The Bitcoin price has doubled within a few weeks. From mid-March to early June 2020, the value of the most important crypto currency rose from around 4,600 US dollars to over 10,000 US dollars. This is a more than 110 percent exchange rate gain in less than three months. This price development is a reminder of the Bitcoin hype a few years ago: Anyone who bought Bitcoins for a few hundred dollars or euros back then is now a millionaire.
How can you as an investor invest in Bitcoin, where can you buy Bitcoin and why can Bitcoin trading be interesting for both investors and speculators? We have selected providers where the Bitcoin purchase is easily done in just 15 minutes via PayPal. We also tell you how you can buy Bitcoin alternatively at a marketplace (with wallet).
Bitcoin – The most important crypto currency
Bitcoin (BTC) is the best known crypto currency of all and still by far the most important. In terms of market capitalization, Bitcoin is clearly ahead of its competitors, and in terms of performance, no other digital currency can hold a candle to Bitcoin: At nearly 160 billion US dollars, Bitcoin’s market capitalization in June 2020 is far ahead of that of Ethereum (24 billion), Tether (8.1 billion) and Ripple (8,2 billion).
The price development of the most important crypto currency is also unique: in 2016 alone, the Bitcoin exchange rate climbed by more than 125 percent, and in 2017 Bitcoin reached highs of almost 20,000 US dollars. Anyone who trades Bitcoins and has a close eye on the Bitcoin exchange rate can make a fortune with a bit of luck. In the past, the most successful crypto currency made one or two investors a millionaire.
High interest in “Anonymous Money”
Some analysts predict that Bitcoin will rise to 500,000 dollars and more. As the “Blockchain and Cryptoasset Pre-Event” at the beginning of April 2019 showed, more and more professional asset managers and institutional advisors want to recommend the blockchain and cryptoasset currencies as investments. Bitcoins are also gaining more and more acceptance among more financial institutions. For example, the U.S. investment bank JPMorgan launched its own crypto currency and many customers in Swiss online trading can already buy with crypto currencies.
Bitcoins have long since ceased to be just nameless online coins that computer users use to make anonymous purchases on the Internet. Bitcoin trading is popular with both private investors and speculators, and the potential still seems great. Especially the recent large price movements are proof of this.
Around the Bitcoin hype at the end of 2017, some critics saw Bitcoin as a risky investment and described the most important crypto currency as “hot air”.
In the end, the Bitcoin price is regulated by supply and demand. And the demand for anonymous money such as Bitcoin, Ethereum, Ripple, Bitcoin Cash, Litecoin & Co. continues to grow strongly. The reasons for this are, for example, the forward-looking block chain technology, the investment in Bitcoin and capital controls that can be successfully circumvented with the help of crypto money.
Bitcoin-Trading – Investment for opportunity oriented investors
Given the performance and technical possibilities of online currencies, many investors are becoming increasingly interested in Bitcoin. If you would like to buy Bitcoin and participate in the performance of the most important Internet currency, there are several options available to you – we have examined the advantages and disadvantages of each of them.
Buy Bitcoin quickly and easily: Bitcoin-CFD
Investors who are primarily interested in participating in the performance of Bitcoin can trade Bitcoins relatively easily through a CFD broker. Opening an account is particularly fast, and deposits can be made by credit card, PayPal, NETELLER or bank transfer.
You can think of a Bitcoin CFD as a security that reflects the Bitcoin price. You as an investor participate directly in the development of the Bitcoin price, but do not own Bitcoin physically. If you wish, you can add leverage to the Bitcoin CFD – you can find out more about this in our CFD Trading Guide. Please note that CFD trading is more heavily regulated since August 2018.
A 1:1 participation without leverage is of course also possible. The biggest advantage of a Bitcoin CFD is that you can get your money back immediately and in full in the event of a sale. This is not a matter of course: Various Bitcoin exchanges have daily payout limits, so a payout of your capital can sometimes take several days.
Our recommendation: If you want to buy or sell Bitcoins as a CFD, you can use eToro among other things. eToro offers credit card and NETELLER deposits and a very fast account opening without PostIdent. Of course you can also use any other CFD broker of your choice.
The Bitcoin certificate
Another very convenient way to participate in the Bitcoin course is to purchase Bitcoin certificates. The choice on the market is currently still relatively limited, but an attractive offer is provided by the Swiss bank Vontobel.
With the Open End Participation Certificate on Bitcoin you can easily invest in the price development of the most important digital currency. The Vontobel Certificate replicates the performance of Bitcoin, but is not a “real” Bitcoin, but a derivative on the crypto currency. The product enables investors to participate almost 1:1 in the gains and losses of Bitcoin against the US dollar – without a predefined redemption date. You can also buy mini-futures on Bitcoin from Vontobel.
If you want to buy Bitcoin, a certificate in the crypto currency is also a very convenient option in addition to the Bitcoin CFD; all you need is a securities account.
Buy real Bitcoin
If, in addition to performance, your anonymity in Bitcoin trading is also important to you, there is no alternative to buying “real” Bitcoins, i.e. buying Bitcoins in the form of “digital money” or in the form of data. Ownership of a wallet is a basic prerequisite for this. This electronic wallet can be compared to a personal current account for your pocket, you can use it to make transfers and receive or send Bitcoins.
In principle, transferring Bitcoins is no different from a bank transfer: instead of an account number, we only speak of a receiving address. Because the digital currency is sent directly from person to person without an intermediary, the fees incurred are lower than for transactions via banks.
If Bitcoins are purchased on several portals, all Bitcoins can be combined in a single Bitcoin wallet. A Bitcoin Wallet on the smartphone is suitable for everyday use, but it is also possible to use a wallet only for online payments on the PC or tablet. After downloading and installing a Bitcoin Wallet, it should be secured with a strong password, a so-called passphrase. This access code must then be entered before each transaction in the future.
How do I buy Bitcoin from a Bitcoin Exchange?
If you want to trade the crypto currency Bitcoin, you can also do so online in a Bitcoin exchange. The best-known German marketplace is called bitcoin.de, an enterprise of Bitcoin Group SE. Here, users trade directly with each other, so that the price for the real Bitcoins is formed by supply and demand. One the biggest Crypto exchanges ist Coinbase, where you can buy and sell Bitcoin.
In detail, it works like this: On marketplaces like bitcoin.de or Coinbase, registered users post their offers to buy or sell Bitcoins with a different currency. Buyers can thus see how many Bitcoins a seller offers at what price. A deal is concluded as soon as an offer is accepted by another user, the potential buyer. The purchase price for the purchased Bitcoins is transferred to the Seller’s bank account and the Buyer receives the purchased Bitcoins as digital data for his wallet.
Depending on the marketplace the operators charge a small fee for the exchange, for the deposit and/or for the withdrawal of the money. Usually this fee is relatively small. The buyer and seller each pay half of the Bitcoin fees.
Another way to buy “real” Bitcoins is through Bitcoin exchanges. Some of the best-known trading exchanges for crypto currencies include Bitfinex, CEX.IO, Kraken, Bitstamp and Paymium. Again, please note that opening or verifying an account can take a few days.
Bitcoin prices on the various trading platforms can vary greatly. While Bitcoin trading on crypto exchanges is automated, trades on a marketplace are processed manually. You as an investor must therefore search for a suitable offer to sell yourself.
If you really want to buy Bitcoins, all you have to do is specify how many coins you want to buy at what rate (classic currencies such as US dollars or euros can be exchanged for Bitcoins there at any time). If the Bitcoin Exchange finds a suitable offer, it will buy the Bitcoins on behalf of the customer and then credit them to the customer’s account. On CEX.IO, processing is particularly easy, especially since credit cards such as VISA and MasterCard are also available as payment methods.
If you want to sell your Bitcoins via Bitcoin exchanges, this works according to the same principle as when buying Bitcoins: Within a few minutes you have posted your offer to sell on a Bitcoin exchange. If someone buys your Bitcoins, the amount is credited to your bank account.
Bitcoin course – How the Bitcoin price is created
The Bitcoin price and the value of the Bitcoin depends on supply and demand from investors – we have already told you this above. If demand increases, the Bitcoin price increases, and vice versa. This means that the digital currency Bitcoin is not controlled by central banks or governments, but is managed decentrally.
And how is the Bitcoin price composed? The total quantity of Bitcoins available is currently capped at 21 million units. This cap is intended to prevent inflation on the one hand and to generate the added value of the crypto currency on the other. However, it is generally assumed that the demand for Bitcoin will continue to grow – for example, by improving the trading conditions for Bitcoin and thus making Bitcoin more attractive as a means of payment.
When Bitcoin saw the light of day in the crypto world, the virtual currency initially had no value that could be quantified in other currencies. This has changed in the meantime. Below you can see the Bitcoin exchange rate development (BTC) compared to the major FIAT currencies:
Like any other currency, the Bitcoin rate is subject to fluctuations, the Bitcoin rate may also vary depending on the trading platform. Investors who want to trade Bitcoin should take into account the high volatility of the crypto currency. In 2017 alone, the value of Bitcoin rose 20 times.
Blockchain: Technology with great potential
The fabulous performance made Bitcoin famous as a crypto currency – and made many investors rich. Bitcoin is still one of the most important crypto currencies at all, also and above all because of its trend-setting technology, the Blockchain. The Blockchain was a basic prerequisite for Bitcoin’s triumphal march and it will also be indispensable in the future.
The reason is obvious: The trend is moving more and more towards virtual money and payment systems on the Internet. The security of mass payment processes in the online world can only be guaranteed if block chain technology (or a comparable anonymous technology) is used.
Buy offline Bitcoins
Although crypto currencies are also called Internet currencies, Bitcoins do not necessarily have to be purchased over the Internet. There are several ways in which the crypto currency can be purchased offline for cash. The cheapest and fastest way to buy Bitcoins is to purchase them from a private individual. Various platforms, arrange private meetings with traders in the area for this purpose.
Caution: It should be noted that trading is very anonymous and unregulated. You should therefore choose your exchange partner very carefully.
Meanwhile, there are also regular meetings throughout the world at which Bitcoin fans discuss the latest developments in the field of digital currencies. Such a direct exchange is probably the easiest way to learn about Bitcoins, Blockchain – the security technology for Bitcoin transactions on the Internet – and other crypto currencies. And often these so-called Meetups also provide a good opportunity to buy and sell Bitcoins.
In addition to the contact points and local Bitcoins, there are other exchange places where you can buy the Bitcoin crypto currency. Occasionally there are even Bitcoin machines where you can buy Bitcoins on site. Depending on the manufacturer, their use differs in detail, but the principle is similar: The machine is fed with cash, then the wallet is scanned, and then the Bitcoins are stored in this virtual wallet on the smartphone.