoin Magazine Pro Team

If you’ve been following the news, you’ve probably seen stories about Bitcoin investors making life-changing sums of money. You might wonder how they did it and if you could do it too. The sooner you start your Bitcoin investment journey, the better—especially if you want to turn a small initial investment into sizable Bitcoin annual returns. This guide on investing in Bitcoin will help you get on the right foot. The information here will give you the basics to confidently enter the Bitcoin market so you can grow your money with this revolutionary technology.  

As you will see, you don't need to be a financial expert to make money with Bitcoin. You can increase your odds of success with proper Bitcoin analysis and strategies, just like with other investments. 

Is Bitcoin a Good Investment for Beginners?

person holding btc - How to Start Investing in Bitcoin

After over a decade of existence, there's still debate over what kind of investment Bitcoin is. Owning Bitcoin is not like owning stock in a company. Unlike a business, Bitcoin doesn't generate revenue by selling products or services. It doesn't issue dividends. It also doesn’t have a CEO, board of directors, or any other centralized group that sets goals or can be held accountable.

Security vs. Commodity

Some have argued Bitcoin should still be considered a security. Others suggest it's a commodity. Commodities are associated with raw materials like metal, grain, and milk. Commodity markets are regulated by the Commodity Futures Trading Commission, which regulates foreign currency trading and is the government agency most active in Bitcoin regulation. 

Still, others say it’s a currency you can use to pay for goods and services. While some businesses accept Bitcoin, it’s far from widespread practice. There’s also the possibility that it’s a new asset class altogether.

The Potential Benefits of Investing in Bitcoin

Bitcoin has historically offered the potential for high returns. It’s decentralized. That said, many people choose to trade and store Bitcoin on centralized platforms. Bitcoin has the potential to be a non-correlated asset, similar to gold. 

This means it may not follow the trends of other assets, like stocks. Nevertheless, while Bitcoin has had non-correlated moments with the S&P 500 in the last decade, it has yet to prove itself as a genuinely non-correlated asset. 

The Risks of Investing in Bitcoin

The price of Bitcoin can go up, as referenced above. It can also go down—a lot. Unlike traditional financial exchanges, Bitcoin exchanges don't have circuit breakers that automatically pause trading when prices diverge too quickly. BTC markets also trade 24/7, and dramatic dips can happen anytime. 

Lost Funds and Limited Consumer Protections

Transactions are irreversible. People have lost millions of dollars of Bitcoin because they lost or forgot their wallet credentials. Bitcoin exchanges lack basic consumer protections, like insurance protection from the Securities Investor Protection Corp. and the Federal Deposit Insurance Corp., found in traditional financial products. 

Understanding Bitcoin Volatility

Bitcoin’s exponential growth and ability to maintain its title of most valuable digital asset can mask the fact that its ascent has not been linear. The upside of buying Bitcoin for a dime in 2010 is clear. But with volatility comes big downsides, too. Someone who bought Bitcoin in 2013 would have seen their investment tumble 80%, and it wouldn’t be above water for another three years. 

Volatility and Risk

Recent highs don't carry the promise of continued returns. Anyone investing in Bitcoin will hope for the best, but they should be prepared for significant downturns, too. While Bitcoin has recovered many times, there's also a possibility that it could go to zero — for example, if several BTC platforms fail and there's a massive sell-off.

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How to Start Investing in Bitcoin as a Beginner

btc on book - How to Start Investing in Bitcoin

Bitcoin mining creates new Bitcoins and validates transactions on the Bitcoin network. Individuals called miners compete to solve complicated mathematical problems, and whoever succeeds first earns the reward, currently at 6.25 BTC per block. 

The Challenges of Solo Bitcoin Mining

The odds of mining Bitcoin solo are low — about 1 in 26 million. Miners face increasing difficulty levels as more Bitcoins are mined, and the mining costs also rise. You’ll need expensive hardware, copious amounts of electricity, and technical expertise even to have a chance at mining Bitcoin successfully. 

Diminishing Returns

Even if you are successful, there’s no guarantee it will be profitable when you equate the reward to your incurred costs. This is especially true since Bitcoin mining rewards are reduced by half after approximately every four years in an event known as Bitcoin halving. The next Bitcoin halving, scheduled for April 2024, will bring the block reward down to 3.125 BTC.

For these reasons, Bitcoin mining has become less profitable and may not be the best strategy for investing in Bitcoin. Instead, consider investing in shares of a Bitcoin mining company to reap rewards from Bitcoin without directly owning the asset. 

BTC Exchanges: The Easiest Way to Buy Bitcoin 

Bitcoin exchanges are the most straightforward way to buy Bitcoin. These platforms are popular because they’re cost-effective and easy to use. They don’t charge hidden fees and offer various extra security features, including online wallets to store your BTC.

Bitcoin exchanges are categorized into two types:

  • Centralized
  • Decentralized 

Beginner-Friendly Trading

A centralized exchange (CEX) is the most common type investors use to buy Bitcoin. As a third-party platform, it helps you complete safe Bitcoin transactions with stringent protocols to safeguard your holdings. A CEX’s simple and friendly interface allows you to use fiat currency to buy Bitcoin, making it a convenient and safe space for beginners.

Bybit is one of the most popular and trustworthy centralized exchanges for Bitcoin transactions. The platform offers you the best prices in the market with triple-layer asset protection, advanced privacy and data protection. 

The Decentralized Alternative

Decentralized exchanges (DEXs) cut out intermediaries to allow for peer-to-peer transactions. Users enjoy anonymity and more autonomy over their funds, less red tape and fewer regulations around transactions. 

These exchanges are less popular mainly because they are more complicated than CEXs. Users must remember their account credentials and acquaint themselves with their platform’s operating style or risk losing their holdings forever.

Bitcoin Trusts and Exchange-Traded Funds: Hassle-Free Ways to Invest in Bitcoin

If you want to invest in Bitcoin without the technical challenges of owning and storing the asset, trusts and exchange-traded funds (ETFs) offer more convenient options.

Many investment companies are looking to meet their clients’ demands for Bitcoin. One way they do so is through Bitcoin trusts, an easy way to get exposure to Bitcoin without directly owning it. 

Private Market Access

Accredited investors who meet the set income and experience threshold can buy a limited number of private shares through brokerage or retirement accounts but without the private key or other Bitcoin exchange storage concerns. By buying through a trust, you rely on your brokerage to buy and manage your Bitcoin assets.

Grayscale Bitcoin Trust is the most popular investment trust, with over $15 billion in assets under management as of September 2023. GBTC stores the actual Bitcoin, tracks the underlying price, and trades its retail index in the open or over-the-counter market.

The ETF Advantage

Another option similar to trust is an exchange-traded fund or ETF. A Bitcoin ETF is a pool of investment funds that tracks Bitcoin’s price and can be bought or sold throughout the day. It offers beginners an easy, simple and cheap way to add Bitcoin to their portfolios.

ETFs follow the price of Bitcoin, which means that when BTC fluctuates in value, they follow suit. Still, they may deviate from the actual Bitcoin value due to various reasons such as market demand, trading volume and other market dynamics.

The Rise of Bitcoin ETFs

Some popular Bitcoin ETFs that invest in futures are ProShares Bitcoin Strategy ETF (BITO), with over $1 billion in assets, and Evolve Bitcoin ETF (EBIT), with $76.17 million under management. Whichever option you choose, you’ll find a safer and more convenient way to expand your portfolio with little to no effort.

Money Transfer Apps: Buy Bitcoin Easily and Safely 

For beginners who want to buy Bitcoin conveniently, money transfer apps like PayPal, MoneyGram and Cash App are great options. These platforms allow you to buy, sell and store Bitcoin. PayPal, for instance, lets you buy Bitcoin using your bank account, debit card or PayPal account balance.

Peer-to-Peer Exchanges: Buy Bitcoin Directly from Other People 

Peer-to-peer platforms (or P2Ps) provide a venue where buyers and sellers can post their buy and sell orders. Many platforms may require you to create and verify your account before transaction.

Securing Your P2P Bitcoin Transactions

You can initiate a trade once you choose your preferred offer and payment method. The seller sends the Bitcoin to the escrow account, and after receiving the fiat currency, the escrow account unlocks it and sends it to the buyer. 

Since P2P platforms connect buyers and sellers directly, you need to take precautionary measures before making a trade, as follows:

  • Ensure that you read through users’ trading histories and choose a reputable seller.
  • Only make a trade on a reputable site with identity checks (to avoid getting scammed).
  • Only release your funds once the Bitcoin is locked in an escrow account.

For an even smoother Bitcoin trading experience, try out Bybit P2P HotSwap, which offers you more advertisers, third-party liquidity providers, competitive Bitcoin rates, and fast payment and release of your Bitcoin.

Traditional Brokers: A Simple Way to Buy Bitcoin 

Traditional brokers have also ventured into the Bitcoin space to offer their customers a way to buy and sell Bitcoin. They don't charge for Bitcoin trades, and only profit from a payment for order flow.

Some of the popular choices include:

  • Robinhood
  • TradeStation
  • SoFi®
  • Firstrade Securities

Bitcoin ATMs: The Easy Way to Buy Bitcoin with Cash 

For people living in areas with limited access to more conventional methods of buying Bitcoin, or if you're just looking for a simple way to complete a transaction, Bitcoin ATMs can come in handy. All you need to do is insert cash or a credit or debit card in exchange for Bitcoin, which is then loaded into your Bitcoin wallet. 

Navigating Bitcoin ATMs

Most Bitcoin ATMs allow one-way transactions, either to buy or sell, while others support bidirectional functionality, which allows you to both buy and sell BTC. The charges to expect here are the fiat currency conversion and purchase fees. Make sure to compare the ATM's fee structures, as they tend to be high or low depending upon location. 

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