With the price of one whole Bitcoin costing over $12,000 US dollars at the time of writing, I am often asked the question, what is the minimum Bitcoin Investment?
The short answer is – Any amount is the minimum Bitcoin Investment! One Bitcoin is divisible by 100,000,000 units also called Satoshis.
The long answer is more complicated. Can you Invest $1 in Bitcoin and see what happens? How much Bitcoin do I need for it to be worth it? What would be a good amount of investment in Bitcoin for the next few years? The answer to these questions and more!
Historical Cost of Bitcoin
There was a time when you could find a website called a Bitcoin faucet. The Bitcoin faucet was a site that gave you free Bitcoin for performing a simple task.
One of the earlier Bitcoin pioneers, Gavin Andresen, came up with the idea for the Bitcoin faucet to promote the growth in the user base of Bitcoin.
The earliest faucets in 2010 would give users 5 Bitcoin for completing a simple task like a captcha or playing a mini-game!* 5 bitcoin! I would have filled out captchas until my fingers were bleeding.
During 2010 the price of Bitcoin hovered between .07 and .30 cents.
$1 invested in Bitcoin in 2010 would be worth somewhere in the vicinity of $80,000 today.
But people didn’t really think of making a minimum investment in Bitcoin. It wasn’t thought of like that in 2010.
The very first Bitcoin exchange was opened in January of 2010. It was called Bitcoinmarket.com.
However, Bitcoinmarket.com was hardly the large scale cryptocurrency exchange you see today like Gemini, Coinbase, and Binance. Modern exchanges have advanced security protocols, insurance, and vast teams working to ensure a secure trading environment.
After 2010. the Bitcoin price underwent a series of dramatic price Bubbles. Check out this article that talks about the 4 major price Bubbles Bitcoin has been through.
The last Bitcoin bubble in 2017 sent the Bitcoin price up to nearly $20,000 US dollars per coin.
Minimum Investment in Bitcoin
As mentioned previously, Bitcoin can be divided up into smaller parts. See the chart below that displays how one Bitcoin can be divided into many smaller units.
Therefore, the absolute minimum Bitcoin Investment is 1 Satoshi. The value of one Satoshi at current USD exchange rates is $0.00012071.
While this is the theoretical limit of how much value you could minimally put in Bitcoin, I’m not sure if it would constitute an investment.
However, before we dismiss this small amount from a first-world perspective, shift your focus with me for a second.
Nearly half of the world lives on less than $5,50 per day. The World Bank classifies extreme poverty as those living on less than $1.90 per day.
I am not suggesting that those living in extreme poverty are in a position to even be thinking about investing. However, Bitcoin as an idea does present a powerful opportunity for the world’s impoverished.
Bitcoin is borderless, cannot be confiscated by corrupt officials, and can be used and acquired by anyone with a cell phone and internet connection. And even more powerfully, Bitcoin represents true digital scarcity as an opportunity for asset ownership for those without property rights.
Much of the world has never before had access to this kind of power in human history.
How much Bitcoin Do I need for an Investment?
Naturally, this all depends on your goals, current financial situation, appetite for risk, and so on. However, let’s take a look at some basic math and see if we can formulate some investment ideas that make sense.
Bitcoin presents us with an asymmetric return opportunity. Put simply, the risk of losing all your money is small compared to the potential gains you could make if Bitcoin continues along its historical trajectory.
We have already seen that the minimum Bitcoin investment is essentially any value.
A $500 investment in Bitcoin would buy you approximately .04 of Bitcoin (at $12K). However, if the Bitcoin price were to appreciate to $100,000, that $500 would go up in percentage the same amount as a one whole Bitcoin.
In this scenario, both investors would experience a 733% increase. Not bad!
Our $500 investor, would have turned his $500 into $4,165. They would have risk $500 to do so assuming that they held onto their Bitcoin in the case it went all the way to zero.
Minimum Investment for various popular Bitcoin exchanges
Take a look at the chart below to see the minimum Bitcoin Investments at the most popular US exchanges.
Please note that the fees on these exchanges may vary as quantity changes. It is important to note especially if you are planning on investing very little in Bitcoin that the fees could make the transaction not worth it.
If you are planning on making frequent small purchases, it is well worth the time and effort to research which crypto exchange will benefit you the most.
In general, Cash app and Robinhood offer the most simple and easiest access to buying small amounts of Bitcoin.
I will warn you as well, with Robinhood you cannot transfer your Bitcoin off the exchange and hold your own private keys. This is a huge negative, especially for a serious Bitcoin investor.
If you were planning on doing bigger purchases the spread costs at the Coinbase and Gemini could provide more favorable terms.
The simple version of why is because these discount brokers may not offer as competitive market prices when entering a trade as the more traditional fee-based exchange.
How much Bitcoin?
Nobody knows the future of Bitcoin. Based on historical results we can see that the price has followed an exponential path of growth.
The number one rule of how much you should consider: Never invest what you can’t afford to lose.
Accept the fact that Bitcoin is a monetary experiment and could fail. If you are willing to accept the complete loss of your investment (or a portion with a disciplined trading strategy) you are on the right track.
Of the funds that you are willing to lose, what is your time horizon?
If you are looking at Bitcoin as a retirement play, then perhaps something like a Bitcoin IRA account could be for you.
Are you looking to maximize your returns on the next Bitcoin 4 year halving cycle?
The bitcoin halving cycles have been extremely lucrative for even the smallest investments. The first halving cycle returned in the vicinity of 9,200% from low to peak. The second havling cycle returned around 2,900%.
Some of the top Bitcoin advocates have predicted some wild Bitcoin prices in the next few years ranging from $50,000-$400,000 and beyond.
In summary, the minimum bitcoin investment is really up to you. Even assuming a low probability of Hyperbitcoinization or Bitcoin reaching the same market cap as gold, a small amount of Bitcoin is likely still a great allocation strategy.
The more you dive into what Bitcoin is and the power of what it can do for the world, the greater you see the probability of its ultimate success. Happy Investing!
Please read our disclaimer here regarding investment advice and risk. Disclaimer: This should not be construed as or relied upon in any manner as investment, legal, tax, or other advice. Please consult an appropriate tax or financial professional to understand your personal tax and financial circumstances. I may get compensated by some platforms mentioned below (because of referral links). Do your own research.
*https://en.wikipedia.org/wiki/Bitcoin_faucet
*https://news.bitcoin.com/bitcoin-history-part-6-the-first-bitcoin-exchange/