I get this question all time and now with bitcoin up 100 percent this month — yes, in just one month — my phone is ringing off the hook with friends, family and investors asking how they can buy some bitcoin.
To be sure, I do think this latest run is a bit of a price frenzy and a correction could be overdue. Bitcoin is a revolutionary and disruptive technology, but it is not immune from the very human emotions of fear and greed. However, I do think for the long term, it is vastly undervalued today.
When I first bought bitcoin in 2013 the process was cumbersome and even a little scary, but today it it is much easier. Individual and institutional investors have some very simple ways to gain exposure to this new asset.
If you are an individual investor and want to buy bitcoin the easiest way is through a digital asset exchange like Coinbase. Coinbase is one of the largest U.S.-based bitcoin companies that facilitates not only buying bitcoin, but also the storage of bitcoin. Opening an account with Coinbase is painless and once you link your bank account you can buy and sell bitcoin with ease.
Beyond the ease of use, Coinbase also offers a “vault” that can be used to store your bitcoin. Since bitcoin is a new financial system that can operate without traditional banks, you control your finances. However, this financial freedom means that you are responsible for the safekeeping of bitcoin. The vault option at Coinbase makes storing bitcoin simple and it has many layers of security.
If you would rather buy bitcoin in a retirement account like an IRA, you can do that too. The Bitcoin Investment Trust (GBTC) is a publicly traded trust offered by Grayscale that holds only bitcoin. This is a good solution for those looking to make a long-term tax efficient purchase of bitcoin. However there is a caveat, the Bitcoin Investment Trust is thinly traded and often trades at a premium to the price of bitcoin.
Institutional investors are also getting into the bitcoin game. For my hedge fund that invests in digital currencies like bitcoin and Ethereum, I use Genesis Trading. Block trading desks, like Genesis Trading, give institutional investors the ability to buy large amounts of bitcoin with very little slippage.
My investment thesis on bitcoin and blockchain technology is that it is a disruptive force in financial services and will likely be the foundation of the next-generation internet also called Web 3.0. It’s worth noting again that while bitcoin has a lot of real-world potential use cases, it’s price is still subject to volatility, which could get extreme in some cases.
Bitcoin, Ethereum and other blockchain assets are a new way for investors to gain exposure to a high-growth industry and I expect the long-term prospect to be filled with plenty of breakthroughs, intermittently interrupted by a few bumps along the road.
Brian Kelly is founder of BKCM LLC, a hedge fund which manages digital assets and a CNBC contributor. Kelly is the author of the book “The Bitcoin Big Bang: How Alternative Currencies are About to Change the World.” He is not an investor in Coinbase or Genesis Trading.