Bitcoin Price 101: Best Practices and Tips
You can buy Bitcoin anytime, but first, you need to have a place to store it. When it comes to the world of cryptocurrencies, this place is none other than a “wallet.” And mind you, the latter comes in different forms. These wallets provide you with different kinds of storage, security, and even access points. It is worth noting that, technically, your wallet does not store your cryptocurrency. It rather holds private keys which are essential in accessing a Bitcoin address and spending the funds. These private keys are all necessary for signing a transaction; otherwise, if you lose them, you will not have access to your Bitcoin. So, before you go on wondering about Bitcoin price and stuff, understand the basics first.
What Does it Mean to Invest in a Bitcoin?
Before you can actually answer the question, you need to determine first what investing in Bitcoin means to you. Regardless of the Bitcoin price, you must understand why you are investing in it in the first place. Do you want to buy this cryptocurrency in hopes of getting a good value later on? Are you into the idea of investing Bitcoin-related entities? Or are you merely looking for a day trade with this currency?
Know that the most common form of investing in Bitcoin is called holding, which his basically buying in hopes that the cryptocurrency will appreciate in value in the long run. If this is your goal, then you really need to determine the right time to buy. Keep in mind that you have to do your own homework and learn all about the complexities involving this endeavor. Do not just listen to anyone’s advice and follow it.
Here are some tips for buying and holding Bitcoin:
- Never bite off more than you can chew. Meaning you should not invest more than you are really willing or able to lose. Remember that investing in Bitcoin is a risky move. It does not always guarantee a win.
- Once you find an acceptable Bitcoin price and buy it, store it in your own personal wallet (more about this later) and do not ever leave it in exchange.
- Only buy from exchanges that, in some ways, have proven a solid reputation.
- Always purchase through Dollar cost averaging. This means not buying all in one trade but instead going for a fixed price each month.
How this Arbitrage Can Help You Find Cheaper Bitcoin Price
Say, you buy 0.003 Bitcoin for only $100. You then go to a marketplace and sell it for a much higher price. After dotting the i’s and crossing the t’s, you are able to receive $135, an amount that can be used to buy 0.00405 Bitcoin. As you can see, this arbitrage is all about buying and selling from the right place at the right time. This strategy has become immensely popular that enthusiasts started creating and using tools to help them. In fact, a website called Cryptopia does this exactly. Apart from making the entire process easy and quicker, you also get to see an offering of the best Bitcoin price.
What Does Trading in Bitcoin Means?
Trading Bitcoin is way too different than buying and holding. Here, your goal is to actively buy the lowest Bitcoin price and sell it a much higher rate. However, for this trading strategy to be effective, you have to do it in a short time interval. Keep in mind that being successful in trading requires practice and knowledge. It is not an overnight process; it is something that you really have to work on rigorously. It is worth noting, too, that the trading market is packed with large players who are all waiting for rookies to come in and take a bite, so be very cautious in trading on the market.
Types of Wallets
#1. Desktop – this wallet is basically installed on your personal computer, giving you complete control of the funds and budget safely. There two desktop wallets to choose from, one of which are thick wallets. The latter allows you to download a network of blocks and gain control of their authenticity. It also provides you with independent security management when it comes to your funds. Thin wallets, on the other hand, do not require you to download blocks. Instead, you can download them to a portable device.
#2. Mobile – the main advantage of this wallet is flexibility. That is because your funds are always available on hand. It is deemed as the most convenient way of paying goods, a process that is done by scanning QR codes. In some cases, however, you can take advantage of your mobile phone’s near-field communication feature. This primarily allows you to tap your device against a reader without entering any details at all.
#3. Online – a web-based wallet is more about storing your private keys online. While it gives you access to your funds anytime and anywhere, there is still a risk of losing your funds. This can happen when the server is hacked or compromised, though it can be prevented using a number of security measures.
#4. Hardware – these dedicated portable devices can hold your private keys and help in facilitating payments. Although there are various types of hardware wallets, all of them are designed to allow you to carry any amount in your pocket.
#5. Paper – this is without a doubt one of the safest options for storage, regardless of Bitcoin price. A paper wallet is simply two QR-codes that can be generated through a designated service. One of these is a public key, which is basically an address that you can utilize to receive Bitcoins. Meanwhile, the private key allows you to spend the cryptocurrency stored at a certain address.
Investing in Bitcoin Mining
Like other people, you might also be interested in Bitcoin mining. While it has its own benefits to offer, this one here only becomes profitable if and only if you do it on a large scale. This means getting a plethora of expensive mining equipment, not to mention being ready to pay costly electricity rates each month. This is why more people are venturing into Bitcoin price than mining, as the former is more cost-effective. Whether you go investing or mining, it is all about educating yourself. Find out which one works for you best and do not just settle for whatever people are telling you.