What To Consider Before Getting Into Bitcoin
Interested in getting Bitcoins? Cryptocurrencies have gained increasing interest from different kinds of investors, but Bitcoin is still, hands down, the most popular and sought-after digital currency.
What is Bitcoin Exactly?
Bitcoin is an electronic currency that has taken the world by storm. As a form of digital currency, Bitcoin is not a physical currency that you can tuck inside your wallet. Bitcoins continue to elicit mixed reactions from investors and ordinary people. Fascinating? Yes. Complicated? Kind of.
Here are some interesting and essential facts that you need to know about Bitcoin:
- The concept for Bitcoin was published in 2008 by a certain “Satoshi Nakamoto.”
- The first Bitcoin was mined in 2010.
- The first Bitcoin transaction in May 2010: 10,000 Bitcoins for, guess what, pizza.
- People like buying stuff with Bitcoins. Expedia, Overstock.com, Dish, and Newegg are just some of the businesses accepting Bitcoins for payments.
- Bitcoin suffered a massive loss in 2014 ($460 million at that time) when the Japanese exchange Mt. Gox was hacked. The incident raised concerns on how secure cryptocurrencies are.
- At the end of November 2017, the cost of the Bitcoin value reached $10,000 per unit.
There are over 800 cryptocurrencies today. Being the oldest cryptocurrency in the world, Bitcoin is also the most valued. Now the question is, should you join the hype?
What to Consider Before Getting Into Bitcoin
Before you start investing in Bitcoin, here are some things that you need to consider:
Start Small and Reinvest
Before getting into Bitcoin, ask yourself why you want to get involved in the cryptocurrency market. Although the ultimate goal is to make a profit, you should not see Bitcoin investing as a get-rich-quick scheme. Bitcoin is not a golden ticket to becoming a millionaire or billionaire. Just like any other type of investment or business, there are risks associated with cryptocurrencies. If you are new to Bitcoin investing, it is best to start with small amounts such as $250. This initial amount is enough to use while understanding a Bitcoin trading platform such as the Bitcoin Revolution. When you have fully understood the process, you can deposit additional funds or reinvest the money in your Bitcoin wallet.
Only Invest an Amount You Can Afford to Lose
Bitcoin is a relatively new but prevalent currency that attracted investors from private to institutional ones. The value of Bitcoin is highly volatile and, just like any other form of investment, has risks associated with it. Bitcoin is a popular and highly lucrative investment asset, but remember to diversify your investments to help balance losses and yields.
There is No Authority Regulating Bitcoins
Investing in Bitcoins is unlike saving money in a bank or spending money in the stock market. Cryptocurrencies are unregulated. These digital currencies cannot be traded in the stock market or a brokerage. It does not have any tangible value like diamonds, gold, or other precious metals and stones. If your risk tolerance is low, you should consider other forms of investment.
There are Only Less than 18 Million Bitcoins in Circulation
Although it might seem like a vast number, the number of Bitcoins in circulation is limited compared to its demand. It is said that there will be no more Bitcoins created beyond 2040, so investing in it today is a great idea. There are even speculations that Bitcoins will be acquired and held as reserves (similar to gold reserves) by governments.
Several Factors Can Affect the Price of Bitcoins
Compared to fiat currencies (aka legal tender), Bitcoin’s value can be affected by several factors. The volatility of the cryptocurrency market is very extreme, as seen from the fluctuation of prices. Bitcoin, being the oldest crypto coin in the market, is still not stable in comparison to government-issued money. Here are the factors that can alter the market price of Bitcoin:
- Supply and demand
- Changes in the political environment
- Media influence and coverage
- Changes in government regulations
- Changes to the Blockchain technology
- Influence from the cryptocurrency community
You Can Choose to be a Bitcoin Trader, Investor, or Both
Getting into Bitcoin may seem like a complicated matter, but it is not entirely different from investing or trading stocks and forex. You can also opt to purchase and sell Bitcoin, invest in it, or even do both. Bitcoin trading, in essence, is buying and selling the cryptocurrency while Bitcoin investing requires a longer commitment than trading. The ultimate goal of both options is to make a profit; it is up to you to choose a more suitable path.
Store Bitcoin Properly
You can store cash inside your wallet, but how do you store a currency that does not have any physical form? Bitcoin is stored using a digital wallet which are applications that hold the information of the cryptocurrency. You should always keep your wallet safe since you will lose your investment if you do not handle it properly. Before getting into Bitcoin, make sure to do ample research for an appropriate and safe digital currency wallet.
Buy (and Sell) Only from Reliable Sources
Bitcoins are very precious, thus sites offering these can be targeted by hackers and illegal groups. In light of this, you should only work with reputable and licensed Bitcoin dealers. Take the time to verify the legitimacy and credibility of a particular Bitcoin exchange platform that you want to use. Avoid getting into trouble with the law and wasting your hard-earned money by associating with licensed and authorized Bitcoins sellers and exchanges.
Track Your Funds
Bitcoins are investments that you need to track, just like any other type of investment. If you created accounts at multiple sites, you should invest in a tool that allows you to monitor your Bitcoins in one dashboard.
Never Stop Learning
To gain from your investments, no matter what type, you should commit to learning continuously. Bitcoins are challenging to understand, but it is not impossible to determine. Before getting into Bitcoin, it is important to arm yourself with sufficient knowledge by:
- Investing in your learning by joining groups or seminars that discuss Bitcoin investing.
- Purchase reading materials that can help you better understand investment strategies.
- You should also subscribe to online channels that will boost and improve your Bitcoin investment journey.
- Join online discussions about the cryptocurrency market on Reddit, Quora, or Twitter. Digital communities offer a wealth of information and you can discuss with like-minded individuals the future of Bitcoin and other cryptocurrencies.
Conclusion
Can anyone participate in Bitcoin investing or trading? Definitely. Anyone can trade or invest in Bitcoin as long as he or she has sufficient capital, has access to a trading platform, and a clear understanding of how the Bitcoin market works. Getting into Bitcoin is a great way to diversify an investment or trading portfolio. It is not a good idea to invest in something that you have no clear understanding of. Just like any other business venture or market investment, it is crucial to understand how cryptocurrencies work before investing your hard-earned money entirely. Understanding how Bitcoins work will take time, but there’s no better time to start than now.
