It can be really exciting getting involved with Bitcoin. But a number of newcomers keep making the same mistakes when they get involved. Some of these mistakes can be very costly so we bring you 5 mistakes that you must avoid at all costs to ensure that you get the most out of your participation with Bitcoin.
- Using your Exchange Wallet to Store all of your Bitcoins
Bitcoins are now worth a lot of money which makes them attractive to new investors. It also makes them attractive to hackers and thieves as well. Most people purchase their Bitcoins from a cryptocurrency exchange. When they do this the exchange provides them with an online wallet to store their Bitcoins.
Keeping all of your Bitcoins in your exchange wallet is a bad idea for two main reasons. The first of these is security. It is almost impossible to hack the blockchain for Bitcoin but online exchange wallets are a much easier prospect. If a hacker gets into your online exchange wallet then they can take all of your Bitcoins.
The second reason you should never keep all of your Bitcoins in an exchange wallet is because they can suspend or even close down your account for a variety of reasons. If they close your account down altogether then you lose any Bitcoins in your exchange wallet.
- Not having Secure Places for your Bitcoins
There are different types of wallets that you can use to store your Bitcoins. The online or mobile wallet offers the highest level of convenience but the lowest level of security. You can use these wallets for small and regular Bitcoin transactions.
You can get a more secure wallet which is an application for your desktop or laptop computer. Some of these are free and some require a small payment. These are medium security Bitcoin wallets as you can disconnect your computer from the Internet.
Paper wallets are more secure. As the name suggests you print off your vital Bitcoin information to paper and then you can store this where nobody else will have access to it (such as in a safety deposit box).
Finally the most secure wallet is the hardware wallet. This is a USB stick where you can store your Bitcoins. You only need to use the hardware wallet when you are making transactions. Take it out of the computer when finished. Hardware wallets are fairly expensive but they are worth it.
- Price Change Panics
It is no secret that Bitcoin is a volatile currency. Price swings of around $100 a day up or down are commonplace. Sometimes newcomers to Bitcoin investing panic when they see these price changes – particularly price drops.
There is no need to panic. Bitcoin tends to go up and down in price in cycles. It has steadily risen in value over the years and there is no reason to think this will not continue.
- Shifting from one Cryptocurrency to another
If you are going to invest in Bitcoin then stick with Bitcoin. Jumping around from one cryptocurrency to another never works well. Don’t be tempted by Altcoin as this is not as well established as Bitcoin.
- Not knowing enough
You need to know as much as you can about Bitcoin to get the most out of it. Understand how it works and study its price change patterns. There are many Bitcoin communities that you can join on social media.