Wondering if Bitcoin trading is safe? If so, here’s what you need to understand before you start trading Bitcoin.
Although Bitcoin has enjoyed great popularity since its introduction, some people are skeptical about its trading. However, some people have earned significant returns from their cryptocurrency trading activities. Today, some people buy and sell Bitcoins daily. However, you don’t have to do this every day to profit from Bitcoin trading. You can buy your Bitcoins and sell them after a week or months. Although Bitcoin trading seems complex to some people, it is easier when you know how to do it safely.
Understanding Bitcoin Trading
The first step to trading Bitcoin safely is to understand what it entails. For most individuals, trading Bitcoin involves buying that cryptocurrency on a cryptocurrency exchange like BitcoinBuyer . Here you register on the digital platform to have a trading account.
Most cryptocurrency exchanges require new users to register with specific details and verify their identity. For example, a Bitcoin trader may ask you to provide personal identification documents like a government-issued ID or a driver’s license.
All in all, the essential thing to do is to select a reputable cryptocurrency trading company. So you can be sure that the fiat currency you hold in your cryptocurrency trading account will be safe. Likewise, the Bitcoins you buy through the platform will be safe for as long as you keep them.
Secure your bitcoin wallet
Most experts recommend transferring Bitcoins from your cryptocurrency trading account to a cryptocurrency wallet. Indeed, cryptocurrency exchanges do not necessarily prioritize security. This may be the reason why some people lost a lot of money after criminals hacked crypto trading.
Therefore, choose a secure crypto wallet and transfer the Bitcoins you do not intend to sell there. Perhaps a hot wallet is ideal for you if you plan to trade Bitcoin more often. Otherwise, keep the tokens in a cold wallet with no internet connection.
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Remember that anyone can transact with your Bitcoins if they get your wallet’s private key. Therefore, keep the private keys of your Bitcoin wallet secret.
Check the amount you spend in Bitcoin
Don’t spend all your savings on Bitcoins. Instead, invest an amount that you can lose without significantly impacting your finances. Most financial and investment advisors recommend investing 1% of the investment portfolio in this cryptocurrency.
However, the funds you dedicate to Bitcoin should depend on your risk appetite. But no one is advocating spending a significant amount of money on this volatile asset. Instead, develop a trading plan that matches your investment goals. Also, research the factors that influence Bitcoin prices to determine the best time to buy or sell this virtual currency.
Understand regulatory hurdles
Some countries formulate rules to regulate Bitcoin and other digital currencies. Therefore, the laws that govern cryptocurrency trading in your country may affect the security of your investment. Therefore, understand the regulatory hurdles you are likely to encounter when buying or selling Bitcoins.
Nevertheless, most governments do not have a concrete position on Bitcoin. Thus, Bitcoin is under-regulated or unregulated in many countries. But this status can be risky because you have no way to recover your Bitcoins if criminals steal them.
Also understand that your country may ban Bitcoins. Countries like China have banned Bitcoin mining and trading. If the government completely bans Bitcoins, you might suffer heavy losses after buying Bitcoins. Nevertheless, cryptocurrency experts believe that it is not easy to outlaw Bitcoin because it is decentralized. Even countries that completely ban cryptocurrencies have difficulty implementing them due to their decentralized nature.
Like any other investment, Bitcoin involves risk. However, you can avoid these risks when trading Bitcoin by doing your due diligence. Ideally, take the time to research Bitcoin and how it works before trading. Overall, Bitcoin trading is safe when done correctly.