As Bitcoin clears its 6 month losses and approaches $7,000 per 1 BTC, interest in acquiring bitcoin is warming up. Demand for bitcoin is currently insatiable in countries like Venezuela with corrupt governments and unstable currencies.
Yet much of the demand for bitcoin is also driven by speculative investment from those in the know about bitcoin’s future prospects at a time when market adoption is still estimated to be only 5% in the United States. As of Q4 2018 there were 32 million blockchain wallets globally. Since one person can create and use multiple wallets, the number of human users is likely something significantly lower than 32 million.
For those investing in bitcoin to save money in a hard asset that operates outside of the perpetual inflationary adjustments of the fiat money supply, and maybe speculate on bitcoin’s potential future growth, knowing the cheapest way to acquire bitcoin is important. Here are 5 ways to acquire bitcoin ranked from cheapest to most expensive.
1. Mine A Few in 2009
Back in 2015 a Norwegian man named Kristoffer Koch saw Bitcoin in the news and dug up some old bitcoin he bought in 2009 for 150 Kroner ($27). His $27 worth of 2009 bitcoin turned out to be worth $886,000 on the market six years later.
The Cheapest Way To Acquire Bitcoin
Koch sold a fifth of his bitcoin in 2015 and bought a nice apartment in a wealthy neighborhood. This is technically the cheapest way to acquire bitcoin. Of course if you’re reading this, then that is no longer an available option.
2. Accept Bitcoin for Your Business
The cheapest way to get some bitcoin in your savings in 2019 is to accept bitcoin in payment for your business’s goods or services. Of course you need to have or start a profitable business in order to do this; and have the extra cash for operations to be able to part with time, effort, and/or inventory for bitcoin instead of cash.
If you sell digital products and ship them digitally, because your inventory is reproducible and deliverable at no additional cost per unit, accepting bitcoin for your e-business is a no brainer at this point. It’s a way to get more business.
How to accept bitcoin for your business?
Advertise that you accept bitcoin in a display before and at the point of sale, whether that’s your brick and mortar business’s front door and cash register, or your e-commerce business’s product pages and checkout cart.
BitPay allows merchants to accept bitcoin for online payment as well as at brick and mortar stores with a 1% transaction fee. GoCoin is another company offering online merchants a secure way to accept bitcoin payments.
3. Buy Bitcoin
The next cheapest way to acquire bitcoin after accepting it for payment for services or goods rendered is to simply buy bitcoin. In 2019 there are innumerable ways to buy bitcoin and it is as easy as paying online for some with your credit card.
When you buy bitcoin the seller will charge a small fee on top of the going market price for bitcoin on the big bitcoin and cryptocurrency exchanges.
If you buy a large amount of bitcoin, be sure you learn how to secure it yourself with your own private keys in your own wallets.
Be sensible about how you keep any large amount of savings in cryptocurrency.
If you hold bitcoin on an exchange, the exchange has your bitcoin and is keeping track of how much your account holds in a central database.
This negates the vital benefit of the bitcoin protocol and architecture putting your money entirely in your own control. Along with that complete banking autonomy goes the responsibility to know what you’re doing.
When buying bitcoin, determine how much you are comfortable leaving in the custody of whatever third party you’re considering, and how much you’re comfortable being responsible for yourself. Know and understand the risks of both third party custody and securing your bitcoin yourself. Don’t keep all your eggs in one basket.
4. Mine Bitcoin
There’s a trade off between cheaper now and cheaper later when it comes to mining vs. buying bitcoin. Although in many cases mining an alt coin right after it’s listed on an exchange has been much cheaper than buying it on the exchange.
Researchers from Princeton University and the University of California, San Diego presented a study with these findings at the Financial Crypto 2018 conference.
At Inc. Eric Mack summarizes the results of the study:
“Researchers from Princeton University and the University of California, San Diego looked at the potential profitability of mining versus speculating on 18 altcoins, include Dogecoin, AuroraCoin, ViaCoin and RonPaulCoin. They found that mining a coin shortly after it is listed on an exchange is more profitable on average than simply speculating on the coin once it has been listed.”
Mining vs. Buying Bitcoin
When it comes to mining vs. buying bitcoin, however, the fixed cost of purchasing a suitable mining rig makes it cheaper up front to buy bitcoin from someone or on an exchange than to mine it.
While mining could offer lucrative short term opportunities for alt coins, and a long term supply of bitcoin for cheaper, it exposes the bitcoin investor to more risk. For instance there is the risk that the miner breaks and the initial investment is not recouped.
Bitcoin mining is also a speculative, high risk-high reward investment in the prospect that each bitcoin will continue to grow dramatically in price with growing demand and market adoption.
It could be far cheaper in the long run, but for it to be profitable bitcoin’s price and transaction fees have to rise above the hazards of electricity costs, Bitcoin mining difficulty, and obsolescence in the relentless development of faster miners.
5. Lease Hash Power
Finally you can lease hash power from cloud mining services. This is both more and less cheap than buying the equipment to mine bitcoin yourself. As with mining versus buying bitcoin, there’s a trade off between cheaper to lease up front and more expensive later. In the long run leasing hash power costs at least as much as mining does plus the fee bitcoin investors pay to cloud mining companies to lease their miners.