The Do’s And Don’ts Of Bitcoin

The Do’s And Don’ts Of Bitcoin

Bitcoin has taken the world by a storm. It is a digital currency best known as a cryptocurrency that does not require any involvement by the central bank nor any peer-to-peer (P2P) individual administrators.

There is no physical existence of bitcoins. Their balances are adjusted on a public ledger saved in the cloud, and its transactions are verified by nodes through cryptography by the computer systems, i.e., the blockchain.

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They are an independent entity, i.e., they do not require issuance or backing by the banks or the government. It is not a legal tender; however, they still rank high in terms of popularity, and due to them, there has been an emergence in the rise of other virtual currencies like Altcoins.

It was launched in 2009 and, since then, has been the world’s largest Cryptocurrency.

If you are planning on investing in cryptocurrencies, there are certain things that you need to keep in mind:

 

Know Your Cryptocurrency Before Investing

 

Before you move towards your investment options, it is always best to know everything there is to know about them.

You need to conduct thorough research on what you want to buy, how you want to buy, and how much you are willing to spend. Never invest in anything that you don’t understand.

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Ask experts or take online classes and educate yourself on how cryptocurrencies work, what the blockchain method is, and which digital currency is best suitable for you. It is always advisable to consult a financial analyst before making any move.

Conduct a SWOT analysis as well based on market research and its prospects. Determine what its mortality rate is going to be and how much beneficial and disastrous this decision, and this investment will be for you.

 

Invest Cautiously

 

Bitcoin is a risky investment. As many chances there are of you succeeding, the equal chances there are of you losing. Hence, invest wisely.

Invest only the amount that you are willing to lose. There have been numerous cases of people falling into debts and losing everything when they invested in bitcoin by taking out a loan and using their assets as collateral.

There are no rules and no laws that protect you from the consequences of Cryptocurrency. Whether if you bear losses, if you are cheated, if there is a technical glitch or if you make an error, you will have to suffer.

 

Never Panic And Be Patient

 

It is always the right approach if one observes patience while investing. Sometimes, the news and the media headlines may influence you to sell your currency in the fear that you might make a loss. This is called Panic Selling. Hence, it is always advised to be patient and trust your gut.

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Use The Exchanges That You Trust

 

Whenever dealing with a digital currency, it always advised to used reputable and secure online exchange platforms.

There may be hundreds and thousands of online exchanges, but there are only a few that are regulated. Most of them fail to provide transparency in terms of their way of working, operation, and how well funded they are and what their cybersecurity looks like.

 

Always Keep Yourself Up To Date By Reading The Whitepaper

 

Reading a whitepaper before investing is a must. You will not only get to know about the latest trends and patterns but the more you look over it carefully, the more you will be able to catch red flags.

A whitepaper is a specialized paper that describes multiple projects, their aims, and the technological methods they adopt. They also explain solutions, like taking blockchain methods.

 

Store Your Digital Asset Holdings Securely

 

Once you have invested in bitcoin or any other digital asset, it is very crucial that you work towards securing it. Securing your digital assets can be done in multiple ways:

 

1.   Wallets

 

In order to secure your holdings, it is always advisable to use personal e-wallets. There is a wide variety of wallets that you can select and store them on your computer systems. They are just like the real wallets and serves the same purpose and are as much vulnerable as them.

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As the bitcoin transaction rises, the number stored in a wallet also increases. It is a smart move to store your bitcoins in multiple wallets for protection in case of theft, error, and scam. If such a catastrophe happens, your investment will still be secured, and your loss will still be at a minimum. Hence, always divide your bitcoins in multiple wallets.

It is imperative that one treats their e-wallets just the same way as they would in the real world. The holders need to be vigilant and handle everything with the utmost care. Therefore, some of the bitcoin shares should be kept offline, and the wallets are always and regularly backed up in case of loss.

Wallets can be stored on your personal computers as well as your mobile phones.

 

2.   Encryption

 

Encryption has always proven to be the most reliable mode of securing any data. You can encrypt your wallet as well so that it is safe from online attacks and theft. They are never exploited, and you have the option of reverting them to a back-up copy and save them in more than one place so that your total losses are recoverable.

One must be careful in knowing that not all computer systems are protected and secure. Hence, you should be alert about your environment and must not expose your wallets everywhere, even with encryption.

 

3.   Password Protection

 

Password protection is one of the oldest and effective methods, and everyone knows how important it is to always password protect your data. It is also applicable to bitcoins. After you encrypt your wallet, it is a good measure that you password protect your encrypted wallet.

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Your password should be unique and not the same as your other passwords. It should be challenging and complex at the same time. If your password is easily remembered, then there are chances that your wallet can be hacked. Hence, you can save your passwords inside a locker or a safe and protect it in real-time. The more complicated it is, the harder it is to hack it.

 

4.   Machine Protection

 

Always protect your machine on which your e-wallets are stored, whether it is through password protection or physically by locking your devices such as phones, memory sticks, or hard drives in a safe or a locker.

Machine protection is extremely crucial because if your machines are not safe, then your money is at risk. Any form of system protection can help. Whether it is through your regular anti-virus programs or avoid installing doubtful software on the same system as that of bitcoin data, anything will work.

 

5.   2 Factor Authentication

 

2-factor authentication adds another blanket of security over your bitcoin transactions and wallets. Make sure that you keep it enabled at all times. It will help you verify your identity every time you enter your password or login. It keeps the hackers at bay and makes you alert if there is an unauthorized attempt to log into your data.

 

6.   Bitcoin Malware

 

One should always be aware of bitcoin malware that can infiltrate and steal funds from your wallet. Hence, always take precautionary measures, as discussed above.

If you have been attacked by malware and your bitcoins are at risk, it is recommended that you perform a system wipe out and reinstall your operating system. You can recover your lost bitcoins through your multiple back-ups.

Bitcoin Malware

Never save all of your wallets in one system. Scatter them around on different systems and keep a backup of it in different locations.

Use a sound firewall system and an anti-virus program. Be personally vigilant and don’t give in to any assurances blindly.

Remove all the unused software and programs and avoid using that system for any other work, and it increases the risks.

 

Always Buy Low And Sell High

 

This one is pretty self-explanatory. You would always want to buy your bitcoins at a cheaper rate and sell them when they get expensive. Buying low and selling high will give you enough profits during your trade and save you from losses.

 

Be Smart And Protect Yourself From Scams

 

You need to be smart and vigilant when dealing with bitcoins. You should be aware not to click on random links and webpages related to blockchain or join any questionable community groups. Have trusted financial analysts by your side that will guide you towards the best course of action and make decisions based on your research and judgments.

 

Cryptocurrency Is Not Free

 

Don’t fall into the trap of getting free bitcoins from someone, whether it is a celebrity or an influential person or anyone. Nothing comes for free, and if there is, then there is always a considerable catch attached to it.

 

Check Everything And Re-Verify Your Trading Activity

 

Always be sure that you are transferring your bitcoins to the correct and corresponding wallet.

In case you accidentally send it to the wrong wallet, your funds will be lost forever, and there is no chance of being able to recover it again.

For example, you can only send ETH to an ETH wallet. If you send it to a BTC wallet, which is for bitcoins, you will lose your ETH funds.

Therefore, it is highly crucial that you make sure and double-check everything that you do.

 

Don’t Participate In Pump And Dump Schemes

 

These pump and dump groups are highly prevalent in the crypto markets and are most likely there to manipulate the price of bitcoins; the trading volumes are little. You may be tempted to join these groups or activities, but DON’T. It is illegal to do so, and if you are caught, you can serve in prison for a long time. The risk of losses is very high, and in other words, it is digital gambling.

 

Be Aware Of Bitcoin Scams

 

When there is money involved, there always chances of scamming to be involved. There are many things to be aware of as follows:

 

1)   Bitcoin Awareness Scam

 

Criminals and thieves are always looking forward to stealing the bitcoins without the fear of getting caught. Over the years, many types of scams and tricks have been played out. The method and the system are so fragile and require extra care by newcomers.

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2)   The PayPal Buyer Exploit

 

The PayPal bitcoin scam was one of the earliest scams recorded in bitcoin history where payments made from PayPal accounts and cards for investing in bitcoins were used to scam the sellers.

Typically, a bitcoin seller accepts payments for a bitcoin transfer through fiat currency online using services like PayPal. Once the payments are cleared, the bitcoins are then transferred.

One must know that services like PayPal and others cannot protect the users against the Bitcoin scams. Hence, don’t use them for your bitcoin transactions.

 

3)   Mining Hardware Scam

 

Bitcoin mining can be done on any computer and is not as profitable. However, the interests of many bitcoin miners can be exploited. Thus, one should be familiarized with technology before getting into this business.

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Many hardware available for bitcoin mining claims themselves to be top of the line. These websites take advance payments for upcoming offers and cancel them at the last minute without paying back the customer’s money. These things happen with physical sales as well. They might give you defected hardware with no return policy. Thus, do your research.

 

Be Aware Of @Bitcoin. Don’t Get Fooled!

 

The promotional account for bitcoins cash (BCH) is not @bitcoin on twitter that has around 950k followers. Hence, don’t be fooled by the information that they give out. Bitcoin cash is not the same as bitcoin. Do your research.

 

“The Next Bitcoin” Is A Fraud

 

Over the crypto markets, there are thousands of cryptocurrency projects by the name of “The Next Bitcoin.” It is only aiming at the newcomers to buy their versions of bitcoins. One should be aware that there is only one bitcoin, and their version is not authentic.

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