Most people who are thinking of putting their money into cryptocurrency consider Bitcoin. After all, it is the oldest and most well-known of the digital currencies out there.
Its rise has been stratospheric. Once upon a time, you could buy Bitcoin for pennies or mine it yourself. Now? The most recent price was about $30,000 for a single coin.
Given the high potential profits, why are some investors hesitant? Well, Bitcoin is very volatile. It can have an 85% drop in value as well as rising astronomically. It’s a mad roller coaster ride and not everyone wants to deal with that.
For those who want less volatile and more steady investments, cryptocurrencies are not the best place to put their money. More traditional portfolios consisting of stocks, bonds, and savings vehicles provide more security.
So, should you avoid investing in Bitcoin?
You must assess your tolerance of risk. And you must understand that timing the market for any cryptocurrency is fraught with danger. Many investors have been wrecked if they sold or bought at the wrong time, or if they tried to go short or long on the cryptocurrency.
If you decide you can handle the volatility of this asset, the best strategy might be a more traditional buy-and-hold one. Other guidelines include not investing more than you can afford to lose, having cryptocurrency as no more than 10% of your portfolio, and making sure you understand the technology before you buy.
Bitcoin, like all other cryptocurrencies, is a digital asset. It was created by a nebulous figure called Satoshi, and it uses something called the blockchain which allows it to be safely exchanged without the involvement of government entities.
Bitcoin was designed as a form of currency. Other cryptocurrencies, however, such as Ethereum, are used for other purposes.
One question some new investors to the space may ask – can you buy bitcoin with credit card?
The answer is yes, with caveats.
There are four ways you can use to buy Bitcoin.
- You can use an exchange such as Coinbase to buy and sell your cryptocurrency. A fee will be charged – the amount depends on the exchange so it’s worth your while to research the rates.
- You can make a direct transaction using a unique and secure code. Many people store their Bitcoin on private hardware wallets and they can directly trade their cryptocurrency with other private investors. Be aware, however, that doing so can carry an element of risk.
- You can use traditional brokers to make Bitcoin purchases.
- You can use a credit card.
Of these, the last is the least favorable. Most major credit cards do not allow you to buy crypto. If they do allow you, they will charge you the highest interest rates, as they treat the purchase of crypto as a cash advance. Also, you won’t get a grace period.
But that is only part of the problem. Most exchanges also don’t accept credit card payments.
However, there is a way to use your credit card to buy crypto – through SoFi’s credit card, which will give you rewards in Bitcoin when you use it to make purchases. This is a risk-free way to use a credit card to get crypto!