Despite bitcoin becoming a mainstream topic recently, people still don’t quite seem to understand what it involves. Some describe it as a type of currency, and for others, bitcoin is a payment network. For the more conservative, bitcoin is a dubious form of payment that they do not understand.
By its simplest definition, bitcoin is a digital currency unit that does not need any intermediary like a central bank. It is the best-known and most valuable cryptocurrency out of the more than 5000 cryptocurrencies in the world today.
Bitcoin trades are recorded on a public ledger accessible to everyone, making it impossible to fake a transaction or reverse one. Although its value fluctuates regularly, bitcoin is a worthy investment considering the price of one bitcoin (BTC) is well over $45,000, while it cost no more than a dollar by the end of 2010.
If you’re one of the many people considering taking a plunge and want to know how to buy bitcoin in IRA from Viva Capital, this article outlines some mistakes you can avoid to safeguard your investment.
1. Not Doing Enough Research
It’s expected that a good bunch of people will buy bitcoin because they have heard that investors are making easy money from it. But this is not the case at all.
No matter how lucrative an investment seems initially, you need to closely evaluate the opportunities and risks before putting all your money into something that might prove futile.
2. Ignoring the Possible Risks
Any experienced investor will tell you that there’s no investment opportunity that doesn’t come with its fair share of risks. That said, the world of crypto technology is still very new and the market is not as stable as people would have liked. So, there’s always a likelihood that you could lose your investment.
Therefore, before making any decisions, try and assess whether investing in crypto aligns with your risk tolerance and financial objectives.
3. Putting All Your Money In One Coin
Going all in is another common mistake new bitcoin investors make. It is advisable to divide your money and invest it in different coins to avoid a massive loss if it happens.
Investing in one coin means you are highly dependent on it to give you high returns. If you diversify your cash into different currencies, you have several money-making options you can rely on. This can balance out any losses you might incur.
4. Investing Money You Cannot Afford To Lose
Another rookie mistake is using all the money you will need for your daily or monthly upkeep on bitcoin simply because you believe you will make a more significant profit.
You need to think about what will happen if you invest in a coin or several coins that all drop drastically. This means you have lost all your money. Do you have a plan B?
You never know when coins will rise or fall, the wisest decision you can make is only investing the cash you know you can risk losing.
5. Not Prioritizing Security
Security should be a top factor of consideration if you’re looking at Bitcoin as a potential investment. If you were to lose your Bitcoin through a scam or hack, you’re not likely to recover your investment since Bitcoin runs on blockchain technology that has no need for a middleman like a bank or other financial institution.
6. Not Learning Crypto Lingo
The world of crypto has a lot of jargon attached to it, and for you to maneuver your way around, you need to understand it all, or at least the more important ones. Doing otherwise will mean you’re making some grave mistakes that could make you lose your investment.
Therefore, as a newbie, you need to familiarize yourself with technical terms involving bitcoin. This way, you’ll become more knowledgeable on the matter and gain more confidence in what you are doing.
7. Investing without Being Clear on the Fees
Another mistake you can avoid is not understanding the fees of owning a Bitcoin IRA such as transaction and maintenance fees. As such, factor in all the costs of investing in a Bitcoin IRA against the tax advantages before you get started.
Avoid these mistakes when learning how to buy bitcoin
Bitcoin is very volatile as a cryptocurrency and, therefore, requires you to completely understand what you are investing in. But if you are willing to take the risk, then the outlined tips should help you make a clearcut decision.
Before taking the step to invest in any cryptocurrency, please make sure you always consult with a financial advisor who can give you professional guidelines and tips.