When life throws you a curveball, it’s time to get innovative. Big banks knowingly gambled with their customers’ money in high-risk businesses in 2008, pushing the United States into a financial crisis. In the aftermath of this disruption, a crypto genius created blockchain, becoming a massive enabler of change to a broken system.
Blockchain is the system on which all cryptocurrencies and NFTs are built. Cryptocurrencies are digital currencies that use encryption and are stored on the blockchain, making them unchangeable, decentralized, and open to everyone.
Cryptocurrencies have become one of the most sought-after investment options because they enjoy high security, faster transaction times, scarcity, and potential for huge returns. The first significant blockchain innovation was Bitcoin, the first global currency. A worldwide currency that’s easily traded between countries without the need for exchange rates.
Bitcoin is a digital currency that runs free of any central authority, oversight of banks, or government monitoring. Instead, it depends on peer-to-peer software and cryptography. Network nodes use cryptography to verify transactions, which are then stored in a public distributed ledger called a blockchain.
Satoshi Nakamoto, a pseudonym for an unknown individual or group of people, created the cryptocurrency in 2008, but the developers put the currency in use in 2009.
Bitcoin is by far the most well-known and most prominent cryptocurrency. But there are many others like Ethereum, Litecoin, Ripple, and Dash among the top ten cryptocurrencies in terms of market capitalization.
Bitcoin has undergone dramatic growth since its introduction in 2009. For instance, its value surged by about 30,000 percent from October 2013 to early June 2021. While this is impressive in and of itself, some analysts believe Bitcoin’s value will continue to rise as cryptocurrencies and the blockchain technology that underpins them become more prominent and integrated into people’s daily lives.
Investing in highly volatile assets such as cryptocurrency can be quite profitable, especially over time. Cryptocurrencies with a high utility, such as Bitcoin, tend to increase in value as their adoption and demand increase. However, while Bitcoin has seen incredible highs, it has also experienced devastating lows.
For example, after reaching nearly $20,000 in 2017, its value dropped and did not rise above half of that until 2020. Although it’s been trending upward since then, it’s still a highly risky investment.
What you Need to Know Before Investing In Cryptocurrency
Are you itching to buy Bitcoin but don’t understand how cryptocurrencies work?? Hold your horses and do your homework well! Digital currencies can be an exciting investment prospect, but inexperienced investors risk losing money if they are duped by scammers or invest in a cryptocurrency that has no history.
If you’ve decided to invest in the cryptocurrency market, you should do your homework first, just like any other investment. We’ll go through what you should know before investing your life savings in BTC.
Consider Why You Want to Invest
Are you interested in cryptocurrencies simply because it is popular? Is there a more substantial reason for investing in one or more specific digital tokens? Of course, different investors have different financial objectives, and for some, investigating the cryptocurrency space makes more sense than others.
But one key takeaway is that you should never invest in a digital currency without understanding its underlying technology and the market conditions.
Understand Crypto Investing and Trading
Although they appear identical, these are two different strategies for purchasing and selling cryptocurrency.
- Crypto Investing– Buying crypto to profit over a more extended period, such as months or years, or when values have risen significantly. Investing in cryptocurrencies is highly similar to stock, currency, and other financial assets.
- Crypto Trading– To benefit from the crypto market, crypto traders take advantage of the lower price increases. This is a more complex technique of crypto investment, held for expert traders with a thorough understanding of the volatile crypto market and trading tools such as Bots.
Understand the Blockchain
When most people think about Bitcoin or other cryptocurrencies, they only think about the currency aspect. However, blockchains are much more than just currencies. In fact, blockchains are so versatile that you can use them to create anything from digital assets (like cryptocurrencies) to decentralized applications.
So, if you’re not familiar with blockchain technology, you must take the time to learn about it. Doing so will help give you a better understanding of why some cryptocurrencies are worth more than others and how they work.
Read the White Paper
Most projects offer crucial information on their websites, such as their vision, team members, tokenomics, and social media accounts, but reading their white paper can be beneficial. The white paper is an excellent guide for fundamental research.
Every project should include a white paper that explains the specific problem the project is attempting to tackle and how it intends to do so.
Understand the Risks
Cryptocurrencies are incredibly volatile and risky investments. Prices can rise and fall dramatically in a short period, so you must understand the risks before investing. Additionally, most cryptocurrencies don’t have a backup of physical assets, so they’re not as stable as traditional investments.
Invest What You Can Afford To Lose
Don’t invest more money into cryptocurrencies than you’re willing to lose. Cryptocurrencies, like stocks, are highly volatile, and the value of tokens can collapse in a matter of hours due to supply and demand pressures.
Other variables that can cause the value of cryptocurrencies to rise include government regulations, media frenzy, and investor sentiments. Remember, this is a high-risk investment, and there’s always the potential for you to lose everything.
Use a Reputable Exchange
When buying Bitcoin or any other cryptocurrency, you must use a reputable exchange. There are many scams in the cryptocurrency world, so be sure to research before selecting an exchange.
With that stated, if you still want in on the game, here’s how to get your hands on some Bitcoin.
How to Buy Bitcoin in 4 Simple Ways
Here’s a guide on how to buy Bitcoin in four simple ways.
1. Choose the Right Crypto Exchange
You’ll need a crypto exchange to acquire Bitcoin or any other cryptocurrency. This is where buyers and sellers meet to trade money for coins.
There are hundreds of exchanges to choose from, but as a beginner, you’ll want to go with one that offers a good combination of ease of use, minimal fees, and excellent security.
If you don’t already have a crypto exchange in mind, check out the top selections, including Coinbase, Gemini, and Binance.
Check if your exchange platform has a Bitcoin wallet. If it doesn’t, you’ll need to create your own. You can also buy crypto on a platform like Robinhood, Paypal, or Venmo, though buying crypto this way means you won’t be able to withdraw or move your coins to another platform. You’ll need to sell your crypto and then repurchase it on a different exchange if you want to keep it in a separate wallet.
- Select a Payment Method
Before you can start investing in Bitcoin, you must first fund your account with funds from an exchange. Depending on the exchange, you can finance your account with bank transfers from a checking or savings account, wire transfers, PayPal, a cryptocurrency wallet, or even a credit or debit card.
However, keep in mind that specific funding methods may incur additional transaction fees. When you make an electronic transfer from a bank account, Coinbase doesn’t charge a fee. It does, however, charge $10 for wire transfers and 2.5 percent for PayPal transactions.
- Make a Purchase
You can place your first order to acquire Bitcoin onceyou finance your account. Depending on the platform you’re using, you might be able to buy it simply by hitting a button, or you might have to type in Bitcoin’s ticker symbol (BTC). After that, you’ll need to enter the amount you want to invest.
You will own a fraction of a Bitcoin once the transaction is complete. This is because purchasing a single Bitcoin today necessitates a sizable initial commitment. To buy a Bitcoin at the current price of $38,000, you’d need to invest $38,000. If you put in less money, say $1,000, you’ll obtain a percentage of a Bitcoin, in this case, 0.026 percent.
- Choose a Secure Storage Option
Your crypto exchange most likely includes an integrated Bitcoin wallet or, at the very least, a favored partner where you may store your Bitcoin safely. On the other hand, some users are wary about leaving their crypto connected to the internet, where it could be taken more easily by hackers.
Most large exchanges have private insurance in place to reimburse customers in a breach, and they’re gradually holding the majority of user assets in offline “cold” storage. You can store your Bitcoin in an online or offline Bitcoin wallet of your choice if you want the highest level of protection. However, keep in mind that you may be charged a modest withdrawal fee if you withdraw cryptocurrency from an exchange.
Investing in a popular cryptocurrency can be tempting significantly when its price increases. However, even though it has the potential to be a profitable investment, you should proceed with caution: It’s a very volatile investment that experts advise against putting a large portion of your money into.