There are tons of methods for identifying and segmenting demographics in the Bitcoin space, but one of the prominent strategies is to separate them by the amount of BTC they are working with. This is also extremely helpful to keep in mind as the painpoints and desires of those handling different ranges of Bitcoin will vary. For instance, the process of buying large quantities of BTC is often separate from buying small amounts. Let’s take a look at how this differs and what people should know if they want to get their hands on a significant amount of Bitcoin.
What Constitutes a Large Bitcoin Purchase?
The idea of a “large quantity of Bitcoin” has changed significantly over time. A few years ago, a large purchase was sometimes considered as owning one BTC, although this is not always the case as some companies consider it higher than this, and others a little lower, depending on the rate at the time.
Nowadays, a general idea of a large purchase starts somewhere between $25,000 and $50,000 USD worth, with there being no upper-limit. Some people even view the start of a large purchase as actually double this, but it really comes down to who you are speaking to or what institution you are looking at.
What is the Maximum Amount of Bitcoin I Can Buy?
Theoretically, there is no maximum amount of Bitcoin you can buy. Technically you can buy as much BTC as there is in circulation. However, the reality is that there will be limitations in place– the biggest of which being accessibility (or liquidity). If you are using a trading service to make your purchase, then you will be bound to whatever the company itself has available, and what they are willing to actually sell to you. For instance, trading portals may have 100 BTC available, which could constitute your limit. However, they might not be ready to part with the full extent of their inventory as they could be looking to sell portions to multiple customers over a prolonged time.
There may also be regulatory limitations in place that prevent certain tremendously high volumes from being bought. Many institutions are heavily focused on ensuring that no market manipulation or money laundering is occurring, which can slow down the possibility of a huge BTC purchase.
Preparing for Your Large Bitcoin Purchase
If you are looking to buy a large amount of Bitcoin in 2024, then there are a handful of factors you should prepare for. A fantastic start would be to look at your finances and assess your goals. Large BTC purchases are highly risky due to the volatile nature of the currency. While over the years BTC has proven itself to be a fantastic asset in terms of long-term gains, it must always be remembered that in the short-term it is notorious for taking unexpected nosedives.
If you are looking for a large purchase as a long-term store of value, then this might not be tremendously relevant, although it is still good to consider the fact that Bitcoin is temperamental and so unexpected scenarios can happen.
Alongside this, check that you have all your financial documentation in order, as some services may wish to see accounting reports, or might request an audit. In a similar vein, it is good to have this information ready in case a regulator decides to investigate. This is not to say it is wrong or bad to make a large purchase, but rather that this happens with any asset once you start making high-level purchases.
Your Purchase Options for Large Amounts of Bitcoin in 2024
Here are your typical options for buying a large amount of Bitcoin in 2024.
Traditional Exchanges
Traditional exchanges, such as those you would use when buying small amounts, are not common when it comes to large purchases. This is because they often have lower liquidity, and are focused more on quick activities. However, it is technically possible to use some of these. If an exchange has a separate service for high-net-worth clients, then you may get redirected to this portal instead.
OTC Brokers
For large Bitcoin purchases, people tend to prefer using an OTC (over-the-counter) service. This is where you agree with a company or client to buy an amount of Bitcoin at a certain rate. These either happen outside of any order book, or they occur on an order book that is separate from what you usually see on a traditional exchange. Many common traditional trading services have a separate arm for this sort of activity. Sometimes you will be put in contact with a specific representative who will handle your customer services and activities.
P2P Trading
High-net-worth traders often like to work with each other, rather than via an exchange. You may be able to seek one of these individuals or institutions who would willingly sell you BTC. These could happen via a decentralized network, or they could occur through more direct interactions (such as meeting or communicating with somebody one-to-one). These actions are not necessarily written down on order books in the traditional sense, although both parties will usually have an accountant who logs the activity. It is paradoxically a more informal process than an OTC portal, but possibly more formal than a regular low-amount purchase using a common exchange.
How to Purchase Large Amounts of Bitcoin Step-by-Step
Here is a guide on what you should do to purchase large amounts of Bitcoin in a simple and straightforward way.
Get Your Finances in Order: To make a large purchase of BTC, you are going to want to ensure you are liquid enough to do so. This simply means that you have the funds and that they are easily accessible by yourself. This is because when the time comes to buy, the process will typically move quite fast, so as to lock in a desired price for both sides.
Find Your Broker: Your broker, or seller, should be somebody who you trust, and who you feel will be a good fit for you. If you are using an OTC portal or exchange, then extensively research the service and see if you feel you can rely on them. If there is a mistake in any way, leading to the loss of funds during the exchange process, or they are embroiled in legal troubles that could cause a regulator to try and investigate or reverse the transaction, then you will be left in a compromising and unfortunate position.
Perform a Test Send: If your seller allows for it, see if you can arrange for them to send a small amount of BTC to you first, as a test. Sending crypto is not like fiat– if the seller has the wrong address for you, or messes up the transaction, then there is no custodian or third party who can retrieve the funds and rectify the matter. Therefore, it is a good idea to see if a small purchase can be made first. Technically, this should only be needed if you are going down the P2P route, or organizing a trade with an individual. If you are using an institution, then you would likely fund your account with them instead, which is a much more custodial endeavor.
Initiate Your Purchase: Once you feel comfortable with your seller, and you have your funds ready, you can make the purchase. The time it takes for your BTC to reach you will depend on the congestion of the network, what gas/transaction fee was paid, and how exactly the seller plans to distribute the asset. For instance, some sellers may send you the whole amount in one lump sum, but for some exchanges you may receive your amounts at different times, as they are pulling from their reserves and liquidity, meaning they may want to send you the money in a way that does not cause dramatic price-activity on the market.
Take Your Funds to a Secure Wallet: If you are using a custodial service, like a trading portal, to buy a large amount of BTC, then you may want to move this over to a cold storage wallet, where it can be kept offline. People tend to view these wallets as safer as there is no internet access, which is the typical place where malicious activity occurs. Remember that by owning a large amount of BTC, a target is placed on your back. This is, to some extent, unavoidable as Bitcoin transactions and addresses are part of a public ledger that anybody can access. However, that does not mean everybody knows who you are, but it does mean that people can see what amount is stored in a wallet, should they have the address. This is why people who buy large quantities are told to keep even their public address a secret.
Best Practices for Storing Large Amounts of Bitcoin
It is a good idea to follow some of the top practices and protocols for storing large quantities of BTC.
Use a Cold Storage Wallet: Send your BTC to a cold storage wallet– this is an offline physical storage tool. It is often highly advised to use these, rather than an online (or hot) wallet, as hacks and bad actors target these types of wallets.
Do Not Share Your Public Address (Where Possible): To some extent, you cannot fully hide your public wallet address, as it will be used for at least one transaction (when the funds get sent to you). However, the fewer people know the address, the better. Anybody can see what amount of BTC is in an address, and so you want to reduce how many eyes are on yours so that you are not targeted.
Keep Your Seed Safe: Your wallet seed is your way of accessing your address. You need to place this information in a safe location, ideally offline and possibly even non-digitally. Some seed storage tools exist which let you etch your phrase into a metal engraving, so that it can be fire and disaster-resistant. Many people consider this as overkill, but depending on how important your BTC is, you may still want to keep it in mind.
Set Up a Savings Account: If you are purchasing a large amount of Bitcoin as a long-term store of value, then it may be smart to open a savings account, so that you can maximise your returns. Services like Ledn’s Growth Accounts are perfect for this, as they not only keep your BTC safe, but you can earn interest on them over time. This helps to secure your financial position, and grow your worth in a passive and low-effort way.
Tax Considerations for Large Bitcoin Purchases
Every country will have its own taxation rules for BTC. These are important to follow even for small purchases, but especially for large ones. Get acquainted with them, and understand how they apply to you. At the very least, you should be logging any transactions you make, or getting your accountant to if you have one employed. The crypto space is still relatively new (compared to other asset classes), and so there is a chance that your country’s regulator may want to audit or investigate you for making such a purchase, so it is always good to have your documentation ready. This is not a bad thing, but rather a sign that governments are taking the emergence and growth of cryptocurrencies seriously and adapting regulations to ensure financial security and compliance.
Avoiding Scams and Fraud in Large Bitcoin Transactions
Those who make large Bitcoin purchases can easily become targets for criminals. Be deeply aware of what activity you are doing, and who you are doing it with. Be hyper-vigilant and critical of all services involved with BTC that you might be interested in. This even (and perhaps especially) includes your broker/seller. These people hold a special level of power in that they know the wallet address that your BTC initially went to, and so they can also easily track where you send it to after.
This is why you need to research your seller as much as you can, and why it is a good idea to stick to well-known traders and portals. You want accredited services that have healthy reputations and are highly regarded.
Conclusion
If you are a high-net-worth individual, then it may definitely be worth looking into buying large amounts of Bitcoin. Many consider this a fantastic store of value, and a great hedge against fiat inflation. Follow these guidelines to help get acquainted with the process and make the right decisions. Additionally, if you do decide to make the leap into owning a significant portion of BTC, then definitely keep Ledn’s Growth Accounts in mind, as they can help your funds flourish in a passive and stress-free way.
Disclaimer
This article is sponsored by 21 Technologies Inc. and/or its subsidiaries (“Ledn”) and is for general information, discussion, or educational purposes only and is not to be construed or relied upon as constituting legal, financial, investment, accounting, tax, estate-planning, or other professional advice or recommendation. Please read Ledn’s full Risk Disclosure Statement and Disclaimers.
