Are you looking to dive into cryptocurrency? 2020 studies show that the cryptocurrency market inflated to a worth of 1.49 billion. Many Americans have found success in the crypto market. However, the crypto world can be daunting even for experts, but it doesn’t have to be.
What currencies you should buy, who you should trust, and how to maximize ROI are common questions. For advice on these and more, read our article. With these cryptocurrency tips, you’ll be well on your way to using and investing like a pro.
Cold Vs. Hot Crypto Wallets
Before you start with crypto, you should know the basics. For example, understanding what a cold vs. hot crypto wallet is. A “cold wallet” is a physical and offline (like a fancy USB stick) version.
On the contrary, a hot wallet is software and connected to the internet. Depending on your preferences, and the risk you’re willing to take, it’s crucial to choose the right crypto wallet. Hot wallets allow easy access and spending online.
However, they are also more prone to attacks or online theft. A cold wallet can be a little more inconvenient, though it gives you a bit more security. Once you’re ready to decide, know that lots of Crypto Exchange services bundle in a hot wallet for you.
Only Trust Reputable Crypto Exchange Services
Cryptocurrency will only keep on growing – its potential is one a continuous expanse. Bitcoin may be the leading type of crypto, but there are other options out there too.
Once you’ve decided on your currency, you can progress to buying, trading, and selling what you have.
To do this, you’ll need crypto exchange services – which are a dime a dozen. It’s easy to fall prey to ones that aren’t legitimate and lose what you have in a blink of an eye. This is why it’s crucial that you only go for websites with solid track records.
It’s best to stick with ones that are ahead of the game. This ensures your security as well as reliable customer support, in case you ever need it. If you’re still on the fence, try reaching out to communities and forums, ask around, and go from there.
Research Before You Buy
Prices fluctuate all the time, and the market changes. Different exchanges rise and fall, and various cryptocurrencies vie for control. All of this affects the price of Bitcoin, its availability, and its desirability.
It might seem overwhelming at first, but it’s essential. If you’re planning on making Bitcoin part of your investment portfolio, then do your research. Never invest in something you don’t believe in, and the same is true for things you don’t understand.
Don’t Put Your Eggs in One Basket
Once you’re past the hurdle of starting, it’s time to delve deeper. Explore a bit more on the types of currencies available and their pros and cons. If possible, look into diversifying what you have.
A good example is having some Bitcoin on a cold wallet and some on a hot wallet. It’s also a decent idea to spread your assets on more than one reputable Crypto Exchange service. This betters your chances for successful trading and profit.
It also lowers the chances of your assets getting compromised. Crypto is one of the most secure assets you can have from a cybersecurity standpoint. However, it’s important to know that although the risks of theft and loss are low, they are never zero.
If your wallet uses passwords or keys, keep them saved offline. Writing with pen and paper might seem old school, but you can’t hack what isn’t on a device.
Know the Difference Between Market, Stop, and Limit Order
Using Bitcoin, or any other cryptocurrency, means understanding how to buy and sell them. The three most basic concepts involve market, stop, and limit order. You’re bound to encounter them in most exchanges, but not all.
A lot of crypto experts have these in the bag. To simplify further, “market” is buying and selling based on the current market prices. This involves tracking changes and placing orders by yourself, which can be instantaneous. “Stop,” on the other hand, employs your services to auto place orders when prices reach a certain value.
The pros use this to sell their crypto immediately if they suspect a crash. Last is “limit,” which is somewhat the opposite of “stop.” It’s an automatic program that lets you buy when prices are low or attractive.
Stick With Coins in the Top 25
Bitcoin is at the top for a reason. It’s trusted, and it’s been around for a while. That said, if you get into crypto and Bitcoin, chances are you’ll be diversifying at some point.
You might even try to use profits from lower-tier currencies to reinvest into more Bitcoin. Regardless of your motivations, do your research and stick to coins in the top 20-25. Don’t go for some low-ranked or brand-new coin hoping for a quick windfall.
Know that Rome wasn’t built in a day, and you need to take your time. Those who know how to use Bitcoin adhere to the concept of “slow and steady wins the race.”
Set a Budget and Hold
If there’s one thing that will always be true about Bitcoin is that it’s always going to fluctuate. The last thing you should be doing is going into it thinking you’ll make a quick buck. Especially if you’re new to the scene, start by buying what you can afford and hold on to it.
It’s crucial to remember that huge crypto investors started before it was mainstream. That said, some people also have luck on their side. If you ride out the highs and lows, you’ll be more likely to get a higher average return over a long period of time.
Start Small and Diversify
Most people don’t put more than 5% of their total investments into any single crypto. Even then, it tends to get split between Bitcoin and 1 or 2 of its competitors. Savvy investors who follow crypto over a long period might pick up more on a weekly or monthly basis.
However, even then, you should be careful not to let crypto take the lion’s share of your portfolio. This is one of the best tips for using Bitcoin. A sudden fluctuation can take a while to recover from, and you want to keep your flexibility.
Spreading a larger crypto portfolio across multiple currencies is the expert way.
Know When to Stop
Bitcoin isn’t a gold rush, but it shares many similarities. The biggest is that plenty of people invest everything they have into it only to lose it all. Everyone, from pros to beginners, knows they won’t get rich overnight with crypto.
Some get lucky, some persevere through highs and lows, but most understand crypto is a gamble. By all means, dip your toe in the water, but know when and where to stop. Take stock of your assets and set a firm and responsible limit for how much you want to risk.
You can even consider withdrawing what you have with the use of a Bitcoin ATM. View here for a better idea of what it is and how to use one.
Watch Out for Scams and Shady Investments
There’s a reason you should do your research, go for reputable exchanges, and focus on the top cryptos. It’s because scams are everywhere, and they’re easier to fall for than you’d think. Most people know not to fall for the obvious phishing and scam emails, but what about crypto scams?
One strategy that’s been making the rounds relates to unknown cryptocurrencies. This is when a group of malicious actors finds new or low-ranked cryptos and inflates the price. They do this by placing mass buy-orders which they never intend to fill.
When the market sees all this activity, it causes the demand and value to skyrocket. Unsuspecting traders flock to the previously worthless crypto, which inflates the value further. Once enough legitimate investors are in, the original scammers pull out.
They cancel their orders or sell en-mass, causing the demand and value to plummet. The scammers get rich, and everyone else loses out. Watch out for those cryptos that seem too good to be true – chances are they are.
Stay on Top of Your Taxes
It may surprise you, but the IRS considers crypto to be taxable property. If you haven’t been declaring your crypto, then you could end up on the IRS’s naughty books. It’s a pretty easy fix on paper.
The first thing is you need to know the value of your crypto at the time of transaction. This can be tricky since the prices fluctuate, and you could be buying and selling often. The IRS isn’t interested in the current value of your crypto but in the USD value at the time you bought it.
Most pros make sure their crypto bookkeeping is up to date. They do this either manually or through an accountant. There is also plenty of accounting software available that works for crypto as well.
Expert Cryptocurrency Tips
When it comes to cryptocurrency tips, there’s a log to digest. You always have to do your research to stay on top of things, learn which investments to trust, and when to stop. That said, using and trading Bitcoin like the pros isn’t as difficult as you might think.
For more on cryptocurrency and Bitcoin, have a look at our site. We have plenty of information and advice for you to explore.