What You Need to Know Before Investing in Bitcoin in 2020
Online shopping, money transfers, setting up a business, and investments have become much easier thanks to the digitization of information over the past few decades. Cryptocurrencies are also gaining ground and Bitcoin is gaining a reputation as the leading light in the infant market. If you have been thinking of investing in Bitcoin, there is no denying that it’s an excellent idea, but there are things you need to know before launching yourself into the trade. Here are some of them:
1. Bitcoin is decentralized
Decentralized currency isn’t regulated by the government or any third party. This is both a positive and negative thing to investors and vendors. On the positive side, decentralization gives you the authority to spend, buy, and sell Bitcoin without an institution standing in the middle and charging you for it. On the flip side, Bitcoin sellers and buyers are more exposed to fraudsters and cybercriminals.
2. Bitcoin value is highly unpredictable
It is important to familiarize yourself with tips on when and how to buy Bitcoin, as the currency is highly volatile. That’s not to say Bitcoin investment is not profitable; it may earn you a fortune if you wake up on the right side of the bed, but if anything trumps its lucrativeness, it has to be its risk level. The best thing to do is to ensure you invest what you can lose, and increase your investment as you make headway and get the hang of the market.
3. Bitcoin is not the only cryptocurrency
Most cryptocurrency greenhorns go straight to buying Bitcoin due to its popularity. While Bitcoin is currently the strongest crypto in the world, there are several other options that need exploring. Try to have a nodding acquaintance with each of them, and only invest in what you think promises the highest returns and the lowest risk. If possible, you can invest in more than one cryptocurrency, and narrow down your list of options over time.
4. Surges are not the norm
Many people dip their toes into cryptocurrency investment when they hear of a sudden newsworthy surge in value. In 2017, Bitcoin almost crossed the $20,000 mark, sparking a dramatic increase in demand and grabbing the attention of even the least versed. What followed was an equally dramatic fall in value, understandably because the currency is bound by the law of demand and supply. Such events are often few and far between, so you must see beyond them when making investments.
5. Bitcoin mining has changed over the years
Bitcoin mining is one of the oldest ways of obtaining Bitcoin. It was a pretty lucrative technique at the start, but things are different now. Only large scale miners with sophisticated mining equipment make any substantial profits out of it. Unless you have these tools, the better idea is to buy Bitcoin using real money.
Bitcoin investment is a multifaceted practice that works in a multitude of ways. You must choose what suits your budget and knowledge. Take the time to familiarize yourself with the cryptocurrency, its alternatives, and the Blockchain technology before making any investment.