I always get tons of question on what the easiest way to buy Bitcoin safely is. I describe everything in great detail in my bestseller “Cryptocurrencies simply explained“, which we recently updated to the latest version (https://geni.us/crypto_simple), but I understand that many people just want to use a short and simple guide. This is exactly what I want to give you in this blog post.
A warning first:
unfortunately there are many people and companies, which offer rip-offs and scams around cryptocurrencies and want others to invest their hard earned money into get-rich-quick-schemes. Therefore, always be especially careful when people try to pressure you into an investment or promise seemingly low-risk high-returns.
Step 1: The right capital amount and timing
The question of the appropriate time is just as difficult as the amount of capital one should invest into cryptocurrencies. There is no right or wrong, however each individual must answer these questions for himself. Personally, I think that 1-10% of one’s liquid capital is a good amount to invest. If you have 10,000 USD on your side, 500 USD makes sense, for example. Why? In the unlikely event that everything is gone, you might be angry, but it is not the end of the world. However, if the 500 USD turns into 50.000 USD, you will be very happy. The reality however, will be somewhere in-between the two scenarios.
Nobody knows the right timing to invest either. That’s exactly why I recommend to halve your investment or even divide it into thirds and invest it in two or three tranches – for example 2 × 250 USD over a period. Never get tricked into running after the market, but rather use a Dollar-Cost-Averaging Strategy – that’s statistically the safest method. Meaning: Just buy at regular intervals no matter what the price does. That’s much better than what most people do, which is running after trends and buying in much too late. In the crypto industry we speak of FOMO – Fear of Missing Out.
Step 2: Getting USD onto an exchange
In the second step, we select a suitable exchange, which should be reputable and charge as little fees as possible. You have a huge amount of exchanges to choose from – I personally use the following two and have never been disappointed:
Kraken, if you like a more traditional exchange and pay by bank transfer: https://kraken.com
Bake, if you would like to have an all-in-one platform where you can pay by credit card and also get interest on your bitcoins: https://bit.ly/bake_JH *note that Bake is one of my own companies
Step 3: Exchange fiat for bitcoins
If you used a credit card, you most likely directly purchased the crypto you wanted to have. In many cases though, you make a transfer and now have euros on the platform. Now you simply exchange your euros into bitcoins. This works differently depending on the platform, but should be relatively intuitive. I recommend that you buy the first 50% of your capital that you are willing to invest in crypto at the market price.
For the other 50%, I would give myself a period of time when I would reinvest. Either after 1-2 weeks, 1-2 months or when you see that the bitcoin price has dropped a lot.
Step 3.1 (optional): Exchange Bitcoin for altcoins
Altcoins (alternative coins) are all cryptocurrencies that are not Bitcoin. They often have other characteristics and some have very different applications. However, most of them are still at the beginning and it is very uncertain how things will develop.
In 2021, there was an extreme altcoin boom. In some cases they made several 100x within a few weeks or even days. As fast as the boom came, so did the crash of most altcoins. Some investors are more than 95% in the minus with their investments from back then, to this day. That would be just $26 today from an original investment of $500 investment!
With this I do not want to scare you at all, but only prepare you so that you do not get into FOMO.
I keep my crypto portfolio rather simple with my 3 main coins Bitcoin, Ethereum, and DeFiChain, and even my crypto portfolio is only one part of a larger investment portfolio which also includes stocks, commodities, bonds, etc.
(optional) Step 4: Store your cryptocurrencies securely
Most exchanges have a huge disadvantage: you don’t control your coins yourself, but you have to trust the platform. If it gets hacked or goes bankrupt, your money is probably gone. The original idea of Bitcoin and other cryptocurrencies is that you can store them yourself without trusting anybody, but that has proven to be a risk as well. What if you are not so technically advanced or lose your own access? That’s why I use a mix of both storage methods. The model that I personally use for self storage is the following: www.julianhosp.com/hardwallet
Step 5: Stay always up-to-date
The crypto market moves incredibly fast and it difficult not to miss any important news among all the noise.
However, my free newsletter makes it easy for you. Just register here and get regular insights into the most important market events and my thoughts on them: https://ceonews.bake.io/
With these five simple steps, you should not only be able to buy and hold cryptocurrencies safely, but also sell them at a convenient time. I hope I have given you some important tips.
If you want to know even more about crypto, blockchain & co, also follow me on social media – you can find all the links below.
Have fun and good investments,
Your Dr. Julian Hosp
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