Cryptocurrency is a hot topic these days. But before you leap into looking into how to buy Bitcoin, there are a few things that you need to know. It can be all too easy to wind up confused and uncertain of just what you are getting into.
As popular (and volatile) as Bitcoin is, it can be all too easy to see the dramatic rise of the cryptocurrency and want to get into it. But before you go investing all that you have in Bitcoin, there are a few things that you should know first.
- You Can Buy Partial Coins
The first thing that you need to know before you try to purchase Bitcoin is that you don’t actually have to buy a whole Bitcoin. The simple fact of the matter is that there are a finite number of Bitcoins out there and that they are highly divisible. As a matter of fact, you can divide a single Bitcoin down to eight decimal places.
You can buy Bitcoin in increments of one hundred-millionth, which makes buying the cryptocurrency highly affordable no matter who you are. Obviously, the more Bitcoins that you own, the more valuable the investment is. But if you thought that you could not get into buying Bitcoin because you couldn’t afford it, you can buy a piece of Bitcoin for as little as $5 to $10, making it available to just about anyone.
- Protecting Your Passwords Is Vital
Security is important no matter where you are in the digital space. But before you buy Bitcoin, you need to know that the passwords for Bitcoin are different from something such as your digital banking password. The biggest difference being that your favourite exchange has what is known as “cold storage,” which means that it isn’t actively connected to the Internet.
Another thing to keep in mind is that your wallet can be locked out without your password. If you get the password wrong so many times, the wallet stays locked and you lose the cryptocurrency within the wallet. This is to ensure that no unauthorized user can get to your crypto. But it can make for a major issue if you simply forget your password and wind up losing out on your money.
- There Are Fees
This one may not come as much of a surprise given that there are fees for just about anything under the sun. When it comes to buying Bitcoin, you can’t do so without paying a fee even when you see a place that says they have no transaction fee.
The vast majority of places that sell Bitcoin make a profit from a “spread.” This is the difference in price they sell it for versus the price they bought it for. Generally speaking, this is in the 1% to 2% range. Depending on the platform, there could also be a transaction fee on top of whatever the spread is.
Fees are a natural part of life and it shouldn’t be something that scares you away from buying cryptocurrency. Just be aware of them so that they don’t take you by surprise later on down the line.
- Know Your Storage Options
Another important thing to know about buying not just Bitcoin but cryptocurrency, in general, is that there are several storage options. Sure, you could opt to keep your Bitcoin in the same place that you bought it but that is just one of many.
You can buy Bitcoin (and other cryptocurrencies) on a crypto trading platform and you can keep them there for easier access when it comes to buying, selling, and trading. But there are inherent security risks when it comes to keeping your crypto there.
If you don’t want to leave your security in the hands of an exchange, you can get a crypto wallet instead. This is basically a separate drive that you keep on your person. It is only accessible online when you are using it, drastically cutting down on the potential risk that you face.
- Know the Difference Between Trading and Investing
When you trade anything, it means that you think the value will increase in short order and you want to make a quick profit. But if you are investing in something such as Bitcoin, then you typically want to hold onto it for a long time to come.
When it comes to Bitcoin, it can be difficult to see the shifting in prices and not want to act. But it is important to have a long-term approach with Bitcoin. You can trade cryptocurrency, but you should be holding Bitcoin for the long haul. It has shown exponential growth over the long-term and the last thing you want is to trade or sell early because you panicked.
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