Everywhere on social media, new and young investors are proving that cryptocurrency is the way of the future. Financial advisors are scrambling to understand this new wave of becoming wealthy and planning for the future. While it can be tempting to place hundreds of dollars into something because someone on the Internet claims to have gotten rich from it, the tips below can help those interested in learning how to buy Bitcoin get started on the right track.
1. Do the Necessary Research
This may go without saying, but everyone looking to start with buying cryptocurrency or Bitcoin needs to consult with experts when looking for advice. Someone on a social media platform or a friend is not going to be well versed enough in the financial market to give someone new to investing all the information they need to make a sound decision.
2. Learn the Language Associated with Bitcoin
If someone is learning how to buy Bitcoin, they need to ensure that they understand all of the vocabulary associated with the process of buying, trading, selling, and even owning Bitcoin. Some of the most frequently used terms are defined as follows.
- Wallet: A cryptocurrency wallet is a program or physical piece of hardware that is used to store the passwords or codes used to access an individual’s cryptocurrency funds. While a crypto wallet doesn’t store the funds itself, a wallet is what allows a user to adjust the balance of the currency through appropriate interaction with the blockchain.
- Recovery Seed: A recovery seed is a generated series of 12, 18, or 24 words, following a particular order, which acts as a recovery password for your crypto wallet. This string of words contains all of the information needed for you to recover your cryptocurrency balance in case your wallet is lost or stolen, or you get a new device. Potential investors must be prepared to keep this string safe and offline, as anyone can steal their crypto balance with it.
- Blockchain: Blockchain refers to the decentralized system of recording financial or other information. This system acts similar to multitudes of individuals storing identical transaction ledgers. When a user adds funds to their wallet, spends their cryptocurrency, or otherwise modifies their balance, all of the ledgers are updated simultaneously. The biggest benefit of Blockchain systems is that they are hard to hack or otherwise illegally modify.
3. Know How Much Bitcoin Is Worth
Understanding the value of Bitcoin is another important factor for any individual wishing to invest in Bitcoin. Bitcoin (BTC) is the original cryptocurrency. Started in 2009 by someone using the pseudonym Satoshi Nakamoto, Bitcoin currently dominates the cryptocurrency market with a total market cap of over 1 trillion dollars. As of December 1st, each Bitcoin is currently worth over 57 thousand dollars. While this value can fluctuate drastically on an hourly basis, the long-lasting overall growth of Bitcoin’s value makes it the king of cryptocurrencies.
4. Learn to Keep Information Secure
Security is the founding principle of the blockchain, and it is one of the most important tools in an investor’s arsenal. Whether it’s phishing scams, brute-force hackers, or malware, the Internet can be a dangerous place. Security must be a top priority for an investor’s wallet, especially in the case of crypto.
While the blockchain that Bitcoin employs makes it easier to invest with confidence, passwords and identifying information connected to said wallet needs to be protected. Passwords should never be given out or shared, and an individual needs to be aware of what passwords are saved or auto-stored, especially if someone else has access to the devices they use to conduct business.
In a similar fashion, a user’s recovery seed should be kept private, secure and safe from damage by water, fading or other wear and tear, as the recovery seed is necessary to recover a stolen account or crypto balance.
5. Be Ready for a Long-Term Investment
While cryptocurrencies have the potential to provide an investor with an excess of wealth, investors must be ready for a long journey. Short selling any kind of digital asset can be dangerous and can lead to financial ruin, but those savvy enough to remain patient as the markets continue to grow and stabilize can reap truly large rewards for their efforts.
This is not to say that selling quickly is bad, but cryptocurrencies tend to fluctuate on an hourly basis, and these fluctuations can be drastic. Understanding market trends is a critical component to smart investing, and patience is key in gaining that understanding.