Reports show that at least one in every ten people invests in cryptocurrencies. Bitcoin, to be precise, has been outshining other cryptos, thanks to its ease of buying, freedom of payment, and control of security.
However, if buying and selling bitcoin was easy, everyone would be doing it. It takes the right tips and willingness to take a risk to make the most out of bitcoin investment.
Keep reading for investing tips for beginners to help you navigate through the complex bitcoin investment requirements.
1. Understand the Basics of Bitcoins
The first and most important step before embarking on Bitcoin investments is to understand the basics of this cryptocurrency. It will help to understand what Bitcoin entails, the pros, cons, and risks associated with buying and selling the asset.
Many beginners have lost their hard-earned cash in Bitcoin because they rushed to trade without learning the requirements of investing and transacting with bitcoins. They fail to consider the volatile nature of cryptocurrency.
The price of bitcoins keeps changing. And if you invest a lot of money without studying the market, you risk losing a lot.
2. Learn the Rules of Bitcoin Investments
The rule of the game is simple; don’t invest more than you can afford to lose. Besides that, there are other rules imposed by the government and the Bitcoin authority on investors.
Some beginners tend to overlook the regulations without realizing the impacts of the requirements on their returns. Only by studying Bitcoin trading rules will you comply and make a sound investment.
You have a ton of online resources explaining the trading and investment rules. You can also seek assistance from expert investors for guidance as you learn to buy and sell bitcoins by yourself.
3. Study How Bitcoin Transaction Works
Don’t assume that Bitcoin transactions are similar to the traditional bank transaction. As soon as you decide to buy and sell bitcoins, you are expected to create a wallet. You are then given a private key, which only you can use to access your wallet and private data.
You should, however, note that all information concerning your money is available to the public, and none will be confidential. Therefore, you should not be surprised to see your transactions displayed on the public ledger dashboard.
However, your username and password are private, so you don’t have to worry about unauthorized persons accessing your wallet.
4. Know That Bitcoin Investment Is All About Speculation
There is no precise intrinsic value behind Bitcoin. The investment does not track the growth potential of a real company selling services or products. Moreover, unlike the stock market, Bitcoin Investment does not involve tracking the value of a commodity.
Therefore, when you opt to invest in cryptocurrency, your return source depends on someone else’s willingness to purchase your bitcoins and pay more for them.
Considering the growing crypto demand, there are high chances of getting a buyer. But it is just fair to assume that other cryptos may flame out. Expect any outcome to avoid disappointment.
5. Study Bitcoin Mining
It will help to learn how bitcoins are entered into market circulation. Bitcoin mining is also how new transactions are confirmed by the network.
As a beginner, you may use a go-between to manage your Bitcoin accounts and probably try mining on your own as you understand the process.
When converting real cash into bitcoins, it is advisable to take things slow. It would also help to use dummy accounts. Or, you can start with a negligible amount in your wallet for practice. As soon as you are confident about mining, you can comfortably add more cash to your wallet for conversion.
6. Join an Exchange
Don’t rush to purchase bitcoins without considering where you want to make a purchase. You cannot go wrong with Bitcoin exchanges.
Keep in mind that Bitcoin is an open-source technology. This means that there is no specific Bitcoin company. But there is a range of exchanges that you can join to facilitate your transactions.
The exchanges act more like middlemen. Take your time to look for a trustworthy exchange. The common options include; Coinbase, Binance, Gemini, and Kraken, to mention a few.
It would be best to select an exchange that insures losses in case of fraudulent transfers or any form of a security breach—conduct background research to understand the features, pros, and downsides of using each of the exchanges.
7. Create a Wallet
By now, you have already made up your mind about crypto investments. You have learned the basics of investing in Bitcoin and have chosen a suitable exchange.
The next step is to create a Wallet to facilitate your transactions. A wallet holds your coins as soon as you purchase them until you are ready to sell.
A crypto wallet cannot be termed a place to store bitcoins. It is more of a type of software that protects your private keys. It also enables you to trade your coins.
Decide if you want a hardware or software wallet. In the case of a software crypto wallet, you choose between a mobile and a desktop wallet. The wallets are sometimes referred to as hot wallets, and all you need is a Smart device and secure internet to get started.
Software wallets are not only convenient but also make exchanges simpler. However, the wallet may be susceptible to cyber-attacks.
On the other hand, a hardware wallet is also known as a cold wallet. It uses hardware such as a thumb drive to download your keys to a crypto wallet.
Hardware wallets are a bit inconvenient. You have to plug the drive into a smart device to make your Bitcoin transactions. It is also at risk of loss.
Weigh the upsides and downsides of each type, then select one that suits your needs.
8. Private or Public Keys
Bitcoin is a digital coin that lives on the Blockchain. This is a technology entailing a permanent digital ledger where all your Bitcoin transactions are recorded.
As soon as you complete your transactions, they are validated and added to Blockchain via a process referred to as Proof of Work.
Therefore, once you purchase or sell bitcoin, you will need a public key to complete the transactions. A public key is more of your wallet’s digital address.
You also need a private key that you use to access your Bitcoin wallet. Keep in mind that if you lose or forget your key, you lose access to your crypto coins. Again, if unauthorized persons access the private key, your bitcoins are likely to be stolen.
9. Connect to a Payment Option
You have already selected a bitcoin exchange and have your wallet in order. The next step is to gather the necessary documents such as your identification, security number, and driver’s license. The documents you need depend on the exchange you opt to use, your locality, and the laws within it.
Connecting your exchange to payment options can be complex as it is almost similar to setting up a brokerage account.
The exchange will verify your identity before completing the payment connection process. Most exchanges allow you to connect your bank directly or your credit card, depending on what works best for you.
Nonetheless, it is not advisable to purchase cryptos using your credit card, considering the high volatility of bitcoin, which could inflate the cost of buying coins.
10. Research the Methods of Buying Bitcoins
You may purchase bitcoins directly. But as a beginner, it will help to try out different alternatives for buying bitcoins until you find the most favorable.
The common one is the P2P exchange platforms. Peer to peer means that you will be purchasing your coins from other investors like you. This is unlike the decentralized exchanges where transactions are done anonymously.
With p2p, you will have a more personal connection with the seller. You will have access to bitcoin listings. Browse through them and select one that matches your budget and payment method before initiating transactions.
In addition, you can buy bitcoins from a bitcoin ATM. Just like the traditional ATMs, you are required to insert money into a machine to purchase bitcoins. After completing payment, the cryptos are transferred to your wallet for use.
11. Load Your Account with Funds
It is time to fund your account. You can do so using your bank account, credit card, debit card, or wire transfer.
The ideal method depends on where you intend to invest in Bitcoin. Some banks may bar deposits or flag any transactions relating to bitcoins. Thus, it will help to check with your bank before funding your account.
Take your time to research the transaction fees by different payment methods and exchanges. For instance, credit cards charge a processing fee on top of the standard transaction fees.
12. Make Your Bitcoin Order
Now you are set to place your bitcoin order. Thanks to technological advancement and the continuous growth of crypto demand, bitcoin exchanges have significantly improved in terms of liquidity and features. With this, it is much easier to make your purchases with little to no assistance.
The improvements at Bitcoin exchanges have changed the narrative. Cryptocurrency is no longer seen as a scam. The industry is no longer questioned and has drawn great interest from many big financial industry players.
With the increased breadth of features, bitcoin exchanges work nearly the same way as stock brokerage. They offer a variety of order types and a ton of ways to invest. You only need to select an ideal one based on your needs.
13. Patience is the Key
Patience is a critical virtue for anyone looking to grow the bitcoins in their wallet. Do not let the urge to make fast wealth push you to make hasty bitcoin purchase or sale decisions. Otherwise, you are bound to make uninformed choices that you will regret a few months or years later.
Digital currency technology is complex and may require some time for a beginner to understand. The terms used differ from the commonly used words in traditional banking transactions. It also takes some time to start enjoying output after bitcoin mining.
Go in with realistic expectations. Expecting too much for your first investment will result in disappointments and frustrations. You are likely to give up on this venture even before you start.
Depending on the exchange of your choice, you may be able to fund your account using apps such as Paypal. Furthermore, with some exchanges, you get instant access to trading. In others, you may have to give the funds some time to clear before you start buying bitcoins.
14. You Can Win or Lose
Before you put your money into bitcoin investment, you must make peace with the fact that you could lose your money. You are dealing with a volatile and risky investment. So, it would be best if you were open-minded about the outcome.
At times, the price of bitcoin can drop as soon as you purchase your coins. Your wallet may get negative, which will leave you disappointed and on the verge of giving up.
You may choose to hold them longer until the price goes up. But still, that does not guarantee profits. Do not panic if the market does not get to expectations sooner. It may take some time, but with patience, you are assured of great returns.
15. Invest What You Can Afford
Like any other investment, you should not spend more than what you can afford to lose. You can never be sure of the outcome, and you should ensure that your financial plans remain intact whatever happens.
Remember that you may decide to hold the bitcoin as you wait for the price to go up. You cannot predict how long you are going to hold the amount. Do not buy bitcoins with your emergency funds. Instead, spend an amount you have not planned for or don’t intend to use any time soon.
Make the Most Out of Bitcoin Investment with Expert Investing Tips for Beginners
Bitcoin investment is not about how long you have done it. Rather, it is about willingness to learn, having a strategy, and patience. Do not be led by greed and unrealistic expectations. With the above-investing tips for beginners, you are assured of getting the hang of the market within the shortest period.
Keep checking our blogs for more articles.
- 1 1. Understand the Basics of Bitcoins
- 2 2. Learn the Rules of Bitcoin Investments
- 3 3. Study How Bitcoin Transaction Works
- 4 4. Know That Bitcoin Investment Is All About Speculation
- 5 5. Study Bitcoin Mining
- 6 6. Join an Exchange
- 7 7. Create a Wallet
- 8 8. Private or Public Keys
- 9 9. Connect to a Payment Option
- 10 10. Research the Methods of Buying Bitcoins
- 11 11. Load Your Account with Funds
- 12 12. Make Your Bitcoin Order
- 13 13. Patience is the Key
- 14 14. You Can Win or Lose
- 15 15. Invest What You Can Afford
- 16 Make the Most Out of Bitcoin Investment with Expert Investing Tips for Beginners