Gaining exposure to crypto has never been easier. As crypto marches steadily towards mainstream adoption, there are an increasing number of avenues by which you can invest in the emerging asset class.
This is great for choice and accessibility, but it can be hard to sift through all the options and figure out which one is right for you. There’s no one size fits all answer, but what we can do is go over some ways people add crypto to their portfolio so that you can make a more informed decision on how you want to allocate your money.
Buy Crypto on an Exchange
Buying cryptocurrency on an exchange has come a long way from the rather shady, user-unfriendly days of the early 2010s. Now, there’s a wide array of exchanges with great customer experience and good customer support. What’s more, they are easy to sign up to, easy to fund, easy to use to make a trade and, for the most part, it’s easy to get your funds or assets off the platform. For some, exchanges are a good way to get access to crypto. When you purchase a certain coin on an exchange, that coin belongs to you. And you are able to decide how you’d like to use it, where you want to put it, and when and if you want to sell it.
Buy Spot Crypto ETFs
Exchange-traded funds (ETFs), notably those that track the spot price of a given cryptocurrency, are a secure and easy way to get exposure to crypto. We specify spot crypto ETFs here, because we aren't really fans of futures-based ones. If you'd like to understand why, we've written this handy article outlining our reasons.
For investors and institutions who want to deal with the ease of use and familiarity inherent in more traditional financial instruments., ETFs are a great place to start. They are also a good avenue to explore if you have the desire to invest in crypto through a tax-advantaged account like a TFSA or RRSP. e
An ETF that tracks the spot price of, say, Bitcoin, is one of the best analogs for owning actual Bitcoin that are currently available to investors. Using our own Purpose Bitcoin ETF (BTCC) as an example, we can give a brief overview of why this is.
When a person or institution buys BTCC, we take that money to buy actual Bitcoin. We then place that Bitcoin in a secure digital wallet. Therefore, BTCC’s value is backed and derived from actual Bitcoin.
Another thing that may be valuable to some investors is that ETFs are regulated. This government oversight can help some investors to breath easier, knowing that the chance of a rug pull or loss of funds is very unlikely.
If you're interested in learning more about crypto ETFs, we go into more detail about how their structure allows them to closely track the net asset value of the coins in these articles: "What Is A Bitcoin ETF?" and "What Is An Ether ETF?"
Invest in Crypto-Related Equities
Another way to get crypto exposure in your portfolio is to invest in companies that are heavily involved in crypto. As an example, this could be any number of publicly traded crypto exchanges, crypto mining firms, crypto-positive payment platforms or even companies that hold a large portion of their strategic reserves in Bitcoin or some other digital asset.
There’s also the option of purchasing ETFs that invest in Web3 or blockchain technology. Products like these make it easier to hedge your risks more broadly across the market as opposed to trying to pick out individual stocks.
Investing in this way is probably farthest removed from actually owning crypto. However, it does allow for an investor to cast a wide net and potentially benefit from the growth of the industry as a whole, as opposed to relying on the price action of a particular crypto to see gains.
Earn Crypto Rewards
Earning crypto rewards is also a viable way to get exposure to Bitcoin and Ether in a straightforward and easy way. There are a growing number of ways to do this. There are options like the Basic Attention Token (BAT), which is the native crypto of the Brave internet browser. Users and publishers are paid out in BAT based on the length and depth of people’s interaction with certain content. (2)
There are also crypto versions of already very familiar concepts like loyalty programs reward credit cards, and referrals. For example, through our collaboration with Drop, a popular rewards platform in North American. Users on the platform have the option to convert their rewards points into Bitcoin and Ether, giving people an avenue to get exposure to the world of crypto without having to use their own money to do so.
Though this is not a method to greatly increase your wealth, it can be a largely risk-free way to get acquainted with the technology and gradually expand your understanding of how crypto works without having to spend large sums of money.
- Haan Palcu-Chang, Crypto Specialist
(1) “Learning Rewards,” Coinbase: https://help.coinbase.com/en/coinbase/getting-started/getting-started-with-coinbase/learning-rewards-faq-and-terms
(2) “Basic Attention Token,” Investopedia: https://www.investopedia.com/terms/b/basic-attention-token.asp
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