Bitcoin is a cryptocurrency that came into being in 2009. At that time, nobody anticipated that crypto would grow to be one of the most respected digital currencies in the world. However, fast forward to 2021, many people embrace BTC as a mode of payment and a particular class for investment.
As years have passed, about 12 years now, the digital currency market has seen several cryptocurrencies come and disappear. But speculators and investors have not failed to see how Bitcoins have succeeded to remain strong.
A significant feature of BTC is that it’s prone to wild fluctuations, and many traders may not cope with the fluid situation. Therefore, such traders can benefit from the services of Bitcoin code. Furthermore, there is a lot of technical information about BTC that some beginner traders do not understand. The good news is that such a code can help these traders cut through technical jargon and continue trading.
In this article, we look at how best beginners can invest in Bitcoins. It is possible for cryptocurrencies, and Bitcoins, in particular, will stay for the longest time possible. Let’s get started;
Choose Your Cryptocurrency
Deciding on the type of cryptocurrency to use may be overwhelming for most people, especially beginners. There are hundreds of cryptocurrencies so far, including Bitcoins. It is believed that they are more than we know, and it is a matter of time before they are discovered.
With more cryptocurrencies emerging online, the entire issue is getting complicated. If you are a beginner, making the right decision is key to successfully investing in this business.
As of June 2021, Bitcoin is the most dominant cryptocurrency. It is drawing attention from experts and beginners in the business industry. Because of its dominance, Bitcoin is the most trusted among the top cryptocurrencies. These days, Bitcoin has become synonymous with cryptocurrency.
Typically, Bitcoin is more dominant than other forms of cryptocurrency; it should occupy the most significant part of your portfolio. Conversely, the rest of the cryptocurrencies should only have a small portion of the portfolio.
However, you should be aware that most cryptocurrencies that came before Bitcoin disappeared. Others, instead of disappearing, ended up flattening. So any investments you make in cryptocurrencies can go back to zero. This is the primary reason why you need to invest with care and consciously about your income.
Also, note that cryptocurrencies are very volatile when it comes to their prices, and Bitcoin is not an exception. So your investment may disappear with short or no notice at all. This prompts investors to look for other significant things.
Looking forward is part of making the right decisions all the time. It is therefore essential to invest in Bitcoins with care while on the loom out.
Allocate Relatively Low Percentage of Your Portfolio to Bitcoins
Just like most businesses, it is essential to decide the amount of capital to invest. For this case, nothing is different; you need to decide in advance the amount of portfolio you will allocate to your chosen cryptocurrency. Unfortunately, it is usually challenging to make a rational decision these days because of the recent advances in the prices of Bitcoins.
Most of the time, investing is ruled by fear and greed. It is relatively difficult to keep greed under control because of how fast cryptocurrency is evolving. Here are some facts that you need to know about investing in Bitcoins;
- No matter the situation, Bitcoin should only take a tiny part of your portfolio. When it comes to how much, it entirely depends on you. We are all different, and our incomes and needs are unique. But generally, invest only about 20 percent or less.
- Understand that bitcoin is relatively different from the stock exchange, and it should not be confused. Unlike gold and silver, bitcoins require relatively more to gain dividends and interest, and you should be ready for that.
- Bitcoins were previously not designed to be an investment but part of the investment. They are mediums of exchange and have been seen as one of the alternatives to sovereign currencies. According to the inventor, the aim was to help increase the efficiency of web commerce. This is primarily because its value is not manipulated like the sovereign currencies but strictly dictated by the market.
- But so far, Bitcoins have not filled the role of a medium of exchange. So far, only a few people or merchants accept it as a medium of exchange.
Choose a Platform to Buy Bitcoins
After deciding on the form of cryptocurrency you want to buy, chances are you will go for Bitcoin because of its advantages; it is now time to buy them. However, the more cryptocurrencies we have online, the more it can get difficult to buy them. It is even complicated when you are a beginner.
Remember, cryptocurrencies are not available in the usual financial places you know, like banks. This raises a question about their security, but that will be discussed later in this article. Even international banks and renowned investment brokerages do not offer them.
So where do you buy them?
Most often, you will get restricted to buying, storing, and selling cryptocurrencies on specific platforms. It is not easy to transfer Bitcoin from one platform to another. In addition, you have to pay some fee in all these platforms or brokerages where you can buy or sell cryptocurrencies. The transaction fee applies when you buy and sell Bitcoins.
What differs in these platforms is the fee and terms of conducting businesses. So when you are a beginner, there are several things to consider before deciding the platform to buy from. And the key one is to look at the fee of the platform and the terms and conditions.
In some situations, you may decide to use a platform that has a relatively higher transaction fee than the rest of the platforms but with significantly better terms and conditions. So the two must go together. However, the final decision lies with you and must align with your desires.
Store Your Bitcoins
Bitcoins are usually stored in cryptocurrency wallets. The wallet can either be cold or hot, depending on what you are targeting. This can also be a complicated topic for a beginner, but we will break it down here.
In a simple definition, a cryptocurrency wallet is a software program storing public and private keys that connect you to where your bitcoins exist. Bitcoins are usually stored in blockchains. So the wallet does not store the cryptocurrencies but only connects you to the blockchains having your Bitcoins.
You must have both public and private keys to complete a transaction. The private key is only known to you, while the public key, also known as the cryptocurrency address, that the other party involved in the transaction can see.
The digital wallet does more than just receiving and sending Bitcoins. It also provides all transactions involved in a blockchain. You can also see the balance through the wallet. Here are some types of digital wallets;
- Desktop wallets that are installed on personal computers. These are safer than the rest because the information is stored in your computer, and you are in total control. However, for online wallets, there are a few limitations on information access.
- Online wallets are another type of wallets known so far. Here, everything is done online on the cloud and can be accessed from any computer with a connection. They are relatively convenient, but your private key is stored online. Therefore, a third party can access the key, so we can say they are less secure.
- Mobile wallets are available in the form of applications that can be installed on smart devices like phones. They are relatively convenient for those who move from one area to another. In addition, you can be able to make transactions easily where Bitcoins are accepted.
- Hardware wallets enable you to store your private key in a hardware device like USB devices. They are relatively secure because your private key is not stored online like online wallets.
While selecting the best wallet depends on your desires, some Cryptocurrency exchanges offer multiple wallets. This tries to cater to everyone’s needs. Therefore, selecting a platform that can offer both is the best solution.
Secure Your Bitcoins
After buying Bitcoins, it is now time to secure them. If you have a hot wallet, this is important if you will have to use Bitcoins to buy products. Generally, like other online transactions, you need to ensure your transactions involving Bitcoins online are secured.
The easiest way for beginners to secure their Bitcoins is by using a VPN (a virtual private network). Such a tool ensures that your online transactions are encrypted and secured. Anytime you use a VPN, all your online connections are secured. That, plus having your data encrypted, prevents unauthorized third parties from accessing your information.
It is common to find hackers trying to crack cryptocurrency wallets. Wallets that are not secured are usually vulnerable to such malicious acts compared to those secured and encrypted. So it would help if you never stopped at only buying.
If you’re starting your journey in BTC trading, it’s critical to arm yourself with information. Here, we’ve explored the key points that you should grasp before investing your hard-earned money.