Buying Bitcoin has become mainstream in the financial world, with millions of users worldwide acquiring it or engaging in similar activities like mining or validating on the blockchain. The value of cryptocurrency has increased so much in the past years that experts compare it with gold, one of the oldest assets people use.
However, this boom in value triggered various disadvantages, such as the massive volatility that spikes when investors’ sentiments change or the government introduces new regulations.
Therefore, Bitcoin has become more difficult for beginners and regular investors to acquire. If you want to buy Bitcoin now, you might want to try approaching fractions instead and then build your way up to create a solid portfolio.
Buying in smaller bits of the cryptocurrency is totally possible and beneficial. Here’s how to do it.
About the Bitcoin denomination
Similar to fiat currency, Bitcoin has small denominations that make it easy to purchase, such as Satoshi. One Bitcoin is 100,000,000 sats, but there are a few other ways to measure it. For instance, a millibitcoin, or mBTC, is 100,000 satoshi, while a microbitcoin is 100 satoshi.
Buying Satoshi instead of Bitcoin directly can help you save money in the long run and maintain the portfolio at a safer rate since you’re not putting all your savings into the account. At the same time, choosing Satoshi offers you portfolio value appreciation and ensures decentralization through borderless transactions.
You can trade Satoshi for other cryptocurrencies, so its use cases are not that limited. At the same time, they can be used for minor transactions, but extensive ones require the ownership of Bitcoin.
What else can you do with Satoshi?
You can buy Satoshi from any exchange selling Bitcoin, so there aren’t really any borders or limitations to owning it. There’s no difference between buying Satoshi or a Bitcoin fraction, but you must be wary of the final calculation of the sum you purchased.
It’s recommended that you use a Satoshi BTC converter for the currency you want your money to be in to get an idea of the conversion rate. Make sure the platform used is reliable and includes features like live updates and a history of conversion rates. You’ll find options with paid and unpaid services, and some products offer dedicated Satoshi conversion for those who invest only in this denomination.
What about other cryptocurrencies?
Bitcoin is not the only cryptocurrency that can be bought in smaller portions. Ethereum also has denominations, as there are 11 ways in which users can divide it. Wei is the lowest value unit, and Tether is the highest, with the distance between each unit being about three decimals. One Wei is equal to 0.000000000000000001 ETH.
Stellar Lumens also has the smallest unit, Stroop, which is equivalent to 0.0000001 XLM, while Cardanos’ is called Lovelace and is the equivalent of 0.000001 ADA. Many other coins and altcoins use these denominations, which are beneficial for users since they can afford cryptocurrencies without compromising their savings.
Compared with fiat denominations, which are issued by the government and are centralized, crypto denominations are decentralized and thus created by a computer. Since they’re a great digital medium of exchange, people can buy them to gain exposure to the crypto market’s safety.
Why are denominations so important?
Buying crypto in the past was much more accessible and affordable as it hadn’t yet become mainstream. Nowadays, we’ve got Bitcoin ATMs almost everywhere, and countries like El Salvador have made Bitcoin legal tender, so their popularity is driving prices up.
Since there’s an increasing demand and a limited supply, it’s no wonder that cryptocurrencies are becoming scarcer by the year. Bitcoin, for example, leverages the halving event, which boosts scarcity to increase value by lowering miners’ rewards by half.
Many other factors contribute to price changes, such as the following:
- Investors’ fear and greed;
- Cryptocurrency regulations;
- Various market events;
- Crypto whales;
- Media coverage;
Considering the previous elements, acquiring cryptocurrencies and building a stable and profitable portfolio is challenging, which is why getting denominations instead is a better choice.
Steadily creating a portfolio
Using denominations to build a portfolio isn’t that different from buying entire cryptocurrencies, as they’re the same assets. Regardless, you should carefully develop a portfolio that doesn’t expose you to risks and can acquire long-term value.
The best thing to do as a crypto investor is learn how to diversify, meaning buying a varied array of cryptocurrencies and assets with different use cases and features. While purchasing the market leaders considerably more than less-popular cryptocurrencies is advised, altcoins and tokens can balance the portfolio’s value during moments of high volatility for Bitcoin or Ethereum.
You can also invest in smart contract blockchain networks for greater diversification, such as Ethereum, Cardano, or Solana because their value is pumped by high-profile tech firms like Amazon because they bring more efficiency and profitability within.
Learn to read the market
Building a strong portfolio isn’t enough to withstand the market’s changing trends. You should learn to read the signs of a specific change to act quickly and adapt your assets. Technical analysis is always required for investors to operate, and they can sometimes leverage technology like AI to predict trends and price shifts better. Technology can also help identify patterns of bull or bear markets, which are known to trigger investors’ FOMO every time they happen.
Reading crypto charts as an investor is essential, but there are many options to choose from. Some offer free plans, while others require monthly subscriptions. It’s best to use those that support more cryptocurrencies and allow trading so you can access more features from one place.
What do you think about cryptocurrency denominations?
Cryptocurrency denominations are coin fractions investors can buy to lower the financial impact of owning these digital assets. Bitcoin’s denominations are frequently purchased as the coin becomes more challenging to acquire due to its booming prices, but coins like Ethereum and Cardano also leverage these fractions. Their advantage is offering market exposure without much risk, so investors can safely develop long-term and profitable portfolios with them.
