Cryptocurrency
Bitcoin For Beginners: 5 Things You Should Know Before Investing
Bitcoin is the pioneering cryptocurrency, and can be traded using online platforms. Like any other investment, you need to learn about it before adding it to your portfolio. We have seen just how volatile Bitcoin can be over the last 10 years. But it’s definitely worth considering, as it has been predicted to hit USD$200,000 a coin by this year.
Check out the following things you need to know as a rookie Bitcoin investor:
- The Market Can Fluctuate And Be Volatile
Unlike some other investments like large-cap stocks, the Bitcoin market can quickly fluctuate. This means that its price is constantly changing. We’re talking tens of percent of fluctuation in a matter of days in some cases.
That’s why it’s important to have a sound crypto strategy that takes into account this volatility when making trade decisions, with ways to help mitigate the downside risk. Try to check this out and other websites teaching how to invest in Bitcoin as they also provide updates regarding the Bitcoin market.
It’s also best to start with small investments while you’re still learning the market. Doing this can help lessen possible losses when the market suddenly fluctuates.
- Unregulated And Decentralized
This attribute means that a distributed network makes every decision-making and transfer of control instead of a centralized entity. No group, organization, or individual owns the computers that mine Bitcoin. The blockchain of Bitcoin uses supercomputers, and different people own such computers.
As a result, there are several network nodes at different locations where the data from the database is spread out. The benefit of having a decentralized blockchain is that all transactions are irreversible. This means that no individual can alter any record already stored in the database.
Crypto Trading theme with person using a smartphone
Because no government or company is in charge of running the technology of Bitcoin, it means it’s unregulated. Thus, anyone can join the trade, especially in countries that haven’t banned cryptos.
However, various governments have now started to centralize Bitcoin and other cryptocurrencies. If this movement becomes successful, expect regulations and laws that may control the technological innovation, investment, and trade of Bitcoin to a certain extent.
- Privacy
Because it’s a digital currency, you can’t have Bitcoin in physical form. Blockchain technology allows you to trace your Bitcoin transactions, but trading or investing is done online. Therefore, you don’t have to give your details when investing in fiat currencies.
You’ll need to make a Bitcoin transaction with your Bitcoin wallet ID. Wherever you are, you can then buy or sell Bitcoin even without the need to divulge your contact number or name. Of course, it’s important you keep the details of your Bitcoin wallet safe.
- Buy It From Anywhere
As mentioned, you can invest in Bitcoin wherever you are. While its technology is a decentralized blockchain, you may use centralized exchanges. These are third-party apps or software that you need to use to buy and sell Bitcoin. The role of these exchanges is to provide confidence to clients that they’re getting the best from what they’re paying for. They do so by overseeing the transactions of their customers.
Another advantage of these exchanges is that you don’t hire online brokers. All you need is to create an account and use it to buy and sell Bitcoin at its market rates. In exchange, you’ll be paying fees for their services.
In addition, most of these exchanges have a wide selection of cryptos, and not merely Bitcoin. This is beneficial if you wish to diversify your crypto portfolio.
- Safe Storage
While exchanges allow you to buy and sell Bitcoin, it won’t be an excellent place to store your digital currencies safely. What you’ll need is a crypto or Bitcoin wallet. With this, you can control your digital assets and avoid the potential risk of losing them when the exchange gets hacked.
If you have a large amount of Bitcoin in your crypto exchange, you should prioritize using a crypto wallet to hold it. That’s because they have more features, such as a more secure network than exchanges. Some crypto wallets even allow you to swap Bitcoin for another crypto and vice versa.
Conclusion
Bitcoin investment has gone a long way since a couple of years ago when its price was still low. Imagine if you bought it at its starting price ranging from USD$1 to USD$30 in 2011. Now, it’s worth around USD$40,000.
This article has provided you with a guide to know more about Bitcoin investment. Start gathering information now so you can grow your Bitcoin investment portfolio.