Introduction
Bitcoin refers to the type of virtual currency that uses blockchain technology to perform transactions (to receive or send funds). It is one of the most popular investment options in the world. It can be exciting as well as overwhelming if you are investing in bitcoin for the first time. Here are some crucial things first-time bitcoin buyers should understand before making purchase.
10 Essential Things To Be Considered Before Buying First Bitcoin
1. Familiarize Yourself With Cryptocurrency
Before making investment you need to know what you are going to buy. Therefore, you should understand cryptocurrency or bitcoin that helps to make investment decision. Bitcoin is a kind of cryptocurrency that uses cryptography and blockchain technology to make and record transactions. It is considered as a currency so it has a monetary value. It is not controlled by central bank or government like traditional currency.
2. It Is Volatile In Nature
Price of bitcoin can swing(increase or decrease) dramatically within hours. Therefore, it is considered as a high risk asset. So, you should be prepared for potential losses and invest money only you can afford.
3. Choose Right, Reputable And Reliable Exchange
You need a cryptocurrency exchange to buy bitcoin. There are different platforms or exchanges such as Binance, Bitstamp, Kraken, Coinbase, Bybit, KuCoin, OKX etc. Select the most reputable and reliable exchange that provides good customer support, has strong security measures and regulated in your country.
4. Transactions Are Irreversible
We should take care while making bitcoin transactions because transactions cannot be reversed. Only receiver can refund the fund. So, always do business with reputable people and organizations.
5. Transfer Bitcoin In Crypto Wallet
You need to transfer your bitcoin in a wallet because it can be hacked if you leave it on an exchange. There are two types of crypto wallets : Hot wallet and Cold wallet. Hot wallet is suitable for frequent trading and cold wallet is useful for long-term holding.
6. Be Aware Of Transaction Fees
It involves network fees, platform fees, trading fees and withdrawal feel while buying and transferring bitcoin. So, you need to understand the fee structure before making any transactions.
7. Understand The Tax Policies
You have to pay capital gain tax when you trade, sale or purchase goods using bitcoin because it is considered as taxable asset in some countries. Therefore, you must understand the tax implications.
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8. Be Aware Of Scams And Risks
There is a chance of scams such as Ponzi schemes, fake exchanges and giveaways etc. in the crypto space. So, you should be aware of such scams.
9. Start With Small
As we know that bitcoin is volatile and involves high level of risks, you should start with small investment as a beginner. So , only invest what you can afford to lose.
10. Stay Informed And Educate Yourself
You need to stay updated on laws so that you can avoid legal issues. As crypto world is evolving quickly, you should learn and be updated about blockchain technology, trends and risks in the market, other cryptocurrencies etc.
