Here are the basic steps to success when making your first cryptocurrency investment.
Investing in Bitcoin (BTC) can be quite intimidating if you’re only just learning about its existence now. In fact, taking the plunge and entering the cryptocurrency sphere is a risk for anyone, with or without investment experience. This is because the crypto space has no centralized authority to guide investors. Rumors, hype and horror stories dominate the internet, and separating fact from hearsay can be difficult at times.
Like any other business venture, you should never get your feet wet until you have all the facts straight. Many Bitcoin investors who have taken losses will agree that they didn’t do their own research. Riding on rumors and hearsay is setting yourself up for failure.
However, the cryptocurrency community does come in handy for inquiries. You’re better off talking to people who are already in the crypto space. As a college student, you’ve got all the time and resources to find out all there is to know about investing in Bitcoin. As you find ways to invest, don’t forget to keep an eye on your academic performance, but if it does begin to suffer, online writing services like WriteZillas help ensure you maintain above-average performance.
The crypto space has existed for quite a number of years now, which means that so much has changed since its advent. If you’re just getting wind of Bitcoin now, you need to do your homework. You’ll make better investment choices when you understand what you’re getting yourself into. Even though cryptocurrencies offer a unique investment opportunity, that doesn’t mean they come without risks.
Treading accordingly ensures you miss all the potholes along the way. Dive into Bitcoin’s underlying technology and figure out how the whole system works. A strong grasp of how the blockchain stores secure data will help you understand everything pertaining to Bitcoin investments.
Don’t go through a few articles on the internet and conclude that you know enough about Bitcoin, because knowing it like you know the back of your hand takes time. Find a mentor in the crypto space who is resourceful and trustworthy. Ask as many questions you can, so that by the time you’re investing, you are doing so in a safe environment.
Ignore the hype and dig deeper to find out the truth. Otherwise, if you rely on the success stories as your guide, you’ll end up risking money you cannot afford to lose. Even though Bitcoin opens up an exciting world, the horror stories are proof enough that it can be complex and confusing, as well.
Knowing everything about the crypto world doesn’t mean you should dive into the deep end. Risk is inherent in every investment, and the crypto space is no exception. You need to proceed with caution, because digital currency is still in its early stages of development. There are extremely high risks involved, which means you can either win big or lose everything you have.
Start small and see how it goes before putting in more money. Instead of chasing Bitcoin prices, let the prices come to you. Timing is key when it comes to investing in cryptocurrency. Once you decide on an entry point, don’t change your mind just because someone told you otherwise.
Once the price gets to where you want it to be, don’t use all your capital to buy the coins. Buy in small quantities, investing a little at a time. The right way to invest in Bitcoins is synonymous with summoning a genie — one wrong move and you lose it all.
Broaden your horizons
Ideally, no investor should put all their eggs in one basket. When investing in the crypto space, you need to diversify effectively. This way, a decline in one component can easily be offset by an equal gain in another.
Aside from Bitcoin, you can also invest in Ripple (XRP), Ether, Bitcoin Cash (BCH), and Litecoin (LTC). Investing equally across different components maintains a balance, as all these components are within the crypto space, and if one drops by a given percentage, another is bound to rise by the same amount.
Be aware of all active cryptocurrencies and invest in them with caution. A cryptocurrency can easily fall because they’re like startups within the crypto space. Researching and keeping up with the crypto market is crucial because a currency can crash to the ground overnight.
Keep your coin in wallets
Since you’re investing within a digital space, you should keep an eye out for cybersecurity. Cybercriminals are all over the crypto space. Use exchanges to buy currencies and move your coins back to your wallets as soon as you’re done. Holding your assets in exchanges exposes you to cyberattacks.
Many exchanges have been hacked before, and this trend is not likely to change. Consider investing in cold wallets, which is another name for offline wallets. These are much more secure than hot wallets (online wallets).
Buckle up, it’s going to be a wild ride
There is nothing as volatile as the digital currency market. As a new investor, you need strategies to help you manage price fluctuations. Aside from diversifying, you should buy and hold Bitcoin — this means resisting any temptation to get into short-term bets. In the crypto space, passive investment has a better chance of succeeding than an active one.
Now that you know the best way to go about investing in Bitcoin, you can enter the crypto space armored with information. When it comes to investing, making informed decisions is key.
The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, you should conduct your own research when making a decision.