Investing is a tough subject for many of us, despite that it’s now become quite accessible. From brokerage to retirement, you can open any kind of account online. Our next investment opportunity is always a click away, and we’re paying less to invest our money than ever.
Several investment houses, including Charles Schwab, E-Trade, Fidelity and Vanguard, now allow commission-free trading on most stocks and exchange-traded funds–which still have an expense ratio. Even better, fractional shares — meaning buying a portion of a full share — are becoming more widely accepted.
Vehicles like ETFs and index funds are popular, but a newer product on the market — a cryptocurrency called Bitcoin — has been harder for investors to grasp. If you’re having trouble with it too, read on to learn how to make money with Bitcoin.
What Is Bitcoin?
Many people know that Bitcoin is a virtual, decentralized currency encoded through cryptography, but they may not know what that means. So, before learning how to make money with Bitcoin, you need to learn about its key features.
Bitcoin is a currency that only exists online in the same way that email accounts only exist on the internet.
The Internal Revenue Service describes this kind of currency as virtual, which means it digitally represents a value that isn’t a “real” currency, like the dollar or a foreign currency. Like its “real” counterpart, virtual currency has a value that can be exchanged.
Encoded via Cryptography
The IRS usually doesn’t consider virtual currency as legal tender. However, cryptocurrencies like Bitcoin are accepted, because they rely on cryptography, a security-minded information coding technique, to validate it. This also keeps a transaction record on a digitally distributed ledger, like a blockchain.
Not Connected to a Physical Company
With traditional investments, such as stock or fund trades, you are buying into a company or a fund made of company stocks. As an investor, you own a piece of the actual company. With Bitcoin, on the other hand, you just own a machine-generated coin that is recognized as an online currency. It doesn’t represent a piece of a larger organization.
Decentralized, Peer-to-Peer Transaction
Unlike traditional, regulated securities, cryptocurrency can be purchased online by anyone, without the oversight of a bank or financial institution.
Converting To Cash
Bitcoin can be exchanged for actual cash. Its cash value depends on its assessed value as a digital currency.
How To Make Money With Bitcoin
Here are three ways to get your feet wet with Bitcoin:
1. Buy Bitcoin
The most common way to invest in Bitcoin is to buy it. You have a couple of options to do this:
- Full or fractional shares.…