How to Invest in Bitcoins
Beginners guidance
Could you and should you invest in Bitcoin? You can, and if done right, you can reap benefits from your cryptocurrency investment. Bitcoin was designed with the intent of becoming an international currency to replace fiat (government-issued) currencies. Since Bitcoin's inception in 2009, it has turned into a highly volatile investing asset that can be used for transactions where merchants accept it. About a couple of years ago, buying/selling Bitcoin may have sounded like a tedious job, fit only for techies Today the scenario has completely changed.
Many emerging startups such as in switch Kuber in the crypto space and venture capitalists are looking to funds such startups, trying to make Bitcoin investing effortless more than ever so it's a good idea that you also learn how you can invest in Bitcoin.
Here is how to invest in Bitcoin, in 5 easy steps.
1.Join Bitcoin Exchange
First, you’ll need to determine where you want to make a bitcoin purchase. Most Bitcoin investors use cryptocurrency exchanges. There’s no official “Bitcoin” company because it’s an open-source technology, but there are several different exchanges that facilitate Bitcoin transactions These exchanges are the middlemen of cryptocurrency investing, like a stock brokerage. If you decide to purchase from an exchange, you’ll have to decide which exchange you want to buy from. Here are a few of the most popular options:
- Coinbase: A very popular crypto exchange that insures losses in the event of a security breach or fraudulent transfers.
- Bitfinex: The longest-running cryptocurrency exchange that’s optimized for advanced traders and lenders.
- Strategize the strengths and weaknesses of the company.
2.Get a Bitcoin Wallet
When you purchase a coin, it’s stored in a “wallet”, which is where all your cryptocurrency is stored. There are two types of wallets — a “hot wallet” or a “cold wallet”. Some notable hot wallets are:
- Electrum: Software the enables you to store your coins on your computer
- Mycelium: A mobile-only app for Android and iPhone users
However, hot wallets are not the most secure form of storage. If the hot wallet provider is hacked, then your coin information may be at risk. A cold wallet is the safest storage method for your coins. A cold wallet is an actual piece of hardware that stores your coins, usually, a portable device that’s similar to a flash drive. Most cold wallets cost between $60 to $100. Some popular cold wallets are:
- Trezor
- Ledger Nano
If you are only going to purchase small amounts of coin, then you might be fine using a hot wallet with an insured crypto exchange but if you’re going to be trading large amounts of coin, then a cold wallet would be well worth your investment.
3.Connect Your Wallet to a Bank Account
When you’ve obtained your wallet, you’ll need to link it to your bank account. This enables you to purchase coins and sell coins. Alternatively, your bank account may be linked to your cryptocurrency exchange account.
4.Place Your Bitcoin Order
Now you’re ready to purchase Bitcoin. Your cryptocurrency exchange will have everything you need to buy The big question is, how much should you purchase? Some coins cost thousands of dollars, but exchanges open to allow you to buy a fraction of a single coin — your initial investment could be as low as $25.
Investing in Bitcoin is very risky, and it’s important that you carefully determine your risk tolerance and review your investment strategy before you purchase any Bitcoin.
5.Manage Your Bitcoin Investment
After you’ve purchased bitcoin, you can:
- Use your coins to make online transactions
- Hold your coins for a long period in the hopes they’ll appreciate in value
- Perform day trading with your coins — that’s, buying and selling coins with other Bitcoin owners, which can be facilitated on the cryptocurrency exchange
Your cryptocurrency exchange will provide you with everything you need to buy and sell coins
Is Bitcoin a Good Investment?
Here’s one of the most commonly asked questions about Bitcoin: IS bitcoin a good investment?
Well, the real answer is no investment is inherently “good” or “bad”. It depends entirely on your risk tolerance, your investment strategy, and your financial goals. Before you consider Bitcoin as an investment, you should carefully consider your own goals and determine what you want to accomplish in your investment activities. Do you want to develop a passive income? Become a full-time investor? Save for retirement? Answering these questions will help you figure out whether Bitcoin is the right investment option for you.
Bitcoin is a very high-risk investment because it’s a volatile asset. That means that Bitcoin values may rise or fall dramatically in value over a very short period — even as quickly as a few hours or days.
Like all cryptocurrencies, Bitcoin has no intrinsic value. It’s not backed by any physical asset, like gold or silver, and there’s no central regulator to ensure that the value remains stable. Furthermore, Bitcoin value isn’t linked to the profits of any one corporation. The value of Bitcoin is dependent on the market demand. When there are more people buying Bitcoin, the value will increase. When there is fewer people Bitcoin, The value will decrease.
To make a significant profit on Bitcoin, you may need to rely on “timing the market”, which is a difficult and generally ill-advised investment strategy.
