In 2020, Bitcoin had over a 41% increase in the number of users compared to the previous year. The numbers are constantly on the rise, as more people are beginning to see how profitable bitcoin is and it could also be due to the fear of missing out.
Regardless of what your reason is for investing in bitcoin, there are key things every beginner should know as they get started. This article highlights a few of them.
Never rush into an investment scheme regardless of what the news might be saying if you aren’t sure of how it works. Do some research to understand bitcoin’s underlying technology and how it operates. This includes learning about its volatility and how it is a decentralized currency, which means anyone investing in it should be prepared to lose all their money. When you better understand how it works, you will be able to make smart choices regarding how you invest. Drown the noise and the FOMO and focus on getting the basics first.
2. Start Small
One common mistake many beginner investors make is that they dive in too quickly and invest as much as they can. This is often common with investors looking to make quick money. Remember that Bitcoin is highly volatile, which can be both an advantage and a disadvantage but you never can tell where your funds would tilt towards per time.
It is also important to note that digital currency is still in its early stage of development and many things still seem uncertain. If you must invest, proceed with caution. More importantly, start with a little amount and gradually increase it as your knowledge of bitcoin improves.
3. Always Diversify
Expert investors would often advise not to put all your eggs in one basket so that when one market crashes or fails to thrive, you can still benefit from others. This is a great way to reduce investment risks and a 2018 study from Economic Horizons shows investment diversification as a strategy for reducing investment risk.
While bitcoin might be the most popular crypto there is today, there are thousands of others that you can still trade. However, you also need to be strategic with your portfolio diversification and not just invest in anything. Do your research on your preferred cryptocurrencies before deciding
4. Use a Secure Crypto Wallet
There are several advanced exchanges today including the bitcoin circuit to help more people trade with ease. However, you also need a wallet to store your funds and that’s where a crypto wallet comes in handy. You can use both hot wallets (online) and cold wallets (offline) to keep your funds as secure as possible. If you’re using an online wallet, always check for a tight security measure in place, including the two-factor authentication.
If you are new to bitcoin trading or considering starting soon, these are key things you must never overlook. Trading bitcoin becomes easier when you learn the basics and know where to start or how.