Ways to invest in Bitcoin without owning the cryptocurrency yourself

Bitcoin has enjoyed successful growth over the past decade, skyrocketing in prices and even gaining support from the big banks.

Yet for many retail investors it can be a complicated investment – it’s historically expensive, volatile, cannot be purchased through a brokerage account, and is not backed by a financial institution.

“There are things you can do for indirect exposure,” said Tyrone Ross, investment advisor and CEO of Onramp Invest, a digital investment platform. “If people do this, I think it’s better and safer before they start to dive into the [bitcoin] rabbit hole. “

There are a number of ways that people can invest in cryptocurrency and even bitcoin, or the technology behind it, without owning coins themselves. While this does not completely protect investors from the volatility of cryptocurrency brands, it can give them some protection against losses.

Invest in companies that hold bitcoin or other cryptocurrency

One way to gain exposure to bitcoin without owning it is to invest in stocks of companies that offer cryptocurrency-related services or own coins themselves, Ross said.

This includes a large group of publicly traded companies in different industries that have either added bitcoin to their balance sheets, or have cryptocurrency storage or payment services.

Recently, companies such as Tesla and MicroStrategy have invested directly in bitcoin. Tesla bought $ 1.5 billion worth of bitcoin and said it will soon accept digital currency as a form of payment. MicroStrategy, an enterprise software company, said it plans to sell $ 600 million in convertible debt and use the proceeds to buy bitcoin.

Look at companies with bitcoin or blockchain related technology

Investors can also gain exposure to cryptocurrency by investing in publicly traded companies that have technology related to coin trading or that use blockchain, the technology on which bitcoin is built.

Experts have also called on companies like Square and Paypal that allow users to trade cryptocurrency on their platforms. Additionally, companies like Riot Blockchain and Galaxy Digital are focusing on cryptocurrency and the technology behind it. And, the big names in tech like Microsoft, IBM, Google, SAP, and Amazon all use blockchain in different parts of their businesses.

There is also underlying material that people could invest in to gain exposure to crypto without holding coins.

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“Someone could also buy from companies that make graphics processing units (GPUs) needed for computers to solve the mathematical equations of blockchain technology,” said Anjali Jariwala, certified financial planner, CPA and founder of FIT Advisors in Torrance, California.

Investing in company stocks is much easier and probably safer than investing in cryptocurrency. On the one hand, this can be done through a regular brokerage account held by a financial institution, providing the user with additional security and ease of use. For example, if you forget the password for a brokerage account, you can reset it – not if you forget your Bitcoin wallet key.

Yet that might not eliminate volatility, Jariwala said.

Discover a cryptocurrency fund

It is also possible to invest in funds containing bitcoin and other cryptocurrencies, according to Doug Boneparth, CFP and president of Bone Fide Wealth in New York.

Right now, there are a few players creating bitcoin trusts, he said, designating companies like Grayscale and Osprey to help retail investors navigate cryptocurrency.

“Buying in a fund wrap is probably more familiar to the retail investor than anything else,” he said. Additionally, working with a fund means that you deal with the company that manages the fund for any questions or account information you need, such as setting a password, tracking gains and losses, or reporting. collection of documents to declare your taxes.

Of course, these services come at a cost – different funds will have different fees, which people should research before investing money in them, Bonaparte said.

And people could also invest in funds exposed to cryptocurrencies and blockchain technology, such as the Ark Next Generation Internet exchange-traded fund, for example. The ETF is exposed to things like artificial intelligence, big data, cloud computing, and blockchain.

To be sure, some investors will still want to own digital coins on their own. More than a quarter of Americans plan to invest in cryptocurrency this year, according to a February survey of more than 30,000 people conducted by Piplsay Research. Additionally, half said they believe investing in cryptocurrency is safe, according to the report.

If you want to invest directly in Bitcoin or another cryptocurrency, experts recommend learning as much as possible first, only investing an amount that you are comfortable losing and holding for the long term.

“The majority of people should spend more time learning than buying,” Ross said, referring to the cryptocurrency.

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Disclosure: NBCUniversal and Comcast Ventures Invest in Tassels.