Bitcoin offers an excellent investment opportunity for diversifying your portfolio. Investing in Bitcoin benefits you through Bitcoin mining, trading, and other ways. Like any other investment, trading or buying this digital currency isn’t without risks. Bitcoins are volatile virtual assets because they endure incredible value spikes and plummets, meaning you can invest your money and lose it all in hours.
Bitcoin is inadequately regulated, meaning no government or other institution can interfere. If your Bitcoin investment is lost, you’ll have nowhere to file a complaint or claim. This article outlines five things you need to know before buying Bitcoin.
1. Buying Bitcoin Can be Tricky
Consider learning how to buy Bitcoin before investing. When purchasing Bitcoin, consider payment methods and their tradeoffs regarding privacy, associated fees, and convenience. Look at the platforms for buying Bitcoin, including centralized spot exchanges, digital wallet providers, OTC desks, peer-to-peer marketplaces, and payment apps like PayPal.
To buy Bitcoin, you must create an account, fund it, and then start trading. Consider where the Bitcoin will go after buying it. Your options may include a Bitcoin wallet you have control over or one that someone else controls.
2. Consider Verifying Your Identity Before Buying Bitcoin
While you can purchase Bitcoin without verifying your identity, it’s more expensive and less convenient. All the principal centralized exchanges require you to provide your personal details and identity documents to sell and buy cryptocurrency without restriction. The exchanges do this to minimize risk.
The Know Your Customer (KYC) process enables them to prevent money laundering and fraud. However, if you want to buy Bitcoin minus verifying your identity, you can do so via Bitcoin ATMs or decentralized exchanges.
3. There Are Various Ways to Store Bitcoin
Bitcoins can be stored in digital wallets, web-based or hardware-based. Your wallet can also be on a mobile device, computer desktop, or safely kept by printing the access addresses and private keys on paper. Failure to store your tokens safely may result in losing them due to loss of access keys, computer failure, theft, and more.
You can safely store your Bitcoin in a hot wallet, cold wallet, and physical coins. Each wallet has a set of private keys; without them, you can’t access your Bitcoin. To protect your wallet, back up your whole Bitcoin wallet, keep your software updated, and follow the multi-signature concept.
4. Research Is Vital
Before investing in Bitcoin, consider researching if a project has long-term sustainability. Considering how volatile digital coins can be, research can help you determine your risk level to find ways to reduce it. During your research, consider the price, look at the blockchain project’s official website and check its transparency. Consider the available Bitcoin communities, the source code, social media or news, and education.
5. Timing Is Crucial
After comprehensive research, you might have identified a project or two to invest in. Next, time your investment because the cryptocurrency world moves faster and is known for its volatility. The best time to buy Bitcoin is when the demand is low. In addition, business hours aren’t the best when purchasing Bitcoin as people are trading. Be sure to buy on Mondays when prices are the lowest.
Investing in Bitcoin can be risky, so be sure to familiarize yourself with the things you need to know making your purchase.
