Cryptocurrency—often shortened to Crypto—is a digital form of money secured by cryptographic technology. Unlike traditional fiat currencies like the Hong Kong dollar or US dollar, crypto has no physical form, leading many to question its legitimacy and long-term value. But is it really just a bubble?
Over the past five years (February 2020 to February 2025), Bitcoin—the largest cryptocurrency by market cap—surged nearly 9x, outperforming major financial indices such as the Nasdaq Composite, S&P 500, and Hang Seng Index. If these returns have caught your attention and you're curious about how to start investing in crypto, this concise guide will walk you through the essentials in just three minutes.
Does Cryptocurrency Have Long-Term Investment Value?
Many investors wonder: Why has crypto risen so dramatically? Is it truly a viable long-term asset?
Let’s take Bitcoin as a case study. In traditional stock investing, assets that sustain growth over 5–10 years usually have strong underlying fundamentals. Bitcoin is no different. Its long-term appeal rests on three core pillars:
1. Scarcity
Bitcoin has a hard-capped supply of 21 million coins. Every 210,000 blocks—approximately every four years—the network undergoes a “halving” event, cutting mining rewards in half. This built-in scarcity mechanism reduces new supply over time, increasing demand pressure. The most recent halving occurred on April 19, 2024, and by March 2, 2025, Bitcoin had gained 47.27% in value.
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2. Decentralization
Unlike government-issued currencies controlled by central banks, Bitcoin operates on a decentralized network. Transactions are verified and recorded across thousands of computers worldwide via a distributed ledger known as blockchain.
Imagine a shared ledger maintained by a global community—no single entity can alter records unilaterally. This eliminates reliance on centralized authorities and protects against manipulation or policy-driven devaluation.
Additionally, Bitcoin is inherently inflation-resistant. While fiat currencies lose value due to overprinting, Bitcoin’s fixed supply mimics precious metals like gold, earning it the nickname “digital gold.”
3. Growing Institutional and Regulatory Acceptance
Once dismissed as a fringe technology, crypto is now gaining legitimacy in mainstream finance. Major institutions like JPMorgan and Fidelity have launched crypto trading desks. Regulators in the U.S. and Hong Kong have introduced frameworks for virtual asset oversight, approving multiple spot Bitcoin and Ethereum ETFs.
Even geopolitical figures, such as former U.S. President Donald Trump, have advocated for including Bitcoin in national strategic reserves—further validating its long-term potential.
What You Need to Know Before Investing in Crypto (Using Bitcoin Spot as an Example)
There are several ways to gain exposure to Bitcoin: spot trading, futures contracts, ETFs, crypto-related stocks, and derivatives. Among these, Bitcoin spot trading is the most direct method—buying and owning actual Bitcoin.
But how do you get started?
Step 1: Set Up Your Crypto Account
Before your first trade, ensure your crypto account is activated and complete a risk assessment. Then transfer funds from your securities or futures account into your dedicated crypto wallet within your trading platform.
Step 2: Execute the Trade
Search for “BTC” or “Bitcoin” to view real-time pricing. To buy actual Bitcoin, select the BTC/USD or BTC/HKD trading pair under "available pairs."
You don’t need to purchase a full Bitcoin—even fractional ownership is possible. On most platforms, you can buy as little as 0.0003 BTC, which at current prices equates to roughly 193 HKD.
Another advantage? Crypto markets operate 24/7, including weekends and holidays—unlike traditional stock exchanges.
For Hong Kong investors, alternatives like Bitcoin ETFs offer regulated access without managing private keys or wallets.
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Key Risks of Investing in Crypto
While the potential rewards are compelling, it's crucial to understand the risks involved:
Policy Risk
Regulatory stances—especially from bodies like the U.S. Securities and Exchange Commission (SEC)—can significantly impact market sentiment and prices globally. Changes in tax policies, trading restrictions, or bans in major economies may trigger volatility.
High Volatility
Crypto prices are more volatile than most stocks, bonds, or mutual funds. While Bitcoin and Ethereum are relatively stable compared to smaller altcoins, double-digit swings within hours are not uncommon.
Security Threats
Hacking and fraud remain serious concerns. Common scams include phishing websites, fake ICOs (initial coin offerings), ransomware attacks, and impersonation schemes. Always verify URLs, use two-factor authentication (2FA), and avoid sharing private keys.
Market Speculation and Bubbles
Some altcoins lack real-world utility and rely solely on hype to inflate prices. These projects often collapse once speculation fades. Always research a project’s use case, team, and on-chain activity before investing.
Despite these risks, crypto losses or “liquidations” are avoidable with proper strategy.
How to Avoid Blow-Up Losses in Crypto
Media headlines often highlight stories of investors losing everything in crypto. However, total loss is typically limited to high-risk behaviors such as:
- Trading crypto derivatives (e.g., futures or over-the-counter contracts)
- Using leverage to invest in low-cap altcoins
In contrast, spot investing, ETFs, or crypto-related equities carry significantly lower risk when combined with sound portfolio management.
Crucially:
✅ Investing in spot crypto or regulated ETFs
✅ Avoiding margin or futures trading
✅ Maintaining diversified exposure
…means you may face paper losses during downturns, but you cannot be liquidated like leveraged traders.
Frequently Asked Questions (FAQ)
Q: Can I start investing in crypto with less than $200?
A: Absolutely. Most platforms allow fractional purchases—some as low as $1 worth of Bitcoin or Ethereum.
Q: Is Bitcoin legal in Hong Kong?
A: Yes. Hong Kong recognizes crypto as a legitimate asset class under a regulated framework introduced in 2023.
Q: What’s the difference between Bitcoin and altcoins?
A: Bitcoin is the original cryptocurrency with the largest network effect. Altcoins refer to all other cryptocurrencies (e.g., Ethereum, Solana), which may offer additional features but come with higher risk.
Q: Do I need to pay taxes on crypto gains?
A: Tax treatment varies by jurisdiction. In many regions, crypto profits are subject to capital gains tax. Consult a local tax advisor for guidance.
Q: How do I keep my crypto safe?
A: Use reputable exchanges with strong security measures. For larger holdings, consider transferring assets to a hardware wallet (cold storage).
Q: Can I lose all my money investing in crypto?
A: With spot investments, you won’t owe more than you invest. However, prices can drop significantly—especially with speculative altcoins. Diversification and risk management are key.
Final Thoughts: Crypto as a Modern Asset Class
Cryptocurrency has evolved from a niche experiment into a foundational component of digital finance. Much like the internet revolution two decades ago, blockchain technology is reshaping how we store value, transfer wealth, and interact with financial systems.
For beginners, the path forward is clear:
- Focus on established assets like Bitcoin and Ethereum
- Prefer spot trading or regulated ETFs over leveraged products
- Practice disciplined risk management
With informed decisions and a long-term mindset, anyone can participate in this transformative financial movement.