5 Tips for Investing in Bitcoin
Bitcoin is one of the most widely used types of cryptocurrency. Virtual coins or tokens are used in a cryptocurrency system instead of physical cash. They’ve no intrinsic value and are not backed up by gold or silver. It was created to solve some flaws in cryptocurrency. Firstly, to prevent the coins from becoming duplicated, as cryptocurrency would not actually be possible if just anybody was able to duplicate a coin and create unlimited amounts of them.
It's been around for quite some time, and many people have ties into Bitcoin now. It is very popular, and it has not stopped growing in popularity, it is actually growing rapidly still, so it is always worth investing in something that is displaying growth like this.
Bitcoin is used for online transactions wherever they are accepted. Always remember, that when you make a transaction with a coin, no actual money is pulled out of your bank account. Money only ever actually leaves your bank when you purchase the coin itself.
Much like a cash currency, the coin's value fluctuates, as you may have heard. This is why some investors get excited about this cryptocurrency. Investors do speculate that Bitcoins value might rise if there is a surge in the market, like you might expect.
What you need to start investing in Bitcoin
Still want to invest in Bitcoin? Good, well, if you want to start investing in Bitcoin, you do not need much.
All you require is some personal identification documents, your bank account information, and a secure internet connection.
Do remember, if you are going to be purchasing coins through a stockbroker, you might not need to supply your personal information, or financial information, as your stockbroker will probably have all of this information on record.
How to invest
So, how do you invest in Bitcoin? Well, it is actually really simple to do. Simply join a Bitcoin exchange, get yourself a Bitcoin wallet, connect your wallet to your Bank Account, and place your order for Bitcoin, then all you need to do is manage your Bitcoin investments.
It is so, so simple to do and won’t take you long at all. You will need to decide where you want to make your Bitcoin purchase, as most investors will use cryptocurrency exchanges as there is no official Bitcoin company as it is open-source technology, some of the popular options are Coinbase, Binance, Kraken, Gemini, and Bitfinex.
It is also worth checking out Bitcoin IRA review for more information on Bitcoin trading companies.
Tips for new Bitcoin investors
So, now you know the basics, let's have a look at what tips we can give you to help you get started in your first bitcoin investment. We will give you five top tips to help you on your way to becoming a wise cryptocurrency investor.
#1. Only invest what you are willing to lose.
Investing is not unlike gambling, it always presents some financial risk, and financial risk can make some people nervous. So, if taking risks makes you nervous, really think about if investing is for you or not, as crypto is extremely volatile. However, if you are an avid risk-taker, only invest a portion of what you're money, an amount that you are willing to lose just in case things do not go well.
Much like any gambling, you should only invest an amount that you can afford to lose and no more. The purpose of investing is to add more value to your existing wealth, and not to just lose it straight up. Therefore, this is a wise way to start your Bitcoin investments, even if you do suffer losses, they are not going to take a chunk out of your wealth, and you will not suffer for it.
#2. Create and maintain a healthy cryptocurrency portfolio.
Having a healthy cryptocurrency portfolio is about more than just investing Bitcoin. This is a strategy that helps to minimize losses and maximize profits. It does have complications, but it is more secure than investing in just one coin. Cryptocurrencies can be exceptionally volatile in their pricing, but the chances of them all failing at once is really, really unlikely.
But, it is best to diversify your portfolio by investing in different cryptocurrencies, as this helps you to hedge the potential risks that are involved.
Doing this means that you will not be too exposed to any singular investment. Winning some and losing some is better than losing it all, and anyone who has ever gambled before will surely know this.
In any investment, cryptos or otherwise, diversification is one of the many smart ways to reap all the benefits of skyrocketing coins, but stay stable in the case that its value might drop, as is not unheard of in cryptos.
#3. Start off your investment small.
Remember the phrase ‘less is more’? Well, this applies. Bitcoin has been around for a while, but given its unpredictable nature it is always wise to start off small, keep your first investment small and limited. Most investors would tell you this is a wise move. Buying Bitcoin is much like buying any other currency. You should always be conscious that its price rises and falls in comparison to others.
Even many of the most experienced investors will set a single-digit percentage of their capital into investing in Bitcoin, yes even those with oodles of cash. They will instead invest the rest in less volatile assets. Despite the hype and forecasts, maintain your investment disciplines and do not get tempted by promises of gigantic upswings in value.
#4. Always proceed with caution.
Bitcoin or otherwise, risk is inherent to investment, and as a beginner investor it is absolutely vital that you are aware of this and remember it throughout your investment in cryptos. Digital currency is technically still in a very early stage of development when it is compared to similar asset markets such as stocks or bonds.
It is still a very high-risk space, and you should always be careful of how much you are investing when you invest in anything, especially cryptos. If you are looking to be more prominent in investments and really want to try out cryptocurrencies, put a little toward Bitcoin, and then do some stocks and bonds too. Get a feel for the experience, and then put more into it once you are more acquainted with the space.
Stocks and bonds can be good practice for understanding the fluctuations of value, although they tend not to be as rapid as cryptos. Caution is the primary focus as you enter into the world of cryptos.
#5. Keep it on the safe side.
We’ve said a lot about caution, and rightly so, we do not want anyone jumping in head first only to find themselves in a tight spot. However, staying cautious is not only about understanding market fluctuations, it's also about online security. While the blockchain is solid and the crypto world is one of the safest out there, some crypto exchanges do still suffer the occasional hacking even today.
You should choose a platform that has the best security technology that invests in regular security audits to ensure that a highly secured cryptocurrency trading platform is in place.
Many investors will follow a seed backup, which is a backup of the phrase that lets you access your wallet. It is wise to engrave seed phrases onto metal plates and then store them in a bank deposit vault if you have a great deal of Bitcoin. It keeps you and your cryptos safe and secure.
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