Ultimate Guide to Bitcoin Investing: The Easy Way
You might wonder if there exists any other form of money, other than fiat or commodity money, for that matter. Definitions of Money have evolved over the decades. It has taken various forms such as paper currency, plastic money ( credit/ debit cards), commodity money, and a few others in today's time. If we tell you there is something such as virtual money, won't it be fantastic? Well, yes, bitcoin is one such form of currency.
Bitcoin is a virtual currency or cryptocurrency in a computer file stored in a digital wallet. A digital wallet refers to a phone or computer. People can easily send and receive bitcoin from each other through this digital wallet. This transaction records in a public list, which is known as a blockchain.
It might not seem very easy now but hold on because we will take you on a tour on bitcoin and investment in bitcoin. After that, it's all at your ease. So, for now, don't lose your concentration and stay tuned.
In this article, we will start from the very basics by introducing what bitcoin is and how bitcoin functioning works, and by the end, you will know how to start investing in bitcoin.
The cryptocurrency market is gaining popularity nowadays. No doubt it has remained under shade for years, but now cryptocurrency and blockchain phenomenon are the hottest topics on the internet. Saying that It has passed the test of time and has proved that the concept of cryptocurrency is no fad will be maximum appropriate at this point. It is as much in reality as any other currency.
Bitcoin is the first cryptocurrency brought into existence. It was developed by a person or group named Satoshi Nakamoto in 2009. They gave figures to the blockchain phenomenon. They started the first block aiming for the financial revolution that had the potential to change the world. The purpose of bitcoin was to bring economic liberality and improve transparency in the system.
The functionality of bitcoin is not too tricky. Since your privacy is essential, bitcoin transfer requires you to create a unique address. It need not have to be your real name. You can even make your address public. The system of bitcoin is mostly or entirely dependent on blockchain. For simplicity, a blockchain is a form of public transaction list where all your transactions made using bitcoin are recorded and stored in blocks and are visible.
We know the new young currency in the market, turning into a hot debate discussion worldwide. However, if someone tells you that there is an opportunity to invest in a bitcoin coin, you will not be amazed? Of Course, yes, you will be. Who does not like multiple digits flashing ones that passbook. ? Everyone does have a chance to invest money at a place with such a hefty return is delighting, isn't it.
So well before you jump upon the decision about investing in bitcoin, you should know specific essential preparation tips such that the decision proves to be valid. It would help if you made plenty of considerations while planning to land in the field of the crypto market. You should very well understand market characteristics and key drivers before you enter the market.
It is essential to decide the source of funds before investing. Do not fund your portfolio with debt. Therefore the best way to fund a cryptocurrency exchange account is with debit or credit card or debit cards.
You will have to decide first which cryptocurrency you want to trade. Now for the chosen cryptocurrency, find out the exchange with enormous trading volumes.
Now you might know that not all exchange accepts deposit if fiat money. A significant chunk receiver would not allow warranties from bitcoin.
Research is the very first and very crucial step that you should perform if planning to start investing in bitcoin. You will have to seek an exchange system that admits deposits in the form of bitcoin.
Moreover, considering an exchange option with a diverse range of cryptocurrency and bitcoin options is also worth spending time on. You can try the Bitcoin Prime app for these.
Choice of the right crypto wallet is the next stepping stone on starting to invest in bitcoin. You will undoubtedly require a wallet to store your cryptocurrency. So, before you begin investing, make sure that you have one. Here you have to check for wallet compatibility as well. Some of the cryptocurrency wallets are:
- Keep key wallet
- Coinbase wallet
- Guarda wallet
Get a trading plan ready. Before choosing your exchange medium or cryptocurrency Wallet to store your transaction, you will not have a proper trading strategy to start investing in bitcoin. Your trading strategy should incorporate the following points:
- Selecting appropriate cryptocurrency
- Noting traders duration
- Identification of exchanges that offer partial investment of crypto
- Use risk management tools.
There are some other points you should remember before starting to trade in the crypto market. First, always peg your expectations to reality. It happens in the crypto market that you lose even more than what you gain, so learn to accept the loss and don't be greedy. Second, perform your research, keep a watch on news wires, review the technical analysis for the cryptocurrency you wish to go ahead with. Third, invest only that much of what you can afford to lose.
It is a very crucial tip you should remember before putting your money and lastly, never debt your investment. Cryptocurrency has uncertainty attached to it, so you can even lose all of what you have. So make sure you never take a loan to finance your investment.
Investing in cryptocurrency is the new cool, but it is not as easy as it might sound. Considering the strategies, research, exchange, and wallet, you are all armed to enter the crypto market. But before that, you should know the 80/20 rule of strategy. We know that the crypto market is highly volatile and hence comes associated risk along with it. There will be a rise and fall in the smaller coin.
However, it recommends having a combination of an 80/20 blend of the large-cap to mid-cap to small-cap. It would give you the chance to gain from market fluctuations and, in the meanwhile getting to hold the most stable coins. Bitcoin too witnesses large swings hence saying stable coin will be a period team for the crypto market.
Focusing on the blend of coins that you invest in matters at large and the number of coins you hold a little. Your investment strategy determines your returns; always remember to have a well-blended portfolio such you can utilize the opportunity of gains.
Now that you know your investment strategy, you should research before you enter the crypto market. We have gathered a range of crypto that fits different components of your profile.
Low cap - these types usually have low trending volume, meaning they have less liquidity. These should have a lower component in your portfolio. It has crypto with a market cap of less than 100 million.
Mid-cap-based on 24-hour volume, these crypto types have a market cap ranging from 100 million to 1 billion. Some of the mid-cap cryptos are cash, vechain, real USD, and many others.
Large-cap - tezos, ripple, bitcoin, etc., have been considered to include large-cap portfolios.
Please make sure you always remember our recommendation to have a blend of crypto in your portfolio to avoid risk and maintain stability.
Now that you know a cryptocurrency, what are cryptography components, and how to start investing in one? You must have also learned how to build an optimal trading strategy, opening a trading account, having a crypto wallet, and exchange medium.
So now it's time you run your research and take your knowledge to enter the field of cryptocurrency trading and investment. Entering a crypto market has no perfect time; besides entering at all-time high ranges, there is no such concrete rule for staying back to any sell-off to slim out. Remember to maintain your trading strategy and modify it according to your risk parameters.