The best way to experiment with any new asset class is by taking a small position in it. Buying bitcoin is a great way to experiment and experience this asset. However, it is also a fact that investments in bitcoin and other cryptocurrencies come with a warning. Never invest an amount of money in cryptos that you cannot afford to lose.
Bitcoin is the world’s first and most renowned cryptocurrency whose value is reaching the sky and breaking all limits. It turns out that 2020 was a great year for bitcoin; even in 2021, its popularity has continued.
Like all other investments, bitcoin is subject to a volatile market. So everyone should apply the crucial crypto market rule-of-thumb that says never invest more than 10% of your savings or funds in a single risky investment asset like bitcoin.
If you are new to the crypto world, go through the guide of investing money and learn what to expect. Then, get the network updates by downloading the applicable software.
Once you’ve done that, keep in mind that there are four basic steps to consider when buying bitcoin or other cryptocurrencies:
Decide the place to buy bitcoin
Bitcoins can be purchased from crypto exchanges to start your journey of bitcoin investment. There are many popular crypto exchanges and online brokers through which you can buy bitcoins. Other than crypto exchanges, few other ways to invest or buy the cryptocurrency including futures, peer-to-peer platforms, bitcoin ATMs, and Grayscale funds.
Bitcoin ATMs work exactly like normal ATMs, but investors can easily buy and sell bitcoins through these ATMs. There are peer-to-peer platforms that allow a buyer to find the seller of the same needs, and using the peer-to-peer tools; the deals can be done. Be cautious while buying bitcoin directly from the seller.
Futures are a great method for investors to trade on the future bitcoin prices, but this method is only suitable for expert crypto investors and not for beginners. Therefore, it would be best if you learned more about trading futures in order to get started with it. Grayscale investments are basically an asset manager of digital currencies. It has two main investment trusts that are Grayscale Ethereum Classic Trust and Grayscale Bitcoin Trust.
Learn how to store cryptocurrencies
Cryptocurrencies are stored in crypto wallets. Hot wallets and cold wallets are the two categories of crypto wallets. Before you buy bitcoin, decide on the wallet in which you want to store your digital coins. With the hot wallet, transactions can be completed fast, but it is not as safe as cold storage wallets. On the other hand, cold wallets offer extra security to keep your digital coins safe for a long period. Many hot wallet providers are available that offer a wide range of digital wallets that include Mycelium, Coinbase, Blockchain, Electrum, and more.
Cold wallets are the safest devices that are expensive but provide high security to your assets. Popular cold wallet providers are Ledger Nano and Trezor.
Make the purchase
Decide on the amount of money that you want to invest in bitcoin before making a purchase. Once you have linked your digital wallet to the crypto exchange, this step becomes easy. First, you need to decide how many bitcoins you want to trade and make the transaction through your bank account or using a debit/credit card. The transaction gets completed in few minutes, and this will add bitcoins to your digital wallet to transfer or send.
Handle your investment
Determine whether you want to hold on to your investment for the long term or short term of this volatile asset. If you want to trade bitcoin, decide on the right trading method and strategy of buying and selling according to its price. Of course, trading cryptocurrencies comes with many responsibilities and challenges, and you must have the right risk management plan and strategies to become a successful trader.
The Bottom Line: Should you invest in bitcoin?
Bitcoin is a volatile and highly speculative asset, and it gives you something that you may have never experienced in your other investments. And investing in any cryptocurrency comes with risks and opportunities at the same time. It completely depends on an individual’s portfolio and risk management skills whether they should invest in bitcoin or other cryptocurrencies or not.
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