Do I Have to Buy a Whole Coin?

Do I Have to Buy a Whole Coin?

Bitcoin is too expensive. I wish I got in when it was so much cheaper! I don’t have enough to own a whole Bitcoin. Do these phrases sound familiar to you? Although navigating the cryptocurrency landscape is tricky even for seasoned traders, the surge of cryptocurrency prices over the past year has undoubtedly attracted more potential investors to the space, and crucially, many novice eyes. With the jaw-dropping prices of many coins, many newcomers tend to shy away thinking they have missed the boat, but this couldn’t be further from the truth.

Although this isn’t new to seasoned crypto investors, many interested rookies still don’t know that it’s not necessary to buy a whole coin. In fact, it’s possible to own as little of Bitcoin, Ethereum, and other coins as you wish, or depending on your financial situation. While this isn’t true of every single cryptocurrency, the majority of them can be broken down into fractional amounts, allowing you to accumulate as much or as little as you wish, based on your budget and risk appetite.

Just like the concept of dollars and cents, 1 bitcoin is made up of 100 million satoshis. Image from fox13now.com

Just like the concept of dollars and cents, 1 bitcoin is made up of 100 million satoshis. Image from fox13now.com

For example, a dollar is made up of 100 cents, with a single cent being the smallest possible unit. In the same way, the smallest unit of Bitcoin you can own is 0.000000001, also known as a Satoshi. For Ethereum, the smallest unit is 0.000000000000000001, known as a Wei. While it is highly unlikely that you’ll only ever be able to afford such minuscule amounts of cryptocurrency, this just serves to highlight that it’s not difficult to start investing in this space.

This can also be beneficial if you plan to diversify your cryptocurrency portfolio by investing in altcoins.  Rather than putting all your eggs into a single coin’s basket, you can mitigate your risk by picking up other coins in the hopes that you stumble upon one or two big winners. In fact, this could potentially give you larger returns than if you only invested in a single coin. Simultaneously, this also reduces the chances of your investment going bad as it is highly unlikely that every single coin will lose value over the long term.

Do note however that it is highly advisable to buy amounts that are significantly larger than the transaction fee imposed for transferring between cryptocurrency exchanges or wallets. For example, if the fee for transferring bitcoin out of your exchange account is 250 Satoshis, it doesn’t make sense to buy just 500 Satoshis as you would immediately lose 50% of your investment. These are significant factors to take into account if you’re keen to venture into the world of cryptocurrency investing or trading.

Disclaimer: This article does not intend to provide, and should not be taken as financial or investment advice. You should conduct your own research thoroughly, and are responsible for any investment decisions you make.

Cover image from coindesk.com

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