DeutschInvesting in Bitcoin: Buying and selling Bitcoin is still associated with a lot of effort, expense and technical know-how. The fact that investing in Bitcoin is still comparatively complicated is mainly due to the factors of technology, law and people. The good news: It will definitely get easier!
Most people, even those who are not consciously involved with emerging technologies, are now familiar with Bitcoin and its advantages. Many of them would also like to tentatively invest a small amount of money in this digital asset. For “ordinary mortals”, however, buying and selling Bitcoin and other cryptocurrencies is still a laborious undertaking that costs several days and a lot of nerves. Find a reputable provider, create an account, get verified (enter personal data, upload proof of residence and ID copy, conduct a video call), transfer money, exchange money for Bitcoin, create a wallet, secure the private key, transfer Bitcoin to the wallet. For the majority of people, this is too much effort just to try out this somewhat confusing but fascinating thing called Bitcoin.
Investing in Bitcoin – why is the Whole Thing Still so Complicated?
Bitcoin is already over 10 years old and has reached the general public since the big boom in 2017. In addition, the digital currency should simplify the handling of money due to its decentralized nature, just as the Internet has simplified the handling of information. Bitcoin allows anyone to hold, receive and send money, all without any third party. The crux, as so often, lies in the transition from the old to the new world. The old money (CHF, EUR, USD) must somehow be exchanged for the new money (BTC). Here there are now various points of friction, which make this process more difficult and, as a result, make investing in Bitcoin strenuous.
Factor Technology
Bitcoin is a new technology that is still in its infancy. Comparing the traditional banking system with Bitcoin is like comparing a traditional library with Wikipedia. One system has existed for centuries and has proven itself over generations, the other was invented in the last 20 years and is still changing, enjoys little trust, but is technically far superior. As with digitizing books, a rather cumbersome technical process is also involved in switching from old to new money. Money must get from the bank account to an exchange, be exchanged there for Bitcoin, and this must then be sent back to a wallet controlled by the user. This process enables the entry from the old to the new financial system, but is currently not very user-friendly and involves some effort. However, this process is constantly being improved through innovative new solutions.
Critics at this point also like to question why it is worth making this effort at all. The Bitcoin network can process far fewer transactions per second than banks and credit cards, and is therefore technically inferior to the traditional financial system. These and other criticisms are justified and make it currently somewhat tedious from the user’s point of view to use Bitcoin, as transactions can only be carried out relatively slowly and comparatively inefficiently. However, there is no doubt among experts that the basic concept of this purely digital, global and decentralized financial system is many times more powerful and will make the traditional banking system look like an old building full of books after a few more years of development. The music quality of the first MP3 players was also worse than that of CDs, and accordingly the majority believed that this new technology would never catch on. Today, only a few people listen to music with their Discman. Technological development often progresses exponentially, and what is difficult to use today will be easier and better than the old familiar systems the day after tomorrow.
Factor: Law
Anyone who makes an investment today or transfers money at all assumes that a bank is involved in this transaction. Strictly speaking, most people’s money is not in their own possession, but they entrust it to their bank for safe keeping and for carrying out payments. There are still good reasons in the Bitcoin age to use this service of a bank, but it is no longer without alternative. Banks have a great responsibility with this task and are accordingly strictly regulated, after all they handle our savings. They need a banking license, are subject to strict equity requirements and must meticulously prove with whom or for whom they have carried out which transactions. These laws now also apply to most Bitcoin sales outlets, as they accept money from customers and trade for them. From the user’s point of view, this means a mostly long and complex onboarding process, in which personal data must be provided and checked, similar to opening a bank account. Like cash, however, Bitcoin can also be controlled entirely independently by the user. You don’t need a bank account or have to be verified by a third-party provider to trade and store this digital asset. So if Bitcoin is handled correctly, it can also become much easier from a regulatory point of view to use it, as you are not forced to deal with an institution regulated by the financial market supervisory authority.
Factor: Human
Bitcoin was invented by programmers, engineers and tech nerds and promoted over the first years of its existence. Therefore, it is not surprising that the majority of products and services offered today in the Bitcoin economy are built more system-oriented and not user-oriented. An engineer builds a Bitcoin app, or the corresponding buying and selling process, differently than a psychologist. The engineer optimizes for the performance of the system, while the psychologist prioritizes user-friendliness. Most of the Bitcoin investment services available today are therefore, because they were developed by engineers, very efficient and technologically advanced, but complicated and unusable for everyday users. Only in the last 2-3 years have bakers, teachers and pharmacists joined in, who also want to enter this new financial world. The market is changing, and it needs a new generation of product developers who put the everyday user more in the foreground so that investing in Bitcoin becomes easier.
Investing in Bitcoin: Will it be Easier in the Future?
The spread of Bitcoin is progressing rapidly. A large industry is forming around the “digital gold” with a market capitalization of over CHF 150 billion, and new innovative providers are storming the market with a common goal: to make access to Bitcoin suitable for the masses. As more and more money and talent flows into achieving this goal, it is to be expected that in the near future it will even be easy for mother and grandmother to invest in Bitcoin. While people used to have to dial into the Internet manually via modem (and could not make phone calls at the same time), today most pensioners write emails and Facebook comments with ease. We are still at the beginning of this development with Bitcoin. Fortunately, people don’t have to understand things like the Internet (or iPhones, credit cards, cars) in detail in order to use them. Sooner or later, Bitcoin will reach the point where the majority basically understands why it is useful and can also use it very easily and invest in Bitcoin.
As a young entrepreneur and consultant in the field of Crypto Finance, Julian Liniger is committed to bringing together the traditional and crypto financial world. With his company Bravis, he advises and trains financial service providers in the areas of Crypto Assets & Blockchain. With the startup Relai, he is working on the simplest Bitcoin investment app in Switzerland. Julian has been working on this topic since 2015 and is firmly anchored in the Crypto Valley.
