Before jumping in, it's important to understand what Bitcoin is, how the cryptocurrency industry works, and what risks are associated with investing in these assets. There are several ways to get informed:
You can search on internet where it is possible to find quality content to better understand cryptocurrencies.
If you know people who have experience in this field, talk to them directly.
It is also possible to join cryptocurrency communities on the internet. There is something for everyone: investing, trading, NFT, mining, etc.
Social networks can also be a good way to stay informed about the latest news and trends in the cryptocurrency world, while keeping in mind that the opinions and advice given there are not always reliable and therefore do not constitute investment advice.
Cryptocurrencies are a young and volatile market. Investing in cryptocurrencies means exposing yourself to some risks.
Market Risk. The cryptocurrency market has a reputation for being very volatile. The price of different cryptos can fluctuate wildly, going from euphoria to little in a very short period of time. This volatility can be due to different factors,
such as unfavorable news, a crisis, overly restrictive regulations, a market reversal, etc. The best remedy to reduce your risk is to look at the economic and financial sectors.
Security risk. Due to recent technology and a lack of crystal clear regulations, cryptocurrencies are sometimes the target of hacking, cyberattacks and fraud. To secure your cryptocurrencies, focus on secure storage of your cryptocurrencies, as well as diversification of your investments and the exchange platforms or protocols you use.
Regulations Risk. The cryptocurrency market is still new and the regulations around cryptocurrencies are slowly evolving. However, wary or overly restrictive regulations around cryptocurrencies can impact your investment. You should be aware of the possible risks related to regulation and try to stay informed.
Liquidity Risk. The cryptocurrency market is sometimes less liquid than other traditional financial markets, especially during crypto winters. This means that less money flows into the crypto market and it can occasionally be complicated to sell a crypto if the market doesn't have enough liquidity.
Fraud risk. There are cases of fraud in cryptocurrencies such as "Ponzi", "Rug Pull", investment scam, etc. Caution is advised. Managing your money sensibly and getting informed is the best way to reduce the risk of being subjected to fraud.
Finally, before investing in cryptocurrencies or any other form of investment, it is important to understand your risk tolerance and put a risk management strategy in place. This includes determining how much you are willing to lose without compromising your financial situation and setting limits to avoid making impulsive decisions.
It is important to choose a reliable exchange platform to buy bitcoin or any other cryptocurrencies. Research the available platforms to determine which one offers the highest security for your investment.
It is not possible to guarantee 100 % reliability of a platform, so as with investments, it may be worthwhile to diversify platforms to better manage your risk. Research the available platforms to determine which one is right for you and offers sufficient security to safeguard your investments.
Several criteria can be taken into account to determine the reliability of a platform, namely: the team that manages the platform, the security mechanisms offered by the platform, its reputation, its number of active users, its liquidity, its transparency, its compliance with the regulations in force. Of course, there are other criteria, such as the availability of customer service or the ease of withdrawal.
Do your research before signing up with a platform and diversify them, as you would diversify your investments.
It is essential to take steps to secure your investment. This can be done in several ways:
The implementation of a two-factor authentication (2FA) which offers additional security. To log in to your account on an exchange, you will need to enter your password and a code generated by an application or by SMS.
Protection of your private keys. Your private keys are essential to access your cryptocurrencies. It is not recommended to share them with others. Keep them in a safe place and do not store them on computers or devices connected to the internet.
It is also recommended to get a hardware wallet or physical wallet like Ledger or Ngrave to store your cryptos outside the internet. This provides additional security. In this regard, feel free to read our article on the different types of wallet that exist.
It's important to invest carefully and not put all your money into cryptocurrencies. Invest an amount that you can afford to lose, and don't rush to invest right away.
DCA or Dollar Cost Averaging can be a good way to invest a small amount of your money periodically. This allows you to build up a crypto portfolio without any technical or fundamental knowledge and by smoothing out your entry price.
If you decide to start buying Bitcoin, there are several reputable cryptocurrency trading platforms that can help you do so.
Also check out our recommended article, which has been read by other users interested in this topic: 5 tips to know before investing in cryptocurrencies