Cryptocurrency is the new big thing in the investment area, and both private and corporate investors have shown great interest in the asset class. Amid this interest, however, is the fear of the dangers associated with cryptocurrencies, and many people would rather not buy the asset outright.
Most investors will invest in it, but in a way that is safer than buying the assets outright and having the responsibility. The following are five primary ways to invest in crypto assets without buying them.
1. Crypto Futures ETFs
If you want to invest in crypto without actually buying the asset, one of the best ways to do so is with a futures crypto exchange trust fund (ETF). If you know how futures trading generally works, you know that you can trade futures without having to buy the underlying asset, say gold.
You enter into a contract to buy or sell an asset in the future at a set price, regardless of its trading price when the trade is executed. This type of investment is more like a bet on the asset’s price. Trading crypto futures works in much the same way, only this time the underlying asset is a cryptocurrency such as Bitcoin, Ethereum or any other altcoin.
By trading crypto futures, you can bet on the underlying asset’s price for the future without ever owning the underlying cryptocurrency. This way, changes in the asset’s value due to volatility will not affect your bottom line.
This is why the Securities and Exchange Commission (SEC) has approved several crypto futures ETFs, but not a spot crypto ETF, which exposes investors directly to the asset.
Through a crypto futures ETF such as the ProShares Bitcoin Strategy ETF (BITO), you can safely trade futures contracts and avoid the volatility that characterizes the crypto market.
But doing this requires some advanced trading skills, so it’s not for everyone. If you think you’re up to the task, try it as a way to invest in crypto without buying.
2. Blockchain shares
Another way to be in crypto without having any crypto assets is to buy blockchain or crypto stocks. One of the world’s largest crypto exchanges, Coinbase, became the first crypto exchange to go public in 2021, giving investors the opportunity to buy its shares.
By buying shares from Coinbase, you are indirectly investing in cryptocurrencies, and every gain in the crypto industry will reflect in your investment. Even if you don’t own any cryptocurrency, whatever happens to the crypto market will affect your investment, be it positive or negative.
There are many other such stocks to buy, including Riot Blockchain (RIOT), owned by Riot; Canaan (CAN), owned by ASIC chip design and research company Canaan; HIVE Blockchain Technologies (HIVE), owned by crypto miner Hive; and Bitfarms (BITF), owned by bitcoin mining company Bitfarms.
3. Crypto IRA and 401ks
Do you still have a few years until retirement? Then you can include crypto in your 401(k). This option is available to those who wish to invest long-term as part of their retirement savings account.
The trick is to get your boss to agree to let you save in crypto. If your employer is open to the option, you can have them save a percentage of your monthly payment in Bitcoin or any other cryptocurrency of your choice.
One company that offers this to its customers in the US is Fidelity. If you show interest, they will buy the asset and hold it on your behalf in an account mainly for crypto assets.
Crypto IRAs are a similar option to 401k, only they do not require permission from an employer. You can simply switch your 401k account to an IRA and use it to invest in any cryptocurrency you want. There are many crypto IRAs that offer multiple crypto options for investing.
A crypto IRA doesn’t just let you invest in crypto; it also allows you to trade them on the IRA platform. However, the IRA manages the funds on your behalf, usually with insurance coverage in case something goes wrong.
4. Crypto Mining
If you find all the above options inconvenient to use, another option is just to mine the cryptocurrencies yourself. However, this can be very demanding, especially Bitcoin mining, which has become more complicated over the years.
You need advanced mining computers known as ASICs to mine successfully because the difficulty level has increased significantly.
Altcoins can be easier to mine, some of which you can do on your laptop. Essentially, you are not buying the asset, but rather playing the role of a miner, and in return you are rewarded with cryptocurrency units.
You can then keep it as an investment until you want to exchange it for cash or other assets. This involves managing the assets yourself in your own wallet.
5. Credit Card Rewards
You can also get your hands on cryptocurrencies by using credit cards with cashback rewards. If you use these cards, you can also benefit from them by getting cryptocurrency cashback. There are many cards out there that will reward you with crypto for making payments on these best crypto cashback sites.
Cryptocurrency startups, such as exchanges, usually issue these cards. Some non-crypto startups, like Venmo, also issue cashback credit cards. Although it doesn’t reward you with crypto directly, you can choose crypto as an option to redeem your cashback rewards.
Credit card rewards may seem insignificant at first, but if you keep collecting them, they can add up quickly and you’ll end up with a significant crypto portfolio in no time.
Like crypto mining, you will end up managing the assets yourself, which is the part most people try to avoid. If you are not comfortable managing a portfolio, you can still use the crypto to invest in other ways that do not require direct portfolio management.
Which is your favorite?
These are the ways to invest in crypto without buying it directly. You may find that some methods are more suitable for you than others, and you should go with what works for you.
If you don’t mind managing crypto assets yourself, you can use any of the methods discussed to accumulate crypto. But if you’d rather let others manage for you, methods like futures ETFs and IRAs will work better. Ultimately, the idea is to benefit from the crypto market without paying for the assets.
