Ten tips for investing in Bitcoin
Bitcoin has lately been getting attention, among other Crypto-currencies. We get a lot of questions about how to best start investing in Bitcoin. But beware: There is not any guarantee that the Bitcoin currency will continue. Bitcoin has in recent years demonstrated that it offers unprecedented opportunities but there are certain risks involved. It is therefore wise to keep a few basic rules when you start investing in Bitcoins.
1. Bitcoin is an experiment: Educate yourself
Bitcoin is still in its infancy, make yourself aware of all the opportunities and all the risks. Inform yourself and choose a good Bitcoin wallet (electronic wallet) to save your bitcoins in.
2. Remember, Bitcoin is NOT anonymous
Contrary to what you may have heard Bitcoin is not anonymous. Bitcoin addresses are not linked to a person but the Bitcoin transactions, however, are completely transparent and traceable. You can therefore see better Bitcoin as a pseudo-anonymous.
3. The Bitcoin currency can fluctuate violently, keep this in mind.
Sneak a peek at the https://coinbase.com exchange page this is necessary for beginners specially.
4. Invest money that you could afford to lose(disposable income)
We already know this rule of the stock market, but the spirit remains the same. Do not assume that Bitcoin will guarantee you riches, realize that you can lose your invested funds.
5. Choose a good Bitcoin Wallet
This will safely store your Bitcoins .
6. Use varied and complex passwords.
Many of us choose it out of sheer convenience of using the same (often simple) password for multiple sites. Hackers, however, crack easy passwords unfortunately or guess them and a password can be stolen or drain etc. So use a complex and unique password for each account. If necessary, use password management software to safely store all your passwords.
7. Make back-ups!
Make regular backups of your bitcoins. Multibit and Bitcoin core both have available the option to create an encrypted backup of your wallet. Do this on a regular basis.
8. Beware of online Bitcoin wallets
Online bitcoin wallets are easy to use, but they also pose a risk. The online service can be hacked or go bankrupt and then the chances are very high that you will never again see your bitcoins. Preferably use the online service as a small money wallet and keep the bulk of your bitcoins on a hardware or wallet secure computer Bitcoin core or Multibit software. This of course combined with a good password and backups.
9. Check your address
If you want to send or receive bitcoin, check always the bitcoin address. Bitcoin payments are irreversible, so bitcoins sent to or received at the wrong address can be considered as lost. Some software or online services will also have the ability to determine the amount of the transaction itself!
10. Consider the tax
As Bitcoin is also being accepted more government agencies interfere. You must now specify for example, all your digital assets in your annual tax return and it probably won’t stop there. So keep proper books and records.