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10 Things to Remember When Planning to Buy Bitcoin in 2019

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10 Things to Remember When Planning to Buy Bitcoin in 2019

It is fair to say that Bitcoin has been one of the most common topics of conversation amongst investors for some while and it still remains a bit of mystery to those who have not got to grips with what the digital currency is all about.

If you are thinking about investing you can find out more at xCoins.io, for example, but there are also a few things that are worth bearing in mind and remember if this is the year that you take the plunge and gain some exposure to this headlining act of all the cryptocurrencies.

A reminder of what Bitcoin is all about

A good starting point would be to appreciate the fundamentals of how Bitcoin differs from traditional currencies.

A major difference would be the fact that, unlike traditional currencies, there is no government or central bank intervention involved in controlling and regulating the money supply.

You can use real cash when buying Bitcoin

The obvious crossover is when you appreciate that you can buy Bitcoins with good old-fashioned cash and other more traditional forms of payment, but you will have to establish a wallet first.

This wallet is created using your ID and is basically a storage point on the hard drive of your computer, or you could consider using a vault service that is designed to keep your coins protected offline.

Why Bitcoins have value

Another basic point that is worth remembering about Bitcoin is that they do have value because they have become a commodity that people want and there is a limited supply, which is a factor that influences the price.

The line of thinking behind the creation of Bitcoin was to create a form of currency that operates independently from a central authority like the Federal Reserve, giving it a certain amount of unique appeal from an investors perspective.

It can be viewed as a deflationary currency

It is likely to be the case that when the system stops producing new money into the system the value of the existing Bitcoins in circulation will most probably rise in line with demand.

Even when the supply of coins reaches a plateau and the system stops expanding it will not be a problem to continue spending what you already have.

Understanding how this works should help you in your investment decisions and long-term strategy.

Future uses of Bitcoin

One of the reasons you might want to gain some exposure to Bitcoin is the future potential of the cryptocurrency and the role it might play as the world economy evolves.

A big advantage that Bitcoin is perceived to have is that it is a low-cost platform that is very effective in moving money around the globe and that makes it a potential rival and player in that market, threatening the dominance of the likes of PayPal and Western Union because of the lack of fees associated with this method of payment.

It should be noted that moving money around the globe is not necessarily instantaneous with Bitcoin, as miners tend to process transactions in batches every few minutes.

A small delay of only a few minutes is hardly a major drawback and if this process is sped up as the system evolves, it could transform Bitcoin into a mainstream payment facility.

Be mindful of security

Nothing is completely impregnable and in much the same way that a person might try to physically steal your wallet, there is always the threat that hackers will try to steal your Bitcoins.

This is why you need to have security at the front of your mind when choosing to invest and pick a safe place to hold your investment.

It is generally viewed that wallets are one of the most secure ways of storing and using the Bitcoin system.

Matching your risk profile

There have been instances in the history of Bitcoin to date where a certain amount of volatility has been witnessed when it comes to the price, and it has sometimes moved dramatically in different directions according to current sentiment.

Another key point to remember is that investing in Bitcoin may not be suitable for someone who is risk-averse and gets nervous about price volatility.

It is largely unregulated in comparison to some other investment opportunities so it can be a bumpy ride for investors, but if you are someone who understands the risks and believes there is a fair risk-reward balance, Bitcoin might match your risk profile.

A ground floor opportunity?

One of the exciting aspects about Bitcoin is that there are plenty of opinions around as to what the future holds for this digital currency and if some predictions are accurate it could prove a shrewd investment decision at this point in time.

Nothing is certain, of course, but if governments start buying Bitcoins, for instance, that would be a real game-changer and boost its reputation as well as its value.

Every investment has an element of risk about it and even if you think the future for Bitcoin is bright it still makes sense to only invest what you are willing to lose.

A future date that is highly relevant

There is a limited amount of Bitcoin and it has been stated that no more will be produced after 2040.

Appreciating the relevance of this information can help you decide how and when you gain any exposure to Bitcoin.

Building your exposure

In view of the volatility of Bitcoin at certain times, it can be hard to gauge when its a good time to get involved and make a purchase.

A traditional investment strategy can be applied in this scenario and using a dollar cost averaging buying approach could help you to ride out the waves.

Buying Bitcoins in stages across a number of different trades and at intervals will mean that you are buying at different prices and could potentially achieve a better return than if you tried to time it right and buy in one hit.

If you remember these fundamentals when planning to buy Bitcoin it should help you make a more informed and controlled purchasing decision.

 

I am the founder of Startup Today. I am the main writer and have put in many hours of work into creating this blog. If you want to find out more about me then lets get in contact.

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