How to Invest in Bitcoin If You've Only Got $100

Investing is boring as hell when you play it safe.

You tediously remove small chunks from your paycheck, lamely put them away in some snooze-ass mutual fund, watch it all slowly appreciate over a period of many, many years, and then, finally, after you’ve inched close enough to death to smell it, you finally stupidly take it all out and spend it on some new toy for your nephew. Ho-hum, who cares?

This is why investing in Bitcoin, or the other cryptocurrencies that are currently out there, seems so exciting. It’s volatile, with massive ups and downs every few minutes, let alone over the course of a day. It’s hot and new, so you can show off your hipness to the kids. And it’s extremely confusing, meaning you’ll be in the driver’s seat during any crypto-forward conversations at cocktail hour or funeral processions.

But, first things first.

Before you invest in cryptocurrency, heed some advice from experts in the field that I polled about such a move.

Michael Cianfrocca, the managing director of communication at Charles Schwab, told me that "virtual currencies are highly volatile and still lack many of the regulations and consumer protections that legal tender currencies have. Due to the high level of risk, investors should view Bitcoin as a purely speculative instrument that should be traded only with money that they can afford to lose."

Parker Thompson, partner at the angel investor matchmaking website AngelList, told me cryptocurrencies "should be seen like venture investments, highly risky with a very small chance of massive upside. The market is being driven by psychology today and has no fundamentals, so I put little stock in pundit predictions of future price movement. Nobody knows."

Carolyn Wegemann, a public relations representative of Vanguard, told me that "given cryptos’ extreme volatility and lack of intrinsic economic value, [we] caution against investing in cryptocurrencies as they may expose investors to undue financial risk. Cryptocurrency prices are generally not based on economic fundamentals, and have depended more on speculation about eventual adoption and use."

Preston Byrne, independent consultant and blockchain expert, said "I don’t invest in cryptocurrency. It’s a very wild west market. There are allegations of market manipulation right, left, and center. And if you don’t know who the sucker is in the room, it’s you."

Kyle Woodley, senior investing editor at Kiplinger.com, told me that "you’re gambling, you’re putting money on red because you have a gut feeling red is coming up. It is far from proven, and could very well be like the dot-com era, where a lot of people lost money. Some legit companies came out of it, but a lot of garbage died, and we don’t know if it’s going to be five, 10, or 50 percent of the cryptocurrencies that die."

Okay, the wet blankets are out of the way. You don’t give a cold shit about those common sense-ass experts, anyhow. You’ve got $100 to your name, and you’re gonna burn it. (Now’s probably a good place to point out that the Venmo and PayPal accounts associated with rickpaulas@gmail.com both accept money, $100 at a time or otherwise.)

Here are some things you should know about how to invest in crypto.

You’re going to need one if you want to do anything with cryptocurrencies, as these are how you prove that you’re the one who owns the thing you’re trying to cash out. These crypto wallets don’t hold actual currency, as much as they hold the code to access the currency, which will always remain out there in the blockchain ether. When you purchase crypto from someone, two wallets are essentially syncing up for a moment as they adjust their respective ledgers; you, as buyer, will then have more crypto, while they, as seller, will have less.

Online wallets are the easiest to set up, involving only a few simple downloads to your browser, before setting up a password. Do not, do not, do not lose your password. However, online ones are also the easiest to hack, and so blockchain experts recommend updating software regularly to patch any exploits, or dole out for an extra-secure wallet, like Armory, which requires permission from another user before a crypto transaction can place. The safest option is an “offline” wallet, wherein you create a “paper wallet” document with all the necessary information to access your coin.

The current price for a single bitcoin is more than $7,000, meaning that you probably don’t have the capital to gamble on one. But the developers of cryptocurrencies knew they’d be too expensive for most people to obtain, so they made them divisible in fractions.

Bitcoins are divisible by eight decimal points, or 1/100 millionth of one, and these fractions are called Satoshis, after Satoshi Nakamoto, the pseudonym of the murky and mysterious creator of the cryptocurrency. If $100 is your cap, that’ll currently buy you about 0.0143 Bitcoin. Ether, the second most popular cryptocurrency, is divisible by 18 decimal points, while BitCoiin2Gen—the, let’s say “iffy” crypto being hawked by sentient boiled ham Steven Seagal—is divisible by 100 million parts. If you have more than $100 to spend, maybe consider diversifying in a few of them, but still, probably not that Steven Seagal one?

If you’re parking money in cryptocurrency as an investment, this likely won’t affect you much, as your best course is to let it simmer, hope yours takes off, and then cash out as a millionaire in a decade. But if you want to shift money in and out of cryptocurrencies, keep in mind that, currently, you’ll need to pay a transaction fee, and it’s sometimes hefty.

As is everything in this weird market, the fee is fluctuating, with the average cost of a Bitcoin transaction reaching a ridiculous height of nearly $55 in December of 2017, due to a systems “upgrade” that allowed evidence of each transaction to be stored separately, but is currently now near $1. Make sure to check the cost at a before moving your money around.

While it’s impossible to know which coins will last, and which will disappear like a hot dog burp in the bleacher seats—at last count, there were over 1,000 different active cryptocurrencies—not all cryptos carry the same risk. What's more, there are all kinds of bitcoin scams out there that you need to watch out for.

So before choosing which one to sink your $100 in, watch their volatility at places like CoinMarketCap, scan through rumors on the message boards, maybe even burn the midnight oil through a few peer-reviewed papers like this one, which tried to predict fluctuations based on user comments and replies. Forbes also has some good tips here on how to avoid "pump and dump" scams.

The point is: It’s extremely unlikely you’re gonna get any monetary reward for investing in cryptocurrency, so might as well get something out of it by making it all a learning process. Knowledge is priceless, as they say, although in this case, maybe they mean worth literally nothing at all.

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