There are over 144 million bitcoin wallets in the world, but not everyone makes off their share. Because, let’s face it, buying bitcoin is much different than investing in bitcoin.
If you want to know how to invest in bitcoin and make money, then you need to be strategic and do more than just hold onto BTC.
Learn more about getting bitcoin and making money off of it in this guide.
Fluctuating Market
The first thing you should know about investing in bitcoin is that the market is volatile. Prices can drastically go up and down with little notice, minute by minute, day by day, and month by month.
Knowing this, you should always keep an eye on the price of bitcoin.
You also need to stay on top of cryptocurrency news in general. If you read about an event that would affect the market, then you need to be ready to buy or sell your BTC.
A good example of this is in early November 2022. The price of bitcoin crashed end went from $21k to $15k in a matter of 5 days. Why did this happen? Because a major exchange, FTX, was involved in an internal scam that caused them to file for bankruptcy and led to the arrest of the CEO.
This event caused a major crash in the crypto market that has yet to be recovered.
This is an extreme example of how one event can fluctuate the market. And for most people, it would be difficult to get out before the cash.
There are smaller examples that could be detected and acted upon. For instance, a company backing out of a deal with a coin or a major investor selling a large portion of their bitcoin.
Avoiding Fraud
After reading about so many cryptocurrency scams, you may wonder: is bitcoin safe to invest in?
While there is no sure way to avoid losing your investment, you can be aware of potential scam tactics to limit your chances of a loss.
However, not all scams are obvious. Just look at FTX. It was one of the most popular exchanges with over 1 million users that handled a $385 billion annual trading volume. No one knew or thought that it would declare bankruptcy and be involved in such an elaborate scam coming directly from its CEO.
Luckily, most scams are on a smaller scale. However, in the world of crypto scams, there are two types: the long scam and the short scam.
Short Scam
A short-term scam is quick and most likely obvious to the conscious observer.
The different types of short scams include:
- Investment
- Phishing
- Hack
- Giveaways
Each one of these quick scams takes advantage of a new or desperate crypto user. Let’s go over each one and how to avoid them.
Investment
You may be looking to buy bitcoin, so you are looking at various exchanges or have posted something on social media about it. This makes you a target for investment scams.
These scams are messages from strangers that claim they have made large amounts of bitcoin and can help you too. They ask for an initial investment to turn into a profit.
Never believe something if it sounds too good to be true, and avoid giving people bitcoin in hopes of a profit.
Phishing
Phishing is a general term to get people to take action to gain information. For example, you may get an email that looks like it is from the exchange but is fake.
The email could contain a link that asks for your login details or has malware attached to it.
No matter what the scheme, the attacker is always searching for information. So, never give your information away. Don’t click on links; rather, go to the exchange directly to see if the email message is valid.
Giveaways
There are ways to get free bitcoin, but not all of them are real. You should be skeptical about random people giving away large amounts of bitcoin, especially on social media.
In exchange for the supposed free bitcoin, you will be asked to verify your account with a deposit.
Instead of falling for these types of scams, look for legitimate ways to get free coins, like on PayPal earn.
Fake Exchanges
Some scammers will go as far as creating a complete crypto exchange to get your deposit and not allow you to withdraw your crypto or bitcoin.
They may also shut down the site without notice, leaving you broke.
Be sure to research the exchange before using it. And never sign up for a website just because it is offering something other major exchanges aren’t.
Long Scam
Long scams are more intricate and take some time, but in the end, you will lose your bitcoin.
There are two main long-term scams: rug pulls and Ponzi schemes.
Rug Pull
This type of scam wouldn’t apply to bitcoin since it is an established and levitate coin. However, there are almost 22,000 other cryptocurrencies available to buy.
And anyone can create a cryptocurrency. This also means that scammers can create a coin or a token to do their project. Once they get enough people investing in the coin by buying their token, they shut it down.
Tokens have no value outside of the platform, so holders of the token lose the bitcoin that they used to buy it and are left with worthless tokens.
Be sure to research startups before you invest. While it could be a worthy earlier investment, it could also be a scam.
Ponzi Scheme
A crypto Ponzi scheme relies on new investments to pay the current ones. No real money is being made; only new money is coming in.
This type of scheme can sound tempting and even legitimate to someone new to investing. However, it is not the way to invest in bitcoin since you get trapped. Then the only way out is to become a scammer.
So, how do you get around the scams and still make money? Continue to find out.
Knowing When to Buy and Sell
Now that you know how the crypto market fluctuates and how to avoid scams, you need to know when to buy and sell Bitcoin since this is the only way to profit with bitcoin.
Making a profit means more than just buying Bitcoin and holding on to it. There are good times to buy as well as good times to sell. You may also buy and sell BTC several times, making a profit within each cycle.
Buying and selling bitcoin is called trading. There are several kinds of crypto trading, including:
- Scalping: buying and selling within minutes
- Day Trading: buying in the morning and selling by the end of the day
- Swing Trading: holding onto your bitcoin for several days or weeks
- Position Trading: watching trends in the bitcoin market to know when to buy and sell
The first three trading strategies can help you make a small incremental profit, but they aren’t long-term investments. Position trading allows you to keep your bitcoin longer and for a potentially higher profit.
Much of the bitcoin price fluctuation depends on the fear and greed index. This meter gauges the emotional sentiment of traders, companies, and the general public, which complements buying and selling trends. Monitoring the market patterns can help you decide the best times to buy and sell for profit.
How Much to Invest in Bitcoin?
The last thing you need to consider when investing in Bitcoin is how much you want to buy.
There are no limits on how much Bitcoin you can buy, except the amount you can buy at one time or over a month, depending on the crypto exchange and your account status.
If this is your first time buying Bitcoin, then you can start with low amounts so that you can get used to the market, find a reliable exchange, and choose a secure wallet.
Follow the steps below to get started with your bitcoin investment.
How to Invest in Bitcoin and Make Money in 5 Easy Steps
Buying your first bitcoin is easy. All you need is a credit/debit card and some fiat to transfer.
- Find a platform to buy bitcoin
- Register, verify, and secure your account
- Choose a payment method
- Buy bitcoin and store it in a wallet
- Use your bitcoin
You can complete these steps, sometimes in a matter of minutes.
How to Choose a Bitcoin Exchange or Trading Website
Picking the best cryptocurrency exchange or website to buy bitcoin is your most difficult task. This is because there are so many.
This task also depends on your country of residence and your preferred payment method. So, let’s go over the features to look for when choosing a bitcoin buyer.
Does the crypto exchange or platform offer the following?
- Ways to buy bitcoin with a credit/debit card and/or bank account
- Security features like 2FA (two-factor-authentication)
- Fast processing times to buy, sell, trade, and withdraw BTC
- An app to check your bitcoin price on the go
- A secure wallet to keep your BTC safe
- Support your current country
You can also learn more about a bitcoin ATM where you can buy bitcoin using cash.
Register, Verify, and Secure Your Account
No matter what crypto platform you choose, you will need to make an account to buy bitcoin.
You can usually use your email or phone number to register. Sometimes, when you learn how to buy bitcoin on Coinbase, you will need to submit a KYC (Know Your Customer) information report to verify your identity.
You might also need to verify your bank account with test deposits.
Next, you want to secure your account by enabling 2FA, Google Authenticator, or a pin code to log in to your account. Securing your account can also increase your purchasing, trading, and selling limits as well.
Choosing a Payment Method
How you buy bitcoin will affect how fast you receive it and how quickly you can trade or withdraw your BTC.
Here are a few ways to buy bitcoin:
- Credit Card
- Bank Transfer
- PayPal
- CashApp
- Cash at a bitcoin ATM or peer-to-peer exchange
Each method has different fees and various processing times to be aware of.
Purchasing Bitcoin and Choosing a Bitcoin Wallet
Now that you have registered with a crypto exchange platform and picked a payment method, it’s time to actually buy bitcoin.
Most platforms—other than more complex cryptocurrency exchanges—are straightforward.
You can choose a buy order for a certain price or instantly purchase a market order that is set to the current price of BTC.
Either way, once you click “buy bitcoin,” your order will be placed on the blockchain. You can check your buy order status on the platform under the orders tab. You can also check your bitcoin transactions on the blockchain at blockchain.com.
Once you have your bitcoin, you want to send it to a crypto wallet to keep it safe. When your bitcoin is left on an exchange, it is vulnerable if the exchange gets hacked.
There are many different kinds of bitcoin wallets, the main difference being offline and online. Offline is obviously safer yet less convenient.
The most accessible way to securely hold your bitcoin is on a wallet app.
Use Your Bitcoin
If you plan to buy altcoins, you now have your bitcoin secured in a cryptocurrency wallet or on an exchange. So what do you do now?
Firstly, you can keep your BTC in the exchange to trade it for other coins and create a cryptocurrency portfolio.
But, if you just want to hold bitcoin for now, you can simply transfer it to your wallet using the “receive” address.
Once in your wallet, you can hold onto BTC as an investment. Be sure to check the price of bitcoin often just in case you can sell some or all of it for a major profit.
Secondly, you can spend your bitcoin just like any other money, except your “wallet” is virtual this time.
Getting the Benefits of Investing in Bitcoin
Now that you know how to invest in bitcoin and make money, you should also know why it is a good investment.
Bitcoin is always appreciating in value, it supports a decentralized monetary system held up by its shareholders, and it is an easy and reliable method to buy consumer goods.
Stay up-to-date on bitcoin by visiting our Market section.
