Is Investing In Bitcoin Safe?

Bitcoin has become one of the most talked about technologies of recent years. The digital asset, known as a cryptocurrency, was primarily designed for fast and convenient online transactions. However, it’s mostly attracted attention thanks to its rising prices, and many see it as a potential investment.

While Bitcoin and other cryptocurrencies may seem like a great investment, especially when you look at the charts, it’s important to know that it comes with risks. If you want to stay safe and ensure your money grows, there are some things you want to consider before investing.

What is Cryptocurrency?

Bitcoin and other cryptocurrencies are built on a technology known as blockchain. This is essentially a new way of storing data, but the main difference is that any records stored on it cannot be altered and are public for others to view. With Bitcoin, all financial transactions are verified by a complex system which means no bank or middleman is required. This decentralisation, along with the fixed supply, has meant the price of Bitcoin has been increasing in cycles for some time.

Cryptocurrency volatility

Something to consider before you invest any money into the crypto market is how volatile the assets can be. Volatility is a term used to describe how frequently the price of an asset rises and falls. Although Bitcoin and other cryptos are prone to large price increases, the market also suffers from regular crashes.

Before you invest, you need to look at the long-term charts of these assets and consider the fact that while prices may go up, they can also come back down. It’s important not to get carried away by hype and always do your research before you invest. If you do experience a crash, don’t panic, and know that holding long-term is often the best strategy.

To avoid the effects of volatility, you should never invest more than you can afford to lose. In addition, it’s a good idea to use an investing strategy such as dollar cost averaging. This ensures you buy at the average price over a long period, avoiding potentially high prices.

Being aware of crypto scams

Unfortunately, there are a lot of scams within the crypto world, and it’s important to be aware of them before you invest. There are scams in other parts of the financial world too. However, unlike a bank scam, you cannot get your money back if you give your crypto away to a scammer. All crypto transactions are irreversible, so you have to be careful about where you’re sending your money.

Avoid investments that seem too good to be true, especially if someone is promising to double your coins once you send them. Be aware of investing in coins with low liquidity, too, especially if a large percentage of the total supply is owned by the creators. These are often rug pull scams, where the creator will sell once a certain investment total has been reached.

Keeping your coins secure

Keeping your coins secure is vital when using cryptocurrency. Unlike traditional investment, there’s no bank or stockbroker that safeguards your investment. You’re fully responsible for your own coins, and you should take the necessary precautions. The first step is to transfer your coins from the exchange to a secure wallet. You can use an offline hardware wallet for additional protection.

Whenever you send your coins anywhere, always double-check the wallet address. Even getting a single character wrong means you could lose out. Copy and paste the address, then check it before sending. For large transfers, you should always send a small test transaction first.