How to buy Bitcoin

What to consider before buying Bitcoin

bitcoin hype
By John Mathews
In: Lifestyle
Dec 07 2017

Recently a few friends have asked me how they can buy Bitcoin. Here are a few things that come to mind:

  1. I’m not your financial advisor and this is not financial advice. These are my personal opinions only.

  2. Don’t invest what you can’t afford to lose.

  3. If the price falls 50%, you need to be able to wait whilst the price recovers.

  4. Write down the following:

    • How much you can afford to invest. Consider how much cash you will need over the next year, how long it would take to recover any losses, etc.

    • How long you want to invest it for

    • How much you want to make

  5. You will need to get good at identifying and ignoring the following, even from your friends:

    • Hype

    • Fake news

    • Fear, Uncertainty, Doubt (FUD)

    Don’t trust. Verify.

  6. Point 5 is really important and one of the best reasons to invest - money has an intensely psychological quality about it, and crypto currencies are the most intense trading experience there is right now.

    By putting something you care about in a risky situation (it is risky) you will experience anxiety and excitement. You need to control your psychology and identity when other people are trying to manipulate you. This is useful in all areas of life.

  7. Almost no one has a clue what’s happening. Conventional economists and traders certainly don’t. This is crypto-economics and the rules haven’t been worked out yet. We’ve never had this tech before, and the internet has made everything - communication and innovation - much quicker. This is a powerful combination of factors and we haven’t seen them play out before.

  8. Take some time to read about the fundamentals and understand the tech as much as you can. Think about why people would behave in certain ways and what makes bitcoin useful, or not. Get started on this today, it will take some time.

    • YouTube has a tonne of videos, and these two sites are good and detailed (one, two).
    • Twitter has a lot of current and new information, but also a lot of bots and scammers spreading hype and FUD (see point 4). You can see who I follow on twitter.

  9. If you’re going to lose sleep over your investment, invest less.

  10. Don’t buy at an all time high. Do your research, wait for the price to correct. Prices fall. The chart below shows the 20 day and 55 day moving average compared to the daily price. My opinion is that by early January the price will have returned to between the 20 day and 55 day average before beginning to rise again.

  11. Coinbase is a user friendly and reputable exchange, there are other good exchanges too.

  12. Don’t make financial decisions when you’re feeling rushed. Check your psychology.

  13. If you’ve bought some Bitcoin or other cryptocurrencies, don’t store them on an exchange. Transfer them to a wallet that you control. If you don’t own your private key, you don’t own the asset. If you don’t know what that means, go to point 8.

Leave a comment if you think I’ve missed something or if you disagree.

BTC hype

bigger chart

I’m not your financial advisor and this is not financial advice. These are my personal opinions only.


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