According to Warren Buffet, you should never invest in something that you don’t understand. The saying is true for cryptocurrency, especially bitcoin. You risk losing your hard-earned money when you decide to invest in something that you don’t understand at all. You should only invest in cryptocurrency once you’re fully aware of the risks. You learn to take calculated risks so that you’re only losing what you can afford. Here are some of the things you should know before you invest in bitcoin.
Research
This point can’t be emphasized enough. Thorough research is needed before you can decide to invest in Bitcoin. You should spend at least a week trying to understand how cryptocurrencies work. The whitepaper on bitcoin is available online and you can easily access it. You get to understand the underlying philosophy and what bitcoin is trying to achieve. You should also take your time to understand how blockchain works and the infrastructure that has the potential of powering financial systems.
No research will ever be enough. You will need to update the knowledge you have as things are constantly changing and what worked yesterday might not effective tomorrow. The technology, regulations, and everything about bitcoin and cryptocurrency is constantly changing. You need to keep abreast of the changes in order to stay ahead of the curve.
Doing the Dirty Work
You should start with small amounts when trading so that you get your hands dirty. Ideally, you should be looking for a demo account which has all the features of a real account. This will teach how to be disciplined and not to make hasty decisions based on emotions. Once you’re comfortable, you can move to the big and real money. It might take a while before you get around things but that is what learning is all about.
Join Forums
One of the easiest ways to learn about cryptocurrency is to join forums and groups. You will find people with the same zest and passion who are always willing to share information. It will be rare to find such information elsewhere on the internet. Keeping up to date in the world of crypto can be overwhelming. You should always keep up to date with the market and future trading opportunities.
There are dozens of websites and apps to choose from and you might not know where to get your news and information. Make sure you’re not joining pump and dump groups as you can get burnt really quickly. Luck might be on your side one or two times but you risk losing everything because of greed.
Track Your Funds
You should learn how to track the funds. You might have to create accounts on different websites and keep track of different exchanges on different platforms. This will make it hard to track all the funds. Keeping track of all the assets across the different exchanges is going to be a difficult task. Automation might not be the best idea as you want to be in control at any given time during the trade.
Taking Precaution
It is better to be safe than to be sorry. You will need to make sure you’re taking the necessary precautions. Cryptocurrency trading is full of scams and hackers and you might fall a victim if you’re not careful know more by visiting online tips on how to prevent these scams. Make sure you’re careful before you enter your keys and passwords on any website. It could be a phishing attempt and you might end up losing everything. It is recommended you have an offline backup just in case something happens.
Only Invest What you can Afford to Lose
This is true for any kind of investment that you’d want to try out. Bitcoin trading is marked with volatility. You stand to gain a lot or lose everything. You shouldn’t invest your life savings on bitcoin especially if you don’t know what you’re doing.
Everybody knows this rule but not a lot of people follow it. You can save yourself the headache by only investing money that you won’t have trouble sleeping when you lose it. Only take calculated risks. Don’t be greedy with the trading no matter how tempting it will get when trading.
To sum it up, investing in bitcoin is something that you should be proud of. Just like any other investment, you stand to gain or lose money. You will be glad you took the plunge when everyone seems to be doubtful. You just have to make sure you’re doing due diligence before making the decision.