Many have made millions and even billions investing in crypto, including Brian Armstrong, the founder of Coinbase.
Are you thinking about buying Bitcoin? Since it has increased in value by thousands of percentage points over the last year, many want to get in on the action.
But is it too late? No, it is not too late. Bitcoin’s volatility makes it easy for investors to jump in and take advantage of short-term and long-term gains.
Some experts predict the value of Bitcoin could surpass $500,000 over the next five years. Even though it looks like it has a high value right now, it could get much higher very soon.
Of course, you have to take precautions. Bitcoin’s volatility comes with just as much risk too. But that is not the only thing you have to worry about here. Newbies who do not understand Bitcoin or the market can get burned quickly.
It would help if you learned some essential tips to avoid that from happening to you. Below are five tips on how to buy Bitcoin and other cryptocurrencies for beginners.
1) Cryptocurrency Exchanges
The best way to buy Bitcoin is to use reputable cryptocurrency exchanges like Swyftx, Coinbase, and Digital Surge.
These exchanges have name recognition, so you know you can trust them. They all have ratings online which exceed 4 out of 5 stars.
These are the kinds of ratings you’ll want to see for an exchange. If you use a crypto exchange based in Australia, it must comply with the Anti-Money Laundering and Counter-Terrorism Financing Act of 2006.
It will also accept Australian Dollars, which makes it much easier for depositing and withdrawing money.
2) Dollar-Cost Averaging
Dollar-cost averaging is when investors make periodic investments in assets to take advantage of temporary dips in their value.
It is in contrast to lump-sum investing, where you make one significant investment and wait for the value to rise over time.
Bitcoin is highly volatile. Lump-sum investing does not work so well with Bitcoin as it does with traditional stocks.
That is why you should look for crypto exchanges that support dollar-cost averaging investments and give you tools to make them easier to perform and track.
3) Watch the Fees
Most crypto exchanges charge a fee per transaction. If you’re going to buy and sell Bitcoin frequently, then you’ll end up paying a lot of money in fees.
Coinbase, for example, is a popular crypto exchange, but they charge a 1.49% fee per transaction.
That might be too high for most traders. There are exchanges with cheaper transaction fees, such as 0.5% per trade on Digital Surge and 0.6% per trade on Swyftx.
These two particular exchanges also offer $10 in free Bitcoin to new members. If you are a newbie, it gives you the chance to start your account as a Bitcoin owner without making an upfront investment.
4) Storage Wallets
Most newbies assume their Bitcoins are safe in their crypto exchange account. They do not realise that a hacker could easily disrupt their performance and steal Bitcoins out of it.
There is no national insurance scheme to protect your Bitcoin balance, so it is up to you to protect it.
If you plan to hold your Bitcoin after it is purchased, you should use a cryptocurrency wallet. It will store the private and public data keys of your Bitcoin transactions.
These keys are how your Bitcoin ownership can get verified. That way, if your crypto exchange is ever hacked or discontinued, you will not lose all the Bitcoin you purchased through it.
Instead, you can take your cryptocurrency wallet to another exchange and load your Bitcoins into another account.
5) Customer Support
Some crypto exchanges have mediocre customer support and guides. As a newbie, it would be better to choose a crypto exchange that makes it easy to get in touch with someone for assistance if you have questions or concerns.
Many user-friendly exchanges offer FAQ sections and tutorial guides or assisting inexperienced crypto traders.
Look for these educational resources for further guidance on your trades.