When figuring out the best way to invest money to make money, many people turn to Bitcoin as a popular form of cryptocurrency to make money from. Whether just beginning Bitcoin investing, or continuing a long career in it, what are the best precautions to take to make sure no large sums of money are lost? After doing extensive research, here are the best ways to take care of a personal Bitcoin account, and how to invest wisely in order to avoid future financial disasters!
With investing and cryptocurrency, it’s always possible to lose large amounts of money. All money in a Bitcoin account can be lost in poor investing choices, or from economic changes, but there are ways to avoid it. With smart investing and study, most people can use Bitcoin without losing much!
What are the most common and widespread ways that Bitcoin users lose big amounts of money at a time? How can an investor make sure they are using Bitcoin and cryptocurrency wisely? Let’s go over what to be aware of, what to avoid, and what to do in order to invest with Bitcoin wisely and safely!
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Investing in Bitcoin
First off, for those new to investing in Bitcoin, it can be a good place to start by covering how Bitcoin is different from cryptocurrency. The main goal of Bitcoin is to increase and simplify the speed of transactions without many government restrictions or limits. On the other hand, Cryptocurrency aims to offer low-cost, safe, and secure transactions to those interested. Bitcoin is something that is limited to trading by using it as a currency itself, while Cryptocurrencies are often used for trading as well. Bitcoin is the most popular of all forms of bitcoin, and Cryptocurrencies have increased in variation, but their share is still less than Bitcoin. Finally, Bitcoin focuses on decreasing the cost of influencers and reducing transaction time while being less flexible, and Crypto’s purpose is to exchange various goods and services in secure environments with minimal middleman interference and trouble.
Although similar in their broad strokes, there are obviously differences and slight pros and cons between various Bitcoin forms and types of Cryptocurrency. They both are worth further researching and looking into, should a shopper want to stick with one form of Crypto or one form of Bitcoin.
When investing in Bitcoin specifically, people start with where to buy it. Bitcoin can be purchased through stockbrokers, through exchanges, and through other owners too! No matter where Bitcoin is bought from, it is wise to think through and know the risks of investing in digital assets like these. Most people buy Bitcoin first when they are dipping their toes into trying out Cryptocurrency. At first, Bitcoin started at a low price, before rising to $68,000 in November of 2021, and then crashing to a low of $17,000 in December 2022. This upheaval was called the Crypto Crash and is the reason why so many people are wary of or even lost large sums of money in Bitcoin.
All Cryptocurrencies, including Bitcoin, are speculative and prey to a lot more volatility and change than other common or older investments, like bonds, stocks, and mutual funds. This simply means that people should really do their research before jumping into it with a lot on the line!
Dangers of Bitcoin
It can be as easy, or as hard to gain money from Bitcoin as investors want to make it. One of the top reasons why people lost money in Bitcoin can be because of short-term mindsets. These people may hear about the price of Crypto or Bitcoin rising dramatically, and hearing about the sudden boom, they’ll quickly buy into Bitcoin or Crypto. This is the wrong way to go about investing, because buying when the stock is high priced, and then selling low will not bring in as much money as it cost to buy the Bitcoin in the first place. Remember to go by the golden rule of buy low, and sell high! When no one is excited about an asset or stock when no news is talking about it, this is usually the best time to buy, and then sell it when it raises in value and when it is being excitedly talked about and put on the news.
The second downfall of some investors can be impatience. Once Crypto coins and currencies like Bitcoin are purchased and added to a portfolio, the owner does need to patiently ride out the small rises and falls of a stock’s values. A term for this is “Panic Selling,” in which people see the stock value go down, so they sell their shares in a panic before the value can decrease. What they really need to do is wait until the value of the Crypto or stocks rises high, so that they can sell their stocks for a higher price and make a gain off of their initial, hopefully lower-priced, investment.
Some people will also be trading Bitcoin when they don’t know how to do so. Trading Cryptocurrency is like any profession or hobby in the world, a person needs to learn about its techniques and gain the skills required personally before they can get good and become an expert in it. To learn how to trade Bitcoin the smart way, people should invest in themselves by learning the ins and outs through trusted resources like CryptoUniversity.com, Crypto books, and Crypto news articles and websites.
Leverage trading can also prove to be a dangerous tactic with Bitcoin. Leverage is when debt or borrowed capital from the investor’s own business is used in investing. Leverage trading, also called margin trading, is a big reason why Bitcoin trading constantly proves to be so volatile and unpredictable. It’s true, high leverage yields high returns, but the same is true for high losses.
The Most Popular Bitcoin Exchange Platforms
There are many paths to travel on the way to buying Bitcoin. There are popular and often-used Cryptocurrency exchanges to use, like Coinbase. There are also traditional brokers like Robinhood and others that can get newbies started with Bitcoin. Some of the top-rated Bitcoin exchangers include Bitbuy.ca, Bybit.com, Coinjar, OKEx, and Xcoins, among many others. What matters is finding a place to start buying Bitcoin that is comfortable and fits personal needs in the best way.
When storing cryptocurrency, there are also a few options to choose from. Bitcoin can be kept in an online account, in a hot wallet, or in a cold wallet. A hot wallet is a Cryptocurrency wallet that is constantly connected to the internet and the Cryptocurrency network itself. They are used to send and receive incoming Cryptocurrency and they let users see how many tokens they have in their account to use.
Cold wallets are one of the safest ways to secure digital currency since they store private keys offline. This means that cold wallet-style storage can be apps that do not connect to the internet, or a device similar to a USB thumb drive that stores the keys. In order to use Cryptocurrency in cold wallets, the digital currency has to be transferred to a hot wallet of some sort before it can be put to use.
Once a cold wallet and hot wallet are picked out, then a Crypto investor has to decide how much they want to invest in Bitcoin. This amount heavily depends on the bank account and income of the investor, and what they are able to sink into Bitcoin while still living off other funds. From there, manage the investment into Bitcoin closely by making a long-term plan for the assets invested. These crucial, ongoing steps will require studying Cryptocurrency and Bitcoin knowledge.
It is also always imperative to know what Cryptocurrency exchanges to use. There are a few varied ways to buy Cryptocurrencies, like through exchanges or through traditional brokers. When purchasing Bitcoin through Cryptocurrency exchanges, it’s good to know that these exchanges may offer dozens of different Cryptocurrency options, but some will only offer Bitcoin and a couple of other alternate options. Exchanges often carry unique consumer protections and fees. Since they’re all so unique, study and compare each exchange platform, such as Gemini, Coinbase, Crypto.com, and Kraken, all of which sell Bitcoin.
If traditional stockbrokers seem to be the preferred choice, there are great options in this field as well for brokers. One of the first investment stockbrokers for Bitcoin was Robinhood, which continues to be a popular broker today. Other great brokers to use are WeBull, Firstrade, TradeStation, and SoFi Active Investing, among others.
Other Bitcoin Tips and Tricks
If the previous options don’t seem like the best fit, there are still other convenient ways to invest in and buy Bitcoin and other Cryptocurrencies! These include Bitcoin ATMs, which work just like regular ATMs, except only the owner of the account can use them to buy and sell their Bitcoin. There are also trusts and exchange-traded funds and peer-to-peer money transfer apps.
Another great tool in the toolbox of Crypto trading is the Stop Limit Order feature. This is a feature that is commonly used to control losses when trading in Bitcoin! The stop limit order executes itself when a specific price or better is reached by an investor’s stocks and investments. Once the beforehand set price, or higher, is reached, then the stop limit order turns into a limit order. This means that the limited order is now able to buy or sell at a limited price or better. This is a great way to make sure there are some automated features integrated into a Crypto portfolio, for when the investor themselves is away from monitoring the rising and falling of their personal investments.
Resources to Use to Learn More about Crypto
As mentioned above, websites and online courses like CryptoUniversity.com can be one of the best ways to avoid financial ruin through Bitcoin trading and investing. There are dozens, if not hundreds of online sites and courses dedicated to teaching people how to become savvy traders and investors.
To cover free sources of Bitcoin learning first, there is luckily no shortage of educational resources for those investors who are on a tight budget! There are dozens if not hundreds of useful Youtube channels that specialize in teaching about the ins and outs of Bitcoin. Then there is OKEx Academy, an exchange platform that offers very advanced and high-level Cryptocurrency trading lessons to newbies! There are also providers like TraderCobb.com and Udemy.com which offer free ways to study Crypto trading. Some paid courses that may fit personal needs better are BlockchainCouncil.org, TheChartGuys.com, Skill Incubator, Forex Academy, Investopedia Academy, and LearnCrypto.io!
Final Takeaways
In final summary form, yes, some people can lose most or even all of their money in Bitcoin if they allow it to happen and invest poorly. This doesn’t mean that great gains can be had off of Bitcoin, and great returns will continue to come in through investment forms like this. The key is making sure to not be easily persuaded by poor information sources, like social media influencers or spur-of-the-moment news updates. Success in Bitcoin has to come from personal learning, careful trial-and-error choices, and planned investments. It will never serve an investor well if they plunge in with no specific trading knowledge or strategy to help guide themselves and their hard-earned money!
To avoid all the dangers, like buying high and selling low, or impatiently selling Bitcoin and Crypto in a “panic selling” frenzy, make sure to learn from experts and certified sources. It always helps to buy low and sell high, patiently wait until the time is right and sell when it feels like the highest possible gain has reasonably been reached. There is even a term called Copy Trading, so named since it is when new traders use websites that allow the investor to copy the trades of registered and experienced traders. This does not mean that copy trading is foolproof or free from mistakes or losses, but it does mean more security in investing than some other forms of Bitcoin buying and selling!
