Purchasing Bitcoin has never been more straightforward. You sign up for an exchange, click “buy,” and you’re a legitimate crypto investor. However, investing entails more than simply purchasing your preferred cryptocurrency. As a seasoned investor, you’ve probably got many questions about cryptocurrency, such as what you should know before investing, how to purchase it, and how to securely store (and protect) your assets.
Bitcoin Is Still a High-Risk, Volatile Investment
Cryptocurrency prices are highly volatile. Bitcoin is an excellent example, as it is not unusual for it to drop 30% one week and then shoot through the roof to record highs the next.
Bitcoin may be performing exceptionally well compared to when it first gained prominence, but the rates of return are neither consistent nor guaranteed. Anyone who purchased BTC in late 2017 and sold it before October 2020 lost their money. Anyone who bought Bitcoin in late 2021 and sold it in June 2021 lost a lot of money.
Experts recommend starting with a small portion of your portfolio if you plan to invest in cryptocurrency.
The FDIC Does Not Insure Cryptocurrency Holdings
Your checking or savings accounts will be covered by insurance for up to $250,000 if your bank fails. However, if your Bitcoin goes bankrupt, is hacked or closes down without warning, you’re out of luck. It would be best to prepare for this risk when investing in cryptocurrency.
Is Cryptocurrency Taxable?
Gains from cryptocurrency are taxable. In 2014, the IRS decided to tax crypto gains as capital gains, and since then, it has issued at least 24,000 warnings to the crypto community. Perhaps you are in a region where taxation does not apply, but we can’t tell how long you have until your government starts taxation. Invest knowing that you might have to pay taxes for your crypto gains.
How to Buy Bitcoin
One of the things you need to do before buying Bitcoin is to choose an exchange. The crypto exchange is where you will buy, sell and store your Bitcoins. Luckily Bitcoin has been around for a long time, and there are numerous exchanges to choose your favorite. Bitcoin Buyer App has been recommended as it is a trading app that is explicitly easy to use and safeguards your trade.
After getting an exchange and being sure, you want to invest in Bitcoin, determine the amount you wish to hold in your portfolio. We advise beginner investors to begin small in their Bitcoin investment, considering the volatility of crypto and how much they are ready to lose.
Store your Private Keys in a Wallet
Once you’ve purchased some cryptocurrency, the next decision is where to keep your private keys. In short, hot and cold wallets exist online and offline, respectively. You require a hot wallet to access and trade your cryptocurrency easily, and security measures to protect it are better than ever.
However, hackers are becoming more daring, which is why some crypto traders, particularly long-term holders, should save their private keys to a cold wallet, such as a hard drive or USB, in a safe.
A hot wallet will suffice for now if you’re indulging in small amounts and believe you’ll continue to buy a little on the regular. As a storage option, you can also consider cryptocurrency savings accounts that pay you interest on your crypto.
Maintain Your Investment
The final step is maintaining your crypto investment. Although you plan to buy and hold, ensure you keep checking on your investment to see how well it is doing. Monitor its progress and keep scrutinizing your chosen exchange to avoid losing your investment in case of irregularities.
