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There’s no doubt that Bitcoin is one of the hottest investment opportunities on the market today. However, many people are hesitant to invest in bitcoin because they don’t want to purchase the cryptocurrency. Thankfully, there are plenty of ways how to invest in bitcoin without buying bitcoin.

Read on to discover three popular investment products you can utilize to add bitcoin exposure to your investment portfolio.

Exchange-Trade Bitcoin Products

An exchange-traded Bitcoin investment products are financial instruments that track an underlying asset, such as a market index, stock, or cryptocurrencies like bitcoin. As the name suggests, they can be bought and sold on stock exchanges and held like stocks, ETFs, or mutual funds.

There are mainly three types of exchange-traded Bitcoin investment vehicles, including ETPs, ETNs, and ETFs.

Exchange Traded Products (ETPs) & Notes (ETNs)

One way to invest in Bitcoin without buying Bitcoin is to invest in a Bitcoin ETP or a Bitcoin ETN. These investment vehicles track an underlying asset like bitcoin. They are typically backed by actual bitcoin held in cold storage, rather than other assets like shares of stock or commodities. They are similar to ETFs in that they allow investors to take advantage of price movements in an underlying asset without actually owning it.

The value of a Bitcoin ETP/ETN is based on the price of Bitcoin. So, if the price of Bitcoin goes up, the value of the ETN will also go up. An example of a popular exchange-traded Bitcoin investment product is the Bitcoin ETP by Iconic Funds.

Exchange Traded Funds (ETFs)

A Bitcoin ETF tracks the price of Bitcoin and gives investors exposure to the cryptocurrency market without actually buying any bitcoin. ETFs are traded on major markets, so they are accessible to most investors.

The biggest benefit of an ETF is that it allows you to buy into Bitcoin without having to manage your Bitcoin or store them in a wallet. Unlike ETNs, when you buy an ETF, you purchase shares in the fund, which represent holdings of bitcoin (or bitcoin futures in the case of Bitcoin Futures ETFs). This is similar to owning part of any company when you buy stocks.

Bitcoin Trusts

Bitcoin trusts are companies that have been set up to hold bitcoin and enable investors to buy and sell the digital currency. Unlike with a regular stock, an investor does not own actual bitcoin, but rather shares in a trust that holds them. The trust creates a contractual claim on the bitcoin it holds, allowing you to trade shares in the trust that provide a claim on the digital currency holdings of the trust.

Bitcoin trusts, such as the Grayscale Bitcoin Trust, are one of the most popular ways to invest in Bitcoin without actually buying bitcoin. They are similar to other types of trusts, such as real estate trusts. They are managed by a trustee, who is responsible for investing the trust’s money in bitcoin. The trustee is also responsible for ensuring that the money is properly invested and managed.

Investing in a bitcoin trust is a good way to get exposure to Bitcoin without having to worry about buying, storing, or managing any Bitcoin yourself. However, it is important to note that there are some risks associated with investing in Bitcoin trusts. For example, the value of the shares in the trust might deviate from the price of bitcoin, so it doesn’t track the price as close as a Bitcoin ETP, for example.

Bitcoin CFDs

Bitcoin CFDs are a type of financial contract that allows you to speculate on the price of bitcoin without actually owning any bitcoin.

CFDs, or Contracts For Difference, are a type of derivative product. This means that they derive their value from an underlying asset, in this case, bitcoin. CFDs are a leveraged product, which means that you only need to put down a small deposit to open a trade. This makes them an attractive option for investors who want to get exposure to bitcoin without having to put down a large amount of capital. However, leverage also magnifies your losses, making trading crypto CFDs a risky affair.

While they are not as risky as putting all your bitcoin on black on a bitcoin roulette table, you can still lose all your money if you make the wrong trading decision.

Bitcoin CFDs are available on a variety of different platforms, including eToro, AvaTrade, and Plus500. Many platforms offer demo accounts so you can test out trading with virtual money before putting any real money at risk.

Bottom Line

There are plenty of ways to invest in Bitcoin without buying actual cryptocurrency. You can invest in a Bitcoin Trust, Bitcoin ETP, or Bitcoin CFD.

No matter which method you choose, remember that investing in bitcoin is a risky proposition. The value of bitcoin could go up or down at any time, so it’s important to only invest what you can afford to lose. With that said, there’s still potential for substantial returns if you make the right decisions with your investments.

This article was provided by Roselyne Wanjiru, one of Kenya’s leading blockchain consultants, a crypto economist, and a senior writer at Rise Up Media.

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