Bitcoin: Step-By-Step Guide To Investing

Bitcoin: Step-By-Step Guide To Investing
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The world is going digital, no doubt. If you would ask me, we have stepped our game up when it comes to the legal tender. We have eradicated the stress of flat currencies through digital means since the advent of bitcoin, the first cryptocurrency. For those that do not know what bitcoin is, it’s a digital peer-to-peer form of electronic cash with no centralization or regulations by the government. You can send bitcoin to anyone without any restrictions whatsoever and you can exchange it for real money anytime. The value of bitcoin has surged since its first announcement in 2008. Its acceptance everywhere makes one thing distinct: bitcoin is here to stay! Oftentimes, we see many people seeking to invest in cryptocurrency. They want to take advantage of the volatile nature of bitcoin to make a profit. But most people often fail.

Bitcoin: Step-By-Step Guide To Investing


The common reasons include:

  • Limited information on proper investment
  • Fear of the unknown because this process is new
  • Lastly, the fear of losing our hard-earned money to a bad investment or scam

If any of the above reasons are stopping you from investing in bitcoin, you are not alone in this. The worth of a bitcoin in 2011 was around $10. Now imagine a man invested $100 in it, meaning he got ten bitcoins with his money. Now in 2019, the worth of a bitcoin is ranging around eight thousand and twelve thousand. What this means is that the return of investment would have been more than 2,000%. Crazy, right? Well, you can still enjoy a profit similar to this and you reading this article means you are willing to give it a trial, so why not let us jump right into it?



1. Get a platform or an exchange to buy bitcoin

The first step you need to take when starting your bitcoin investment is to get a good exchange. Don’t try to wave this process off because the importance can’t be overemphasized. There are several bitcoin exchanges out there, but most of them are not advisable due to their shady integrity. The best way to get a trustworthy exchange is through thorough research online and also by reading reviews on the different sites. When you have found one, you can sign up on the platform and purchase the coin through your credit card. Another thing you should also look out for is their terms and conditions especially if it’s in accordance with the laws of your country. Most of these exchanges have a Know Your Customer form (KYC) so you will be needing your picture, ID card/passport, or other documents to verify your identity.

Bitcoin: Step-By-Step Guide To Investing


2. Risk/Reward

Like any other form of investment, bitcoin has its downside, which is why you have to come to terms with only using the money you are willing to lose. Yes! It seems counterproductive when you think of the worst-case scenario in an investment that you want to make money from. However, you will agree with me that one must be factual in any investment, that is, preparing for both the negative and positive outcomes. Another reason you should risk only the money you can afford to lose is that it allows you to make decisions with little or no emotional interference on your investment. In order to earn from cryptocurrency, you sometimes have to hold longer than you have planned so using this procedure will go a long way for you. Although bitcoin is potentially rising in price, there are cases where it dropped to about 30 to 60 percent of how much you invested. You earn profits once it rises. Therefore, if you do not sell out of panic, you will probably profit from your investment. The standard risk-reward is 1:2; meaning you plan on gaining double of the amount risked. In bitcoin, this feat is achievable because of its high volatility. Its growth over the years is a surprise.



3. Trade against a currency

Here is another practical step you can take when investing in bitcoin. Instead of merely having your coin stored in a wallet or exchange in hope that it would rise, you can actually benefit from its every move by trading it against a currency or even other cryptocurrencies. As we have pointed out earlier, the price of bitcoin is highly volatile, compared to fiscal currencies. Volatility is not necessarily harmful if you can take advantage of it by trading it against another currency giving you a chance to earn more. For example, you can trade your bitcoin against the pound on your exchange. If that is the case, you need to be on the lookout for the pair “BTC/EUR.” Although admittedly, you will need additional knowledge to earn from this form of investment; it’s reward is quite worthy of the time you use to learn how the cryptocurrency market works. After acquiring additional knowledge on how to trade your bitcoin against other forms of currency in your exchange, do well to place an order based on the volume. The reason for this is that we are making an order when the market is liquid and less volatile. With this, you have a variety of options to exploit for profit-making when trading against a currency.


4. Place a position

Bitcoin: Step-By-Step Guide To Investing

After you might have followed the three previous steps, the next step is to take a position in the market. There are three major types of orders that you can place on the market. It depends on what you want to do or achieve with it. The first type of order is the market order; here you take a position (either buy or sell) with an amount you have stipulated. Trading starts once the amount is calculated in bitcoin. The second type of order is the limit order; here, you are not placing an order using the market price. Instead, you will input the market price to activate your order. You can also do this by selecting a market price in your exchanger’s chart. The order won’t be activated until the market price reaches the specified price. The buy limit order must be lower than the current market price while the sell limit should be above the current market price. The last type of order is the stop order; it differs a bit from the limit order. The buy stop order is set to be above the market price and becomes activated when the price hits your set price. Meanwhile, the sell stop order must be set below the current market price, and it activates when the price gets to your set price. Note that you can cancel the order anytime you wish to either save your investment or to take your profit.


5. Create a separate wallet

Don’t confuse this with the exchange platform. The wallet is for keeping your bitcoin. It is super necessary because the exchange in which you put your investment is not entirely safe. There have been cases of compromised and hacked exchanges, causing investors to lose their money. There are many bitcoin wallets online, but you have to be careful not to fall into the hands of wallets that are neither trusted nor verified. The fact that they are on Play Store or even appear at the top of your search list on the Internet doesn’t make them credible. Don’t be cajoled by the wallets given to you by exchanges, you do not have total control of it, and unlike your bank account, the security of your coin and wallet rest solely with you. Keep your private keys hidden as much as possible as this will enable you to recover your bitcoin in case of wallet loss. Also, you can use the bitcoin you have earned to buy any currency of your choice.

There you have it! Now you see that the process of investing in bitcoin is easier than you have always thought. When you start your investment, make sure you keep track of what experts are saying regarding bitcoin, and if you are trading it against a currency, you need to keep yourself updated on the currency. Do not panic during your whole investment, the up and down movements of the market price are just trends coming to play; what we care about is the result, not how we get there. Furthermore, keep acquiring knowledge about the market as it will help a great deal in making you gain more through your investment.


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