According to recent research, 16% of Americans have invested in cryptocurrency, including Bitcoin. However, this is still a relatively new concept, and some people may not yet know how to invest in Bitcoin. That’s where we come in!
Keep reading to learn 8 tips on how to invest in Bitcoin.
Bitcoin Is a Decentralized Currency
Before you buy Bitcoin, you need to realize that it’s a decentralized currency. Decentralized means that it’s different from currencies like the United States dollar.
No third party is controlling the currency. There is no central government or financial institutions. Instead, Bitcoin is hosted under a decentralized framework, so you don’t have to worry that a third party can control it.
Because it is decentralized, there is a risk of criminal occurrences since there is no government or power managing it, but you can avoid this, if you’re careful.
Figure Out Where to Buy Bitcoin
Now that you understand what Bitcoin is, you can begin to figure out where to buy the cryptocurrency. We suggest you start by looking at Bitcoin ATMs.
BATMs are like standard ATMs that you can use to sell and buy Bitcoin. As Bitcoin becomes increasingly popular, more will pop up in cities near you.
You may also be able to buy Bitcoin from exchange-traded funds (EFTs). You could also buy Bitcoin directly through peer-to-peer purchases. However, this might not be as safe.
Get a Wallet
Before you can purchase Bitcoin, you’ll need a crypto wallet to put it in. You will store all of your cryptocurrencies in this wallet. There are two types of wallets you can get: a hot or cold wallet.
If you get a cold wallet, this is one of the safest places to store your coins. It’s an actual piece of hardware in which you will hold all of your coins, and it looks like a flash drive. Most cold wallets will cost anywhere between $60 to $100.
A hot wallet is a digital wallet operated by a cryptocurrency exchange or another provider. These exchanges will give you a wallet when you open your account. They’re convenient, and you can access them anywhere if you know the password.
However, because they’re digital, they are susceptible to being hacked if you’re not careful. For a reliable cryptocurrency wallet alongside secure fiat, and crypto banking services download ByteWallet.
Be Careful of Unit Bias
When investing in cryptocurrency, you must also be careful of unit bias. Not all coins are created equal when it comes to cryptocurrency.
There are thousands of crypto coins out there, and some are trying to imitate Bitcoin. However, even with Bitcoin, you can determine the coin’s value by asking what purpose for which innovators created the coin.
What was it used for? Who’s working on it? How big is the community?
Read Crypto Whitepapers
If you’re still unsure if Bitcoin is a good investment, read the Bitcoin whitepaper for yourself. If you find yourself still intrigued, check out The Bitcoin Standard by Saifedean Ammous. While word of mouth is good information, it also helps to read research on it.
Before investing in Bitcoin or any coin, make sure you read their whitepapers. Every cryptocurrency project should have a whitepaper that is easily accessible, online. If you come across a crypto coin that does not have a published whitepaper, it is a huge red flag that you shouldn’t invest in that cryptocurrency.
The white paper should tell you how the project’s developers intend the coin to work, have a time frame, and give specifics about the project.
If there’s no data or plan for the coin, it may not be a good investment. If the whitepaper feels misleading or incomplete, this could mean that there are other issues with the project. However, you should be able to read Bitcoin’s information online easily.
Know About Investor Protections
You want to ensure that your Bitcoin investment is also protected. Unfortunately, Bitcoin and other cryptocurrencies are uninsured by the Securities Investor Protection Corporation.
That means, no losses are covered in the event of an exchange failure or a theft. However, any transactions made through a traditional stock brokerage account, will be protected for up to $500,000.
Some cryptocurrency exchanges offer private insurance, but this doesn’t protect you from individual breaches, like if someone hacks into your account.
So just to be safe, you’ll want to ensure that wherever you buy Bitcoin, you have some level of protection.
While Bitcoin is a great investment and one of the most popular worldwide, you’ll want to ensure that you diversify as well. Diversification is important for any portfolio to help mitigate your risk.
If you put all your resources into Bitcoin and it falls, you’ll lose all that money. You know the old saying, “Don’t put all of your eggs in one basket”.
Bitcoin can be a viable option for day-trading, but you’ll need to know how to manage your investments. Bitcoin is definitely a choice long-term hold.
It is essential to develop an investment plan to maximize your earnings from Bitcoin. When you’re creating this plan, make sure that you take into consideration tax deductions. They can get complicated when you’re dealing with cryptocurrency.
Discover More Things to Know About How to Invest in Bitcoin
These are only a few things you need to be aware of when investing in Bitcoin to succeed, but there is always more to be learned.
We know that beginning your cryptocurrency investment journey can be challenging, but that’s why Bitcoin ATMs exist. They’re easy to use and very accessible. Check out our website to learn more about Bitcoin ATMs.