Bitcoin is a form of cryptocurrency that was introduced to the world in 2008 by an individual or group of anonymous developers called Satoshi Nakamoto. Individuals can receive or send a portion of Bitcoin to users. Moreover, BTC is decentralized, therefore, no authorized entity or centralized authority can control the flow of BTC in the financial sector. BTC is a reward to Blockchain miners after solving complex mathematics.
Bitcoin Investors are those who purchase and hold Bitcoins (BTC) as a part of their investments. Bitcoin has however not gone unnoticed by investors and individuals in the industry, its decentralized system has attracted investors and institutions to invest in the digital coin. Btc’s growth, interest and adaptation have made its investment outgrow other cryptocurrencies, currently, it is the largest cryptocurrency in the financial sector.
However, investing in cryptocurrency is a trick, investors need to note some crucial factors before proceeding. Below is a guide to help you understand how to invest in Bitcoin (BTC), especially for beginners.
Bitcoin Investments
Bitcoin is a digital coin among other digital coins in Blockchain that is utilized in the financial industry to enhance peer-to-peer transactions in Blockchain technology. BTC has been growing vastly and has raised investor’s concerns about BTC. It is bought and sold in decentralized exchanges; besides, it is decentralized, which is an advantage to BTC since no authorized or centralized authority needs to control BTC. Additionally, transactions in BTC do not require intermediaries or middlemen like banks or centralized institutions.
Investing in BTC has been attracting not only investors but also institutions, recently in the year several institutions like Blackrock filled out applications for spot Bitcoin ETF. This shows how interest in Bitcoin has grown. BTC is however volatile; it has swings which can affect your portfolio negatively or positively. Investing in BTC, however, needs discipline and strategy before investing in it.
Investing in BTC can either be a short-term perspective or a long-term perspective. It is crucial to have a plan while investing in BTC, remember this digital asset is volatile, therefore, mistakes can be made during investment or emotions can take the best of you, wise decision is therefore crucial while investing in BTC.
5 Tips For Bitcoin Investors
Before jumping into investment investors are required to have plans and strategies on how they will conduct their investments, if you are new to Bitcoin there are various tips that you need. In the below section, we will be highlighting to newbies the 5 tips for investors before venturing their investments in BTC.
Research About Bitcoin
Before diving your investment funds into Bitcoin, Bitcoin investors need to do your research smartly. Remember you are new to BTC you actually don’t know anything about the digital coin. Conduct deep research on Bitcoin, understand what it is and how it can affect your investment, moreover, understand the trends in BTC. How is the BTC market currently? Is the market on an uptrend or downtrend? Is it volatile at the moment? All this deep technical research will help investors make wise decisions before jumping all their investments into the digital coin.
Additionally, investors need to be equipped with the latest news about Bitcoin. Whatever is going on in the market, as an investor you should know for effective returns, the news will showcase how the market is and how it affects your investments. Additionally, regulation changes should be your prior concerns, although BTC is decentralized, exchanges and wallets supporting BTC might be regulated. Therefore, it is important to be in the loop about regulation exchanges.
Secure Wallet Storage
Now that you have conducted your research, where will you store your Bitcoin? Consider having a wallet that is more secure and decentralized is essential. There are a number of wallets in which investors can store their BTC. However, if you decide on storing all your coins in one wallet, be sure to choose a wallet that is insured, regulated and it is responsible for the safekeeping of your investment in the custody.
Moreover, Bitcoin investors can choose crypto wallets to keep their assets. Crypto wallets have two types of wallets; cold wallets and hot wallets. Hot wallet is accessed by individuals through the internet, besides it is easily accessible and more convenient to beginners. A cold wallet on the other hand is a device which is portable much more like a USB. They ensure the safety of assets by storing the digital coins offline. Furthermore, crypto wallets have two keys; private keys and public keys. Private keys are used to ensure smooth transactions and accessibility of digital assets while public keys are used to ensure transacted assets have been received.
Risk Management
While investing it’s important to have a risk management strategy, Bitcoin is volatile, therefore having risk management ensures that your investments are safe. This strategy maximizes profits and minimizes risks, investing in Bitcoin requires individuals to invest in what they can afford to lose. Expertise advises investors to invest in approximately 3-5% of your portfolio. Moreover, if you are new to Bitcoin you do not have enough exposure in the market, therefore it is important to manage your risk. Additionally, if you decide to trade Bitcoin, ensure to utilize stop loss and limit loss to minimize your losses and to avoid putting your investments in jeopardy.
Bitcoin Exchange
Bitcoin is not acquired in banks, investing in Bitcoin requires individuals to have exchanges where they can buy or sell BTC. acquiring BTC needs Bitcoin investors to be cautious with the exchange they go for. There are several exchanges in cryptocurrency, for instance CoinBase. Exchanges play a crucial role in Bitcoin and cryptocurrency at large. Besides, it facilitates liquidity in the exchange, investors can buy or sell BTC without price fluctuation. Additionally, it serves as a link to access digital coins. Exchanges are therefore essential to investors, besides, investors should be careful while choosing exchanges. You should dig deep into the preferred exchanges and look at the security, fees and regulations.
Long-Term Perspective
Long-term perspective is a crucial tip to Bitcoin investors, BTC is well known due to its fluctuations and risk that is associated with the asset. The long-term perspective excludes price fluctuation and risks associated with the market for the short term. Additionally, the long-term perspective is advantageous to investors, for example, the potential for higher returns and financial flexibility. This ensures investors’ financial goals are achieved.
Conclusions
Investment is a big step, taking turns to invest in Bitcoin or digital currency like Ethereum and other cryptocurrencies is however more risky. Therefore researching BTC and understanding the market of BTC is important. Bitcoin is risky and investing in BTC requires investors to take caution and deep consideration of market trends and BTC news.
