Bitcoin is the most expensive, popular, and largest cryptocurrency. At the time of writing, one Bitcoin is worth $30,466.90.
As such, many people assume that investing in Bitcoin is out of the realm of possibility for them.
However, this isn’t actually the case. What many people don’t realize is that it is possible to purchase a fraction of a Bitcoin.
In fact, this is a very popular way to invest in Bitcoin and cryptocurrency more generally.
To learn more about purchasing a fraction of Bitcoin, take a look at the ultimate guide below.
Units Of Bitcoin
Just like a dollar, a Bitcoin is divisible. The smallest unit of a Bitcoin is called a satoshi.
There are 100 million satoshis (otherwise known as sats) in a single Bitcoin. This means that every satoshi is worth 0.00000001 Bitcoins.
However, the satoshi isn’t the only unit of a Bitcoin. Like a dollar is divisible by a cent and a quarter, a Bitcoin is divisible by a satoshi and a millibitcoin.
A millibitcoin is equal to one-thousandth of a Bitcoin, or 0.001 Bitcoins. There is also a microbitcoin, which is one-millionth of a Bitcoin, or 0.000001 Bitcoins.
And, on certain networks (such as the Lightning Network), it is actually possible to make a transaction using a smaller unit than the satoshi.
Being able to divide Bitcoins into fractions is a necessary feature of the currency. It allows for microtransactions to occur.
Small units of Bitcoin, such as the satoshi, have also become indispensable since the price of Bitcoin skyrocketed.
The existence of the satoshi has ensured that investors can purchase a small fraction of a Bitcoin.
In theory, you can purchase as little as $1 worth of Bitcoin. This makes investing in Bitcoin very accessible.
Purchasing a fraction of a bitcoin is also very easy to do. All you need to do is specify the value of your trade in dollars.
Then, the cryptocurrency exchange will draw on the current market prices to calculate the amount of crypto your dollar investment equates to.
Minimum Spend And Deposits
However, there are some requirements when it comes to investing in Bitcoin.
Specifically, there will likely be a minimum spend and minimum deposit requirement on the crypto platform that you opt to use.
Different platforms will have different requirements. As such, make sure that you shop around to find the right platform for you.
Below, we’ve listed three prominent platforms and their minimum requirements.
- Coinbase – this platform has a minimum spend of $2. The value of the minimum deposit depends on how you choose to transfer money.
- Gemini – on this platform, the minimum requirements depend on the cryptocurrency you are investing in. For Bitcoin, the minimum spend is 0.00001 Bitcoins, which equates to around $0.60. There is no minimum deposit required.
- eToro – this platform has a minimum spend of $25. It also has a minimum deposit of $50.
Consequently, most people who are interested in dipping a toe into cryptocurrency investment usually spend at least $20 on Bitcoin.
However, this doesn’t mean that you have to! Just make sure that you choose a platform that supports your investment.
It is also important to consider any fees that you will be liable to pay when you invest in cryptocurrency.
Different types of exchanges all have different fee rules, but we’ve listed the most important ones to be aware of below.
- Deposit fees – these will depend wholly on the way in which you plan to deposit your money. Generally speaking, if you opt for a bank transfer, you won’t need to pay a fee. A credit or debit payment usually comes attached to a fee of around 3%.
- Trading fees – Some exchanging platforms will make their trading fees clear. Others will simply offer you a quote at the time of trading. It is likely that you’ll be able to get a discount on trading fees if you pay in the token owned by the exchange.
- Withdrawal fees – it is very important to be aware of any withdrawal fees before you invest. Some exchanges require that you pay a percentage of the withdrawal, or even a set fee for a certain currency when you take your money out.
How To Judge A Cryptocurrency
It is important that you don’t judge a cryptocurrency purely by its price.
Thanks to small units of Bitcoin and other well-established cryptocurrencies being available for purchase, you don’t need to risk your money by purchasing cheaper, less-established currency.
Don’t be fooled by a cheap coin – this doesn’t necessarily mean it is a good investment. For example, many meme coins produce billions of tokens, each worth less than a cent.
However, there is no guarantee that the price of these currencies will rise. As such, you could, in fact, end up losing your entire investment.
So, how should you measure the safety of an investment in cryptocurrency? Well, we recommend looking up the market capitalization of your chosen currency.
Cryptocurrencies can be divided into three categories: large-cap, mid-cap, and small-cap.
Those in the large-cap category, such as Bitcoin and Etherium, are considered to be safer and less volatile investments than the others because they have a proven track record.
Those that are categorized as mid-cap tend to be riskier, however, they also tend to have some untapped potential.
Currencies that are considered small-cap are particularly risky investments, so we recommend steering clear of these.
Remember – all cryptocurrency investments are risky. Cryptocurrencies are notoriously hard to predict and tend to be volatile investments.
But, some are more risky and volatile than others. So, be smart and do your research before investing.
Purchasing a fraction of a Bitcoin is a great way to begin investing in cryptocurrency.
You don’t have to spend too much money, and you can feel confident that you’re making a relatively safe investment.
However, cryptocurrencies always come with risk and volatility, so do as much research as possible before investing.