Bitcoin is coming of age: make sure you own some
Bitcoin has consistently been underestimated by its critics. Yet now it’s on the verge of being adopted by institutional investors and corporations. Dominic Frisby explains why you should have a little in your portfolio.
If you are new to bitcoin and blockchain technology, I urge you to research as much as you can: read about it, listen to podcasts and, above all, try out the technology. Buy small amounts of bitcoin, practise transacting in it with a friend, practise storing it. Get on top of the tech before you risk any significant capital. It will take you a few days, but it’s worth allocating the time. An easy place to get your first wallet is blockchain.com.
The most difficult aspect of bitcoin is the point of transfer between “fiat” money (eg the pound in your pocket) and bitcoin. The easiest place to buy it is on an exchange. Options include Gemini, Kraken, CEX.Io, Binance, SFOX, Crypto.com and eToro. Generally, the more you want to buy, the more paperwork you have to fill in. I’ve also found that in many cases it’s easier to set up an account on your smartphone than it is on your computer, especially with Binance and Crypto.com.
Then, once you’re set up, you’ll experience the delights of sending money to your exchange via a bank. You might end up having to make a phone call at this point. Easier options for small amounts include Bittylicious and LocalBitcoins, or even bitcoin ATMs. Revolut makes it easy, but you can’t then move your bitcoins elsewhere. You can only sell back to Revolut, which is somewhat besides the point.
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
You can keep your bitcoins at an exchange – some offer cold storage, similar to the way that bullion dealers often offer gold storage. But longer term (and unlike with bullion dealers) I advise against this, as if the exchange goes out of business, you’ll be in trouble. Other long-term storage options include electrum plus a multisig (multi-signature) hardware wallet or – a slightly more user-friendly option – is bitcoin storage specialist keys.casa. This will all start making sense once you start playing around with the tech.
The Financial Conduct Authority recently banned the sale of crypto derivatives to retail investors, which means that getting exposure to crypto via traditional markets has become very difficult. So my advice is to go down the rabbit hole, and buy and hold actual bitcoin as it was meant to be bought, and hold.
If you’d still prefer some sort of listed option, then you could buy Microstrategy (Nasdaq: MSTR), which has become something of a proxy for bitcoin. Or there is London-listed bitcoin miner Argo Blockchain (LSE: ARB), though its share price has lost touch with reality. Alternatively, as more institutions follow the likes of Ruffer, you might well be able to get some exposure to bitcoin in the longer run via more and more investment trusts, so keep your eyes open.
-
Energy, healthcare and utilities: how to tap into AI in the real economyAI promises to add to the productivity and profitability of much of the economy beyond tech. Here’s two themes to tap into AI in the real economy.
-
How Junior ISAs could help with inheritance tax planningLooming inheritance tax changes will limit how much pension wealth can be passed on but more people may be maxing out their loved ones’ JISA allowance instead
-
Should you sell your Affirm stock?Affirm, a buy-now-pay-later lender, is vulnerable to a downturn. Investors are losing their enthusiasm, says Matthew Partridge
-
Why it might be time to switch your pension strategyYour pension strategy may need tweaking – with many pension experts now arguing that 75 should be the pivotal age in your retirement planning.
-
Beeks – building the infrastructure behind global marketsBeeks Financial Cloud has carved out a lucrative global niche in financial plumbing with smart strategies, says Jamie Ward
-
Saba Capital: the hedge fund doing wonders for shareholder democracyActivist hedge fund Saba Capital isn’t popular, but it has ignited a new age of shareholder engagement, says Rupert Hargreaves
-
Silver has seen a record streak – will it continue?Opinion The outlook for silver remains bullish despite recent huge price rises, says ByteTree’s Charlie Morris
-
Investing in space – finding profits at the final frontierGetting into space has never been cheaper thanks to private firms and reusable technology. That has sparked something of a gold rush in related industries, says Matthew Partridge
-
Star fund managers – an investing style that’s out of fashionStar fund managers such as Terry Smith and Nick Train are at the mercy of wider market trends, says Cris Sholto Heaton
-
Affordable Art Fair: The art fair for beginnersChris Carter talks to the Affordable Art Fair’s Hugo Barclay about how to start collecting art, the dos and don’ts, and more
