Understanding an opportunity is the first step before investing in any type of investment. The crypto market is relatively new in the investment world.
It’s only ten years old, but the return is far better than the stock market. However, cryptocurrencies are highly volatile and come with some other risks.
Among all the cryptocurrencies, Bitcoin is the most popular, and it’s for a good reason. It is the first digital currency and remained at the top position in terms of market capitalization. If you want to invest in the crypto market, you should know the basics. I will consider Bitcoin to explain the fundamentals throughout the article.
Beginner’s Guide to Crypto Investment
Before you invest your money in anything, you should ask yourself these three things:
- Do I have a reserve fund?
- Am I ready to lose money?
- Do I understand the investment opportunity?
If you get yes for an answer to all of the above questions, you are now ready for investment. First, you need to have a reserve fund that is at least six times your monthly expenses. Second, investing involves the risk of losing money. Can you afford to lose money? Finally, investing without the proper knowledge of the investment opportunity is a big mistake that you will regret later.
Now, if you qualify for the first two conditions, let’s understand Bitcoin basics and how you can start your crypto investing journey. You will learn about Bitcoin and cryptocurrencies, why Bitcoin is popular, Blockchain, crypto wallet, crypto exchange, and some tips. Now, let’s dive in.
Bitcoin & Cryptocurrencies
As I have mentioned, Bitcoin is the first cryptocurrency developed in 2009 by Satoshi Nakamoto. The name associated with it is pseudo-anonymous, and the founder is still unknown.
Before Bitcoin, cryptocurrencies were not possible due to the double-spending problem of digital currencies. Simply, it is the illegal use of a single digital currency multiple times. The technology behind Bitcoin solved the double-spending problem of cryptocurrencies, and it is Blockchain Technology.
Why Bitcoin is Popular
Although thousands of cryptocurrencies are available today, Bitcoin is the most valuable, and here is why. The initial rise in the price of Bitcoin was from $0.0008 to $0.08 in 2010. Today, its value is around $10000 -$11000.
More importantly, the highest bitcoin price was $19,783 in 2017, making it the most lucrative digital currency. Now let’s understand the underlying technology of the cryptocurrencies.
Blockchain is a distributed ledger technology that allows the users to transfer cryptocurrencies securely without any intermediary. It also offers privacy, transparency, and faster processing, which made it one of the disruptive technologies of the 21st century.
Apart from finance, there is a broad application of Blockchain in different industries such as healthcare, data security, education, supply chain, etc. If you want to know more, you can learn about the Crypto Genius
A crypto wallet is necessary to store your Bitcoin or digital wealth securely. There are generally two types of crypto wallets;
- Cold Wallet or Offline Wallet
- Hot Wallet, or Online Wallet.
Offline wallets are more secure than online wallets. Online wallets are again of three types, i.e., Desktop wallet, Web Wallet, Mobile Wallet. On the other hand, Offline Wallets are of two types, i.e., Hardware Wallets and Paper Wallets. Among all, mobile wallets are the easiest and more convenient to use.
It is fairly easy to find crypto exchanges allows you to invest in cryptocurrencies. There are two forms of crypto exchange platforms available such as crypto exchange mobile app, ad crypto exchange websites.
Bitcoin and other cryptocurrencies are highly risky investment assets. So you need to think twice before investing your money in them. If you don’t have a primary income source, don’t expect that it is the solution. Yes, it has the potential, but you should have the financial back-up to afford the risk. Hopefully, the article has helped you to understand the Bitcoin basics. Now, share your thoughts on this post in the comments section below.