5 Things To Know Before Buying Bitcoin
Are you contemplating becoming a Bitcoin holder but don’t feel confident about it? Then this write-up is for you. Credible high-paying investment opportunities don’t always appear on the scene. Yet, that’s what Bitcoin has been in the last decade.
And, risky though it may be, investments in Bitcoin consistently yield profits. However, for the newbie Bitcoin buyer, exercising ultimate precautions is always necessary.
Hence, in this article, we will take you through the five major things you must know before making your first Bitcoin purchase.
- You must have an investment model
Bitcoin is a highly volatile asset. A couple of months ago, the cryptocurrency traded at an all-time high of $60,000.
As of the time of this writing, it’s trading at $47,000 just 24 hours after trading around $42,000.
Veteran Bitcoin investors love these fluctuations because it allows them to build consistently successful investment strategies.
Thus, you, too, must be prepared to face this unpredictability. And that means having a tested and reliable investment blueprint as your guide.
You will need to know how to set limit orders to trigger a sell or buy action when Bitcoin reaches a certain price. You may also need to diversify.
For example, Coingate will allow you to spread your investment across 50+ digital tokens that might even produce more profits for you.
However, as with every investment, it’s advisable to limit your BTC purchase to the amount you can afford to lose.
- Select only a reliable exchange
Bitcoin is a decentralized asset. It means there is no central authority or a government agency involved in how users interact with the currency.
Hence, Bitcoin can only be purchased (and sold) via P2P platforms. These are known as exchanges. However, some exchanges are more user-oriented than their counterparts.
For a seamless buying experience, finding a crypto exchange with intense liquidity levels, diversity of assets, time-tested security measures, and reliable customer service is recommended.
Also, you can read previous users’ reviews to get an unbiased opinion of the trading experience available on an exchange.
Suppose you are an investor who is newly making his way into the digital asset industry, transacting through exchanges that offer fiat payment methods for buying Bitcoin can be the way forward.
- Guard your private keys
If at some point you feel uncomfortable leaving your Bitcoin holdings in an exchange, you can switch to using a cryptocurrency wallet.
There are many of them these days from a soft wallet like Trust Wallet, SafePal, to hardware types like the Nano Ledger.
As much as you might want to rely on the security level of this wallet, it is solely your responsibility to protect the private keys (and seed phrase).
Most experts recommend using the hardware type as that would mean the additional safety of keeping your funds away from the internet.
- Know when to buy and sell Bitcoin
Familiarizing yourself with the perfect times for buying (and selling) Bitcoin is significant in two ways:
You will know when the market is ripe with opportunities for a profitable investment.
You will also know when there is a change in the tide – if you need to sell off or stack up more on your BTC holdings.
Going to and from these processes will become inevitable on your way to becoming a successful Bitcoin investor.
You can start by referencing previous events when investment in Bitcoin seems reasonably safe or otherwise.
- Be prepared to deal with scammers
Bitcoin was created to be a force for good that will, among other things, tackle the global financial exclusion problem.
However, cybercriminals have consistently used digital currency as bait to trick unsuspecting persons into losing millions of dollars.
The dark arts of luring victims by offering them mouth-watering Bitcoin investment proposals is one of the most familiar ways scammers use to achieve their goals.
So obviously, this is one of the red signs to watch out for. Over the years, billions of dollars worth of funds have been lost to Ponzi Bitcoin schemes, rug pulls, and exit scams.
Hence, it would be best if you learned how to avoid them. Here are some of the safety measures that you must keep in mind:
- a) Watch out for identity impersonators. Especially if you are on telegram, scammers will attempt to use names and pictures of project managers known to you.
- b) Email spoofing techniques are also another method scammers use. Here, the metadata of an email address is edited to look exactly like that of a popular organization’s email address.
Fortunately, it’s hard to get fooled by this. Email services platforms like Gmail have optimized their security to detect such changes.
Bitcoin is a hot investment topic today, even amid the current regulatory climate that seems fully charged to crush down the crypto market.
However, as institutional players continue to make headway into the space, it’s safe to say Bitcoin is here to stay and will play a leading role in an imminent financial revolution.