4 Risks Associated with Bitcoin Investing and How to Overcome Them
Bitcoin is the world’s first cryptocurrency system. It is also a financial settlement system that never sleeps. For the last 11 years, Bitcoin has showcased 99.99 percent uptime. That’s a figure higher than every major tech company.
But bitcoin also holds considerable risk as far as investment is concerned. Folks have earned close to 20 million percent ROI as of writing since remaining invested in BTC when it first started trading in 2010.
On the other hand, investors have lost their wealth’s value in bearish drawdowns of 2018 and March this year. And due to a variety of other reasons.
An investment in bitcoin can be extremely rewarding as can be seen from above. But it is important to stay aware of the associated risks, and ways to deal with them.
Risks Pertaining To Volatility
Bitcoin and its underpinning technology blockchain are relatively new compared to other tech innovations. Hence, volatility is pretty much an integral aspect of the bitcoin market as it will be a long time before the cryptocurrency can see widespread adoption.
This is similar to the boom of the internet era and the dot com bubble. Stock prices of tech upcoming tech companies went through frequent rallies and crashes before attaining valuations that are far less sporadic.
As a bitcoin investor, panic and FOMO can get the better of you, if you react instantly to the immediate bouts of movement that BTC prices go through a lot of times. You may end up losing a significant amount of cash by not being patient and observing the market.
Speaking of observation, you must always look at the bigger picture. Look at bitcoin’s market performance for the last 10 years and go through news talking about the increasing rate of BTC adoption by mainstream institutions and corporations. You will then realize that bitcoin’s volatility can become your greatest friend.
Risks Pertaining To Security
Scammers and hackers abound in the bitcoin space. Especially when the cryptocurrency market has started picking up pace this year. With BTC blasting past the $10,000 mark again, an increasing number of online robbers would want to get their hands on your bitcoin stash.
Through fake social media giveaways, pump and dump groups, cryptojacking malware deployment, and phishing, hackers could try and steal your bitcoins.
If you are an investor (and not a trader), it is important to store your BTC holdings in a setup that is not easily accessible to crypto attackers. Hardware wallets can prove extremely useful in this regard. To understand them better check out this article and the video below.
Also never fall for scams, fake bitcoin wallet apps, pump, and dump groups. Learn to see through one through extensive research and digging deeper. While transacting on a bitcoin exchange, keep these in mind:
- Create strong passwords for your account(s). This is the most important step. Create strong passwords that include numbers, characters, capital letters, and symbols.
- Do NOT share your passwords, do not share your OTPs, and do not save them in your email accounts.
- Check the official URL and the lock symbol while accessing the exchange website.
- Don’t fall for scammers in Telegram groups or any other website. Anyone asking for funds, passwords, or OTP online is probably a scammer.
- Never share your private keys or account information on mail, chat, or any social media sites.
- Use 2-factor authentication (2FA)
Using 2-Factor Authentication is probably the most important thing to do. If you haven’t enabled 2FA, your crypto is at risk.
Risks Pertaining To Rumors/Hearsay
People who don’t understand what bitcoin is, or how it works can present an extremely negative/contradictory picture from the one which you have in mind or believe in.
Rumor mongers and FUD (fear, uncertainty, and doubt) spreaders can also denigrate bitcoin to prevent the large scale adoption of BTC. They would generally say that bitcoins are worthless, they have no ‘intrinsic value’. Also, BTC is a Ponzi scheme, it is prone to hacking, bitcoin is used for illegal activities, a threat to existing financial systems, blah, blah, blah…
None of these claims are based on any solid foundation of reasoning or logic. Do your research and trust the bitcoin code. As it is totally based on principles of mathematics and cryptography. You can also go through this article – Why Do Bitcoins Have Value? to know why bitcoin rumors are baseless and without logic.
Risks Pertaining To Invested Capital
Things can go south, like really south if you allocate a substantial portion of your savings to bitcoin. As mentioned above bitcoin markets are volatile and highly fluctuating in nature.
You should invest responsibly, which calls for a mention of the thumb rule that must ideally preceed all investment actions – One should only invest the money one can afford to lose.
INR is the actual usable money with a legal tender that you can use to purchase goods and services in India. Hence, your bitcoin buying decision should be based on any excess capital/funds lying around, and not the money that you use to address financial formalities in your day-to-day life.
How To Buy Bitcoin in India
In India, you can use the WazirX cryptocurrency exchange to buy bitcoins. WazirX has a stellar reputation and a team which supports the need for adoption of bitcoin and other cryptocurrencies in India
To get started with buying Bitcoin on WazirX, first begin by registering on the platform, followed by completing a KYC procedure. Then you can deposit INR funds to purchase BTC.
Step 1: WazirX Account Creation
- Head over to the WazirX website or download bitcoin app. Click the Sign-up button.
- Fill in your email address and desired password.
- Check I agree to WazirX’s Terms of Service. Do go through the Terms of Service first.
- Hit Sign Up to complete.
- Check your email inbox for a verification mail and click on Verify Email to complete the process. If you haven’t received it, check your spam folder. Or hit Resend Here. After a successful verification, you should see this message:
- If you’d like to change your email address, click on Restart the registration process and start over.
This is the last stage of the registration process. Select your country from the list of options:
You will then be asked for KYC verification.
Congratulations! You now have a functional trading account on WazirX.
Step 2: Depositing Funds
How to deposit INR on WazirX
KYC verification should be completed before depositing funds
We can make a deposit via UPI/IMPS/NEFT/RTGS. We’ll need to submit our transaction details to WazirX for verification purposes.
We can make a deposit via IMPS/NEFT/RTGS. Here we have to skip having to submit our transaction details. In case the INR deposit is rejected, check out the WazirX support page for such issues.
How to deposit cryptocurrency on WazirX
Depositing cryptocurrencies into your WazirX account, either from your wallet or another exchange is an effortless process. It’s also free – with no fees on any deposits!
You begin by obtaining your deposit address from your WazirX wallet. Then, you share this address on your holding wallet for transferring your cryptocurrencies. For more details, check out the WazirX Support page on depositing cryptocurrencies.
Step 3: Buy Bitcoin
Now you are ready to buy Bitcoin with your deposited Indian rupees.
- Visit the Exchange to view the latest bitcoin price
- Scroll down, you will find the BUY and SELL options on your dashboard.
- Enter your desired price in INR and the amount of BTC that you have planned to buy
- Hit PLACE BUY ORDER and wait for the order to execute
Once the transaction is executed, you will find the appropriate amount of bitcoins added to your WazirX wallet.