Bitcoin was developed to become an international virtual currency that will replace the traditional (fiat) currencies. Since its existence in 2009, BTC has grown to become a highly volatile investment asset that’s also used for transactions. Bitcoin has become a watchword for many people, and more investors seem to be interested in knowing how to invest in bitcoin.
Unlike other digital assets, Bitcoin isn’t controlled by the traditional financial institution, government, or an individual agency. It is a modern currency that operates online.
However, for any individual who is just learning about BTC for the first time, he/she might not be too comfortable in investing in it as it might sound somehow risky and suspicious. Investing in Bitcoin may seem complex and scary, but it is much easier than it sounds.
So, the big question is: Should you invest in Bitcoin?
Knowing how to invest in Bitcoin isn’t a big deal; in fact, Bitcoin investing is an opportunity that you shouldn’t let pass you by. However, before investing, there are a few things you should learn and understand.
Below are some of the things you should know before Bitcoin investing.
Bitcoin as a Decentralized Currency
Unlike traditional currencies, BTC is hosted on a decentralized system as it is a virtual/digital asset. The currency is not managed by any third party, not even financial institutions or central government. Due to its decentralized nature, you don’t have to worry about the currency being devalued or seized by a third party. You don’t need anybody’s permission to invest in this cryptocurrency. You just need to learn how to invest in Bitcoin, and you are good to go. However, it has its disadvantage of being decentralized because it can increase cybercrimes as the government has no control over it.
Find out more about how to invest in Bitcoin safely even on a low budget.
The origin of Bitcoin
Bitcoin was developed in 2008 by an anonymous individual or a group of people referred to as Satoshi Nakamoto. The crypto community has a few guesses about Satoshi’s character, and several hypotheses have been made up to date. The pioneer block for BTC was mined on the 3rd of Jan 2009, which is the beginning of bitcoin’s blockchain.
BTC indeed provides more transparency and offers more privacy. Instead of account names, BTC uses two keys – the public, and the private keys. The public key is the one you can send to people who want to transfer BTC to you, while the other key is a private key that shouldn’t be given to anyone. Once this key is exposed, your coin is at the risk of being stolen. Read about how to secure your crypto assets and make sure you protect your assets from the threat of scammers and cyber-attacks.
Bitcoins can be stored and kept in a wallet. There are two types of wallets, the offline and online wallet. An online or hot wallet is sometimes preferable because it’s easy to access. However, they are prone to hacks compared to offline or cold wallets that offer guaranteed safety.
Unpredictable and Volatile Nature
Digital currencies like Bitcoin are very unpredictable, though it’s a very good investment means. This means that the price may vary from time to time, as a result, investing in Bitcoin can be bumpy at times. You have to understand that Bitcoin’s unpredictability accompanies investment risks. Therefore, it’s advisable to invest amounts you can afford to lose to minimize risks.
The Digital and Pseudo-anonymous Nature of Bitcoin
Bitcoin is a virtual currency that cannot be touched as there is no physical form of it. It’s a digital asset that only operates online and can only be traced using blockchain technology. Bitcoin is pseudo-anonymous because it doesn’t need or use personal information like names and other confidential information but only makes use of BTC wallet ID for transactions.
Understand the art of buying and selling before learning how to invest in bitcoin
Learning how to buy and sell is vital in Bitcoin investments. By understanding the steps, you can predict the outcome of an investment process. Begin by searching for the easiest and safest platforms to buy bitcoin. Make sure you get platforms that offer training and support for new traders/investors. Also, it is important to get a platform that accepts several other digital currencies.
Buying and selling are the basics of learning how to invest in bitcoin. Ultimately, you buy bitcoin before investing and sell after you make profits.
Don’t leave huge amounts of crypto in exchanges
Some exchange platforms are susceptible to hacks, and your entire funds may be lost if this happens. Even if you use the most secure passwords, sometimes it might not be enough to protect your accounts from cybercriminals and hackers. To be on the safe side always, be careful with your investment and use more than one exchange for your investment and trading activities. Also, it’s advisable not to leave your Bitcoin in your wallet for a very long period.
Diversify your investment portfolio
Because of its popularity, it’s easier to understand how to invest in Bitcoin. However, it is important to understand that there are several kinds of crypto, and Bitcoin is just one of many thousands. This means that you can invest in bitcoin as well as many altcoins. Diversifying your investment will help you reduce the risk of investing in BTC only.
There are many things you need before Bitcoin investing. A crypto wallet, a payment method, and an account at any crypto exchange are the basic requirements. Means of payment such as using a debit card, credit card, or bank transfer among several others are also required. It is also possible to get BTC at specialized crypto ATMs. However, it’s important to note that bitcoin ATMs were beginning to require government-issued IDs in early 2020.
Privacy is very vital for Bitcoin investors. Even though it’s a virtual/ digital asset, it is always a good idea to keep your details safe. Anyone who has the private key to a public address on the Bitcoin blockchain can make and finalize transactions.
Disclaimer: This is a paid post and should not be considered as news/advice.