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4 Things To Know Before Investing In Bitcoin
This past September, we remarked on bitcoin crossing the $4,000 barrier, which seemed like a significant milestone. Now, it almost seems quaint.
Bitcoin topped $19,000 before the end of 2017, and so far in the early days of 2018 is trading in the $15,000 to $16,000 range.
Understandably, these high values have gotten a lot of people who previously ignored cryptocurrency altogether interested in buying in. But while investing in bitcoin certainly has great potential, there are some things you should know before you buy any.
You Can Buy A Fraction Of Bitcoin
Hopefully this has become clear given that bitcoin is now worth well over $10,000. If you had to buy a whole one to invest, the market would essentially be closed to most of us!
Bitcoin, as one article put it, is digital and practically infinitely divisible, so you really don’t need to worry about it in units. You can simply decide what dollar amount you’re willing to invest and buy, say, “$50 worth of bitcoin” or whatever the case may be. You’ll then see what fraction of a bitcoin you own, and you can go from there.
Altcoins Are Legitimate Alternatives
The term “altcoin” describes most any cryptocurrency that isn’t bitcoin – and there are more of them than some people realize. In fact by this point there may well be hundreds of them. However, there are some particularly popular ones (including Zcash, ether, and litecoin to name a few) that have gained legitimate value.
It’s worth taking the time to read about their differences when compared to bitcoin so you understand what might affect their prices. Generally speaking however, those prices tend to fluctuate in a way that mirrors bitcoin at least loosely.
Before buying into bitcoin, you may want to at least look at some of these altcoins as well to see if one might not be a more appealing investment.
Some Are Predicting A Bubble
Even some of those who buy the underlying significance of bitcoin technology are quite clear in expressing negative feelings about the investment boom: bitcoin is a bubble, they say, bound to burst at some point and make a lot of investors unhappy.
This isn’t necessarily true (no one really knows), but it’s certainly something to read about and take into account to counter the boundless optimism that so many bitcoin proponents are expressing these days.
Your Wallet Matters
As a final point, remember that the bitcoin market isn’t the only thing you need to study. You’ll also need to study wallet options, because a bitcoin wallet is effectively an account for managing a cryptocurrency investment portfolio.
Different wallets have different security measures, transaction fees, and wait times for withdrawals. Some provide material for analyzing the markets, some allow you to store multiple cryptocurrencies, and some specialize in one. Choosing the right wallet or your trading practices is a vital component of bitcoin investment.
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