4 Things To Know Before Investing In Bitcoin
Bitcoin and other cryptocurrencies are now a hot cake and everybody is scrambling to get a fair share of the cake. Investing in cryptocurrency, no doubt is a right step in the right direction but the terrain is full of ups and downs. Only those who have the right information are likely to come out unhurt. Sometimes, even the well-informed ones get their fingers burnt because the crypto market is volatile. Anything could make the prices of coins to change at any time.
All things being equal, there's a lot of money to make from the digital currency market. For instance, Bitcoin and Ethereum have already made a lot of people to become millionaires because they invested at the right time and when the prices of the coins went up, they suddenly woke up from sleep to find out they were in millions.
Now that you are aware there is so much to make, do you just jump into the market? No, of course! Doing so might make you lose your life savings and end up in a state of depression. You must know one or two things about the market before opting to part with your investment money. So, what are the things to know?
- Buying and holding
This is the commonest style of investing in Bitcoin whereby a buyer purchases Bitcoin in hope that its value will appreciate. This phenomenon is simply referred to as "holding". Before buying, you must decide whether you are there to buy and hold till there is a rise in price. Ask yourself again if the price is likely to rise beyond the point where you are buying.
A few advices for buying and holding Bitcoins
Don't invest more than you are able to. In other words, be sure you are investing the amount you are prepared to forfeit should there be any great fall in price
After buying, move your Bitcoin to your personal wallet. They should never be left at the exchange. You can use hardware to secure it if possible.
Always buy from exchanges with track records
Buy Bitcoin through Dollar cost averaging. That is to say, you should not buy all your Bitcoins in a single trade. Instead, spread out the purchases over days, weeks, or months so that you don't lose all your money if things go wrong.
Trading in Bitcoins
Trading in Bitcoins is not the same thing as buying and holding. It simply means that you trade with the intent to buy at a very low price and sell when the price is high. To succeed in this terrain, you need to acquire some knowledge on how the trading is done. You can get some tips here.
- Investing in Bitcoin mining
If you have enough money, you can invest in Bitcoin mining. But for an average investor on a low budget, this is not advisable as a lot of money is involved in buying the mining equipment. You should rather use your money to safely buy Bitcoin than spending it on purchasing mining equipment.
- Grow your Bitcoins
This involves investing your Bitcoins in companies or investing in HYIPs (High Yield Investment Programs). But you must be aware that there is hardly anyone that can help you grow your Bitcoin into something great. A lot of the sites that promise to multiply your Bitcoin or pay you a high margin profit when you participate in some of their programs are there to defraud you. So, don't allow any form of greed to push you into them. You could lose your hard-earned money.
When you see a site that promises you those profit margins that look too good to be real, please, don't get involved. However, if there are programs you can trust and have done a thorough investigation about them, you should invest with care but remember that you do so at your own peril.
My sincere opinion is that you should use the first three ways of acquiring Bitcoin. Try as much as possible to avoid number four because you could get your fingers burnt in the process. Bitcoin will naturally grow based on market demand. Don't be in a haste to make more gains.