What Do You Need Before Buying Bitcoin?

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  Investing in cryptocurrency is associated with great risk, primarily because digital assets are highly volatile. However, this is far from...

 Investing in cryptocurrency is associated with great risk, primarily because digital assets are highly volatile. However, this is far from the only reason that can lead to losses. There are other nuances that must be considered before buying digital coins, writes RBC Crypto.

Spontaneous purchase

Before buying a cryptocurrency, first of all, you should understand what it is for: it is a long-term investment or a tool for speculation. The point of entry into the asset and the strategy of market behavior will depend on this, explained Vladimir Smetanin, director of the financial company Newent. According to him, the secret of successful trading in the market lies in the correct determination of the moment when it is better to buy an asset and when it is better to sell it.

“It is important to think in advance how to act in the event of a sharp collapse or growth in the price of a cryptocurrency,” Smetanin said.

In case of drawdowns in quotes, traders succumb to emotions and can act impulsively, therefore, it is necessary to decide in advance on the reaction to emergency situations, having designated for themselves the levels of profit or loss fixation, the expert-recommended.

A relatively safe and win-win time to buy bitcoin is when its price is 80-90% below the historical maximum value, the so-called ATH (All-Time High), added co-founder of 1inch Network Anton Bukov.

Black market

The number of chats for over-the-counter (OTC) digital currencies continues to increase in the Telegram messenger. Such sites usually have their own system of recommendations and reviews, but there are no guarantees. The scale of cryptocurrency fraud on Telegram is so great that the   IRS has paid attention to it.

Because of this, buying cryptocurrency on Telegram and other unregulated OTC markets is considered one of the most unreliable ways to become the owner of digital assets.

The most reliable method of buying cryptocurrencies is considered to be conducting an operation on a large centralized exchange that obeys the requirements of regulators, as well as identifies its customers (KYC), and counteracts money laundering (AML) schemes.

Unsafe storage

After buying a cryptocurrency, the investor faces the question of its safe storage. Even if the coins were bought on one of the largest crypto exchanges, leaving the tokens on the exchange wallet is not the safest option. The addresses used by exchanges to store assets usually contain large volumes of cryptocurrencies, which attract fraudsters.

Often, cryptocurrency exchange wallets become targets of hackers. The largest attack in the history of the crypto industry is considered to be the hacking of the Mt.Gox exchange, as a result of which digital assets worth more than $ 450 million were stolen (at the exchange rate at the time of the attack). Because of this, the site ceased to exist. The liquidation process of Mt.Gox continues to this day, as well as the lawsuits that were initiated by the site's clients in the hope of receiving their funds.

The safest way to store cryptocurrency is a hardware wallet. When using such a wallet, you should make a backup copy of the seed phrase (a set of random 12, 18, or 24 words to restore access to the wallet). Typically, the seed phrase is printed on paper and stored along with important documents.

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Cryptocurrency Magazine - Crypto Market Updates: What Do You Need Before Buying Bitcoin?
What Do You Need Before Buying Bitcoin?
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Cryptocurrency Magazine - Crypto Market Updates
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