Unless you have been living under a rock, you know at least a little bit about Bitcoin. But before you go running out to learn how to buy Bitcoin, there are a few things that you should know. After all, it has proven to be one of the most volatile investment opportunities out there.
If you aren’t sure how to properly buy Bitcoin, you aren’t the only one. But you need to enter the fray with as much information as you can. If you want to get started on the right foot, keep reading…
Six Things That You Should Know Before Buying Bitcoin
Here are six things that you should know before you consider buying Bitcoin.
One of the most important things to note about Bitcoin is that it might be the most transparent payment option there is. This has to do with the blockchain technology that acts as the backbone. It is essentially a distributed ledger, which is what banking systems use.
Each transaction is not only public, but immutable and traceable. Everything is stored publicly on the Bitcoin blockchain. Whenever you sell or buy Bitcoins, all of that information is updated and then broadcast for all to see. All without giving away your personal information.
Perhaps the most important thing to know before you learn how to buy Bitcoin is that Bitcoin is perhaps the most volatile investment there is. There have been wild swings in the value of the digital currency, with the highest of highs and the lowest of lows.
Before you invest in Bitcoin, you need to know how to ride the wave. It can be terrifying to see the huge drops, but there have been major spikes as well. Yes, it has grown on the whole over time but the ride to get there has been a terrifying one for its investors.
Traditionally, investing was limited. You had to have a certain amount of money to get in or even be an accredited investor. But Bitcoin is for everyone. It is due to the decentralized model that all of this is accessible to just about anyone.
Yes, anyone can mine Bitcoin. That process is a lot more complicated than it sounds, but you don’t have to be an accredited investor to do so. Bitcoin has made investing a possibility for everyone, putting it on an even playing field. That is something most traditional investing avenues can’t say.
4. Easier to Buy Than You Think
Before you buy, it helps to know that there are a ton of ways to buy Bitcoin. For starters, there are many cryptocurrency exchanges out there. Each of these exchanges offers a platform to buy, sell, and trade cryptocurrency, even those outside of Bitcoin.
Not only that, but there are apps that feature the top exchanges and their rates. That means getting the best rates available on the cryptocurrency market today. There are even some businesses that accept Bitcoin as payment. It is becoming more widely available with each passing day.
5. It Is Taxable
Investing is never free. There are fees and taxes that need to be paid all the time. The same can be said for Bitcoin. If you make a profit on Bitcoin, you will definitely have to make a tax payment on it. You may be able to make a cryptocurrency donation, but you need to be sure you know what the legislation is regarding crypto taxation.
Capital gains taxes are important to pay attention to before buying Bitcoin. The last thing anyone wants is to try to get in on the latest investing trend only to wind up in tax trouble.
6. Your Wallet Is Everything
If there is anything to know about crypto in general, it is that storage is key. Your storage option depends on the level of activity you plan to have. Lighter users can get away with using a cryptocurrency exchange for their storage options, for example.
But those who will be putting substantial funds into their crypto accounts will want a separate, encrypted drive instead. This means not being connected to the Internet 24/7 where possible hackers can do damage. A separate drive can also be brought with you wherever you want for trading, buying, and selling from wherever.
Before diving headfirst into Bitcoin investing, you’re going to want to perform some due diligence by learning some investing basics and at minimum how to buy and securely store bitcoin.
A little education goes a long way towards ensuring you don’t lose your ass like many newbie investors. Scams are rampant in this industry. It’s literally still the wild west out there.
Keep in mind the six things we’ve covered here and best of luck!