Do I Need to Buy a Whole Bitcoin or Can I Invest a Small Amount?

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The price of Bitcoin has seen a meteoric rise since the cryptocurrency’s inception in 2009, but does that mean the average investor is now priced out of the market?

The short answer is no, you do not have to buy a whole Bitcoin in order to gain exposure to the OG of the crypto world.

Bitcoin (and other cryptos) can be divided into one hundred millionths of a coin. With Bitcoin, each of these tiny chunks is called a Satoshi, named after the cryptocurrency’s eponymous creator, Satoshi Nakamoto.

This means that, barring any restrictions or minimal spend limits on the exchange you’re using, you can buy a few pounds or dollars’ worth of BTC to dip your toes in the water of what is an exciting technology.

Check out my guide to buying Bitcoin in the UK – it’s easy to follow and you’ll be building your crypto portfolio in no time.

How is a Bitcoin divided?

One whole Bitcoin (BTC) is made up of 100 million Satoshis. Below is how one Satoshi is denominated:

One Satoshi = 0.00000001 BTC.

At the time of writing 60 Satoshis (0.00000060 BTC) was worth 1p GBP or 0.012 cents USD.

Some people don’t use Satoshis, or ‘sats’ but rather BTC. So small fractions are expressed as 0.00000001 BTC.

Many cryptocurrency exchanges allow you to buy small amounts of a coin – say £10 / $12 – meaning you can start investing without risking a significant amount of cash.

Think of a whole Bitcoin as a company share and Satoshis as fractions of that share.

Many traditional trading companies allow investors to buy fractions of shares and it’s no different in the crypto sector.

Is it worth buying a fraction of a Bitcoin?

This all depends on your view of Bitcoin and the future of cryptocurrency and blockchain technology in general.

Many investors in a variety of different asset classes start small and gradually build up their portfolio over time, taking advantage of pound/dollar cost averaging at the same time.

If you believe Bitcoin and crypto will rise in value in the future than buying small amounts on a regular basis is a good way of creating a long term portfolio.

Just because you can’t afford to put a large chunk of money into Bitcoin, or any other investment for that matter, shouldn’t stop you from entering a market if you’re confident of growth and you’re not investing more than you can afford to lose.

To clarify: I’m not advising you to go out an invest in crypto, but I want to make it clear to those new to this sector that buying Bitcoin is very easy and does not require a huge financial outlay.

Many crypto exchanges allow you to set up regular purchases so you invest each month without have to think about it.

Some people even make it their ambition to own a whole Bitcoin and become a member of the 21 million club.

You can also think about Bitcoin ownership like this: there are 7.753 billion people in the world right now meaning there are roughly 369 people to every Bitcoin that will ever be minted.

Take into account all the crypto that has been irretrievably lost, or is held by whales (large investors/institutions who hold hundreds if not thousands of whole coins) and you’ll see the BTC pot is spread pretty thinly.

Anyone who owns Bitcoin is already in a fairly exclusive club, and the more ‘sats you stack’ the more you are potentially building a healthy investment for the future because of the scarcity of the coin.

Don’t forget the fees

Although exchanges allow you to buy fractions of a Bitcoin, you’ll still need to pay the fees involved in doing so which will add to the cost.

Coinbase, one of the largest exchanges operating at the time of writing, was charging 99p to buy £5 worth of Bitcoin.

On this exchange, the fee is deducted from the purchase price, so you’ll actually receive £4.01 worth of BTC.

You can cut your fees significantly if you use an advanced trading platform – available through Coinbase (it used to be called Coinbase Pro), or another exchange.

Coinbase is one of the easiest exchanges to use, especially for complete beginners, but it’s by no means the cheapest.

However, even taking into account the fees, you can see that the outlay involved in buying small amounts of Bitcoin is very low making the asset class accessible to even the most modest of investors.

Buying large amounts of Bitcoin

The flipside to purchasing a handful of Satoshis is buying a large amount of Bitcoin, but you may be wondering how, especially as most exchanges have daily limits.

The answer to the question ‘How do I buy large amounts of Bitcoin’ is by using what’s called Over The Counter (OTC) trading.

OTC markets typically sit outside normal crypto exchanges and enable buyers and sellers to link up and negotiate specific – and more private – deals, usually involving very large amounts of crypto.

When engaging in OTC trading, there’s a market desk or trading market sitting in between the trading parties to ensure that the transaction is fulfilled to the satisfaction of all involved.

This type of crypto trading is only accessible to professional traders, high net worth individuals and institutions.

Conclusion

Investing in Bitcoin – and other cryptos – is very easy and you don’t need a lot of money to get involved.

You can invest a tiny amount of money as an experiment and maybe you’ll enjoy the experience and gradually build your portfolio over time.

Either way, as with all investing, never invest more than you can afford to lose.

Crypto is a high risk asset class and can be extremely volatile. If you’re not prepared to experience the lows and potential highs of this type of investing do not get involved.

Two of the most common mistakes people make are: buying high and selling low or panic selling at the first sign of a downturn.

If you do decide to buy crypto go in with your eyes wide open and be prepared for a wild ride!