In this article we cover the very basics if you want to get into investing in Bitcoin – these are fairly sensible tips but important as like all investing you can lose a lot of money as well as gain money.
Understand how Bitcoin works
We have given you all the information that you need in this guide to understand how Bitcoin really works. You need to know the principles of blockchain and how Bitcoin trades are made.
Don’t get caught up in the technicalities but make sure that you have a firm understanding of Bitcoin before you make any trades.
Go for Long Term Investment
You may have heard a lot of stories about traders who make money from Bitcoin trades every day.
Some of these may be true but these people have a lot of experience and know what they are doing!
Go for a long term investment strategy (buy and hold) instead to battle against the volatility of Bitcoin.
The price can fluctuate wildly in a day, never mind a year
Be Wallet Secure
Online wallets are the least secure and hardware wallets are the most secure. For convenience it works the other way around with online or “hot” wallets being the most convenient and offline or “cold” wallets being the least convenient.
Bitcoins are very valuable so you need to have the right wallets to protect them. If you are going to trade regularly then just keep enough Bitcoins in an online wallet to do this and keep the rest in your cold wallet. If thieves get hold of your private keys then you can say goodbye to your Bitcoins.
Use Reputable Exchanges to buy and sell Bitcoins
Due to the high value of Bitcoins there are plenty of thieves and scammers out there who want to steal yours from you. Only use a reputable cryptocurrency exchange such as Coinbase or Kraken to buy and sell your Bitcoins.
Always check out a cryptocurrency exchange thoroughly. Do they have a track record? Are there user reviews? If you can’t find these things then look for another exchange. If an exchange is making promises of Bitcoin deals that seem too good to be true then move on.
I use Coinbase and they offer free crypto in other currencies
Watch Bitcoin Trends
It is always a good idea to keep an eye on the price fluctuations of Bitcoin. Use tools like Bitcoin Wisdom and Cryptowatch to stay in the loop. This is especially important if you are thinking about investing a lump sum into Bitcoin. You want to buy at the lowest price and sell at the highest price.
Avoid Bitcoin Trading Initially
Once you get more experience as a Bitcoin investor then you can try your hand at Bitcoin trading. We do not recommend that you start trading straight away. You need to learn a great deal about Bitcoin pricing and be able to effectively control your emotions to trade successfully.
There are demo accounts available that you can use to practice Bitcoin trading. Use these to the full and learn from any mistakes that you make before you start using real money to trade Bitcoins.
Accept that Bitcoin is Volatile and High Risk
Bitcoin is a highly volatile digital currency. This means that there are opportunities to make significant gains and the risk of losing a lot of money too. You need to accept this and always bear it in mind to be a successful Bitcoin investor.
One day it can drop 5% or more and you might panic, by the end of the day it may be up 10%.
I kept mine when it dropped to under £4000 in March 2020 and now its above £30000 at the time of writing.
Unfortunately there are many cryptocurrency scams. Bitcoins are very valuable and thieves will do everything that they can to steal them from you. Watch out for fake exchanges, phishing in emails and too good to be true Ponzi schemes. Double you bitcoin would apply here – hand over your crypto and we will double it – aye right.
Avoid Bitcoin Mining
Do not get involved in Bitcoin mining when you are starting out. You will need to make a significant investment in high end computer equipment to have any chance of success and it just makes more sense to use this money to purchase Bitcoins instead.
Also, the equipment can become pretty obselete quickly and it takes time to get a ROI. I would also avoid cloud mining services as well.