What Is Bitcoin and How Do You Invest in It?

Bitcoin is a digital currency that you can buy, sell and exchange directly, without an intermediary like a bank. It was created in 2009 by an unknown person or group of people using the name Satoshi Nakamoto.

Bitcoin began as a technology for payments, but today most people consider it to be an investment asset. People are adding Bitcoin to their IRAs, for example, as a way to save for retirement.

As a decentralized, digital asset, Bitcoin is a popular choice for people who want to add alternative assets to their portfolios. Many find cryptocurrency appealing as a hedge against inflation or as a way to get diversification. Bitcoin has experienced astronomical growth and has outpaced recent gains on major stock market indices, making it an attractive alternative.

Here's a look at Bitcoin's price over the years.

Bitcoin's price is impacted by several factors. Here's a closer look at some of the key drivers.

Investing in Bitcoin can take different forms. Here are some of the most popular ways to get started.

Bitcoin is still a relatively new asset, but it has displayed impressive past performance, and more and more companies are using it or accepting it as a payment method. As Bitcoin becomes more established, it may experience fewer fluctuations in price too.

“Bitcoin's price volatility is steadily decreasing over the years,” said Brady Swenson, co-founder and head of product marketing at Swan Bitcoin. “As a far more liquid asset, its price volatility is lower than relatively illiquid cryptos.”

If you plan on holding onto your investment for the long haul, investing money into Bitcoin could be a good choice.

“It's always a good time to invest in Bitcoin with a long-time horizon, [such as] 10 or more years,” said Swenson. “Cryptos are for gambling, not investing.”

Although Bitcoin is the most well-known cryptocurrency, it's not the only investment option you have. When deciding where to invest your money, consider these alternatives.