Investing in Bitcoin (or investing in cryptocurrencies in general) is perceived as a way to ensure significant gains even starting from a small initial capital. But not all that glitters is gold. Due to their volatility, these assets can cause large losses if you are not prepared enough for them.
Bitcoin, Ethereum or Blockchain are technical words that are used within the crypto ecosystem that, little by little, are becoming more and more familiar, but do we know what they are and how they work?
Faced with this doubt, it is essential to know, at least approximately, what they are and how to interact with them in order to be able to start off on the right foot and be able to improve, a little at a time, our investment in cryptocurrencies (without drowning in the attempt). To do this, we must keep in mind these useful tips to start investing in cryptocurrencies.
Don’t invest more than you can afford to lose
This is a valid maxim for any type of investment and we should always keep them in mind, because it will allow us to begin to familiarize ourselves with the emotions that the investment causes, with less pressure, and will also allow us to sleep better at night. This, however, does not mean that it is illegal, but it is not supported by any government agency that protects the investor (although a government task force for regulation has already been established).
Study, read, get informed
Today, there are countless books, YouTube channels, courses and podcasts that can be of great help in understanding and gaining a good knowledge base on the industry before investing in cryptocurrencies. However, you need to know how to choose, and it can be difficult to know who is providing quality information. A good start would be to read “The Bitcoin Standard: The Decentralized Alternative to Central Banking”, by Saifedean Ammous, as it gives us a broad view of what Bitcoin is and the crypto ecosystem.
Once you know where you are and if you want to buy and sell cryptocurrencies, try studying some technical analysis to understand the charts. Japanese candlesticks, trend lines or supports and resistances will be your new allies when deciding when to enter and exit the market. It’s also suggested to join into some special platforms like Bitcoin Evolution.
On YouTube there are countless free videos where you can train in no time and get a general idea of technical analysis. As soon as you know enough, the fastest and easiest thing to do is to buy and accumulate Bitcoin, as its bullish projection makes it a very attractive investment asset.
Choose well where you put your money
You have to be careful of platforms that promise you a very high return on profits in a short time, they are scams and you have to stay away from them. The safest option is to operate on world famous exchanges such as Binance, Kraken or Coinbase, although you have to keep in mind that your keys will not be yours, they will have them until you pick them up.
You can also buy cryptocurrencies via wallets, but if your idea is to buy to keep bitcoins (accumulate cryptocurrencies and not make purchases) the most advisable thing is to use cold wallets, so called because they have no internet connection and cannot be targeted by hackers. The best known today are Ledger, Trezor or Safepal.
Try to think long term, because patience pays off. It is useless to look at the price every half hour, keep in mind that the volatility of this market is high and that having a long-term view keeps us steady and with mental clarity to resist sudden price drops.
Diversify your portfolio
Today there are more than 14,000 cryptocurrencies, but Bitcoin is the most important, the one with the largest capitalization and the only truly decentralized. All the rest are alternative projects (hence the altcoin name) that do not have the very solid and secure foundations of Bitcoin, although they can give stratospheric benefits.
Think safety first instead of making money
For an investor, the most important thing is not to lose the capital, since in addition to being your working tool, it must be considered that, emotionally, a total loss of funds can permanently remove us from the world of investments. If you decide to trade cryptocurrencies, prioritize strict risk management before seeking benefits.
We must take into account from the beginning that if we make money with cryptocurrencies we will have to pay taxes, as happens for example with stocks. Keep a record that is as reliable as possible, which keeps track of everything, starting with the first purchase and any exchanges you will make in the future.
As mentioned, cryptocurrency regulation is still being defined in our country and it is not known exactly how taxation will take place. Get healthy, talk to a tax expert and save as much information as you can.