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Investing in bitcoin practical tips

  • March 3, 2021

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The interest in the crypto market does not seem to dwindle these days. Here are some great tips to follow, especially if you are just getting started with BTC investing.


Understanding the Bitcoin blockchain


The blockchain emerged in 2008 with Bitcoin as the first cryptocurrency. This new technology gives the possibility of transferring data online in a highly secured and transparent environment.

Thus, Internet users can make money transactions and send money over the Internet independently, without third-party intervention (banks), and in a secure manner.

Since the advent of Bitcoin, many cryptocurrencies have emerged. Most are just simple copies of Bitcoin and are unlikely to have a great future. However, some have created real innovations, so it's important to be familiar with the top and best cryptocurrencies in the rankings.


Understand the risks of Bitcoin investments


The high volatility of the cryptocurrencies' prices often results in large fluctuations. While it can lead to big wins, it can also lead to big losses.


It is therefore recommended to invest only a small part of the capital. Some experts recommend that institutional (professional) investors invest only 2 to 5% of their capital in this new market. Bitcoin and other assets are also seen to diversify investments because their prices are not correlated to any other asset for the moment. 


However, constant concern over bitcoin crash is present. But as we could see so far, many people got rich thanks to their lack of concerns and willingness to take risks.


Define your investment strategy


There are two main strategies. The first one is long-term bitcoin investing, where you buy currencies for a return over time. It is about investing in one or more crypto-currencies of your choice to make a profit over several months or even years.


And very short-term Bitcoin investing: traders who practice pure trading, that is, doing several dozen or even hundreds of crypto transactions daily. This second strategy requires a lot more involvement and technique.


Focus on new crypto-currencies projects


It is important that the currency has a utility and is not yet another copy of Bitcoin. For example, Ethereum makes it possible to launch a fundraiser in cryptocurrencies called ICO.


Avoid beginner's mistakes in trading


The high price of a virtual currency does not necessarily mean a bigger, more profitable investment. We must also take into account the daily transaction volume and especially the market capitalization of the currency.


Also, do not invest in cryptocurrency because someone advised you to do so or because you have read that it is a good investment.


Suppose you feel ready to invest in this sector. In that case, you can choose from the best known: Bitcoin, Ethereum, Ripple, Bitcoin Cash, IOTA, Cardano, Stellar, Dash, NEO, EOS, Litecoin, and Ethereum Classic.


To get other less popular currencies you will need to trade once you own Bitcoin.


Secure your Bitcoins and cryptos


Once your crypto-currencies are in your pocket, you can decide to leave them on online services or keep them in a crypto or Bitcoin wallet outside of the internet network and avoid the potential risks of the hack.


Such a storage device is called a hardware wallet. It is a touchable wallet that looks a lot like a USB stick. For our part, knowing that an anti-theft product of this type costs around € 100, we recommend its use when your investments exceed € 500/1000.


Diversify your crypto investments, but not too much


Many newbie investors decide to acquire dozens of different cryptocurrencies to spread the risk. However, we now know that many projects are doomed to failure and that it is better to bet on a few safe stocks like Bitcoin.


If you own too many cryptocurrencies, you risk getting lost in your investments and making potential mistakes. As mentioned earlier, investigate and select a few assets that you think bring real added value.