Bitcoin Exchange Bithumb Announces 50% Layoffs
18 Mar 2019
Bitcoin is a piece of stellar technology and undoubtedly one of the best investment options out there. Of course, it’s not a low-risk investment, but if you’re smart about it, it pays off well. In the past one month, the price of Bitcoin has grown by 130%, which is remarkable.
If you have not started investing in Bitcoin, then you should really consider doing it now. If you don’t have a lot of cash with you, you can always buy a small amount of Bitcoin to start with. Like any other systematic investment, you can invest a small amount every month.
There are many ways by which you can invest in Bitcoin:
The best thing to do is number 1 – buy in and hold onto your bitcoins for a while.
For now, I will assume that you are someone who has already invested in Bitcoin or is planning to invest soon. To ensure your security, there are a few things you need to watch out for.
Note: This post is useful for both beginners and experienced users.
1. Don’t tell the world – “Hey! I got bitcoins!”
The biggest mistake that most newbie Bitcoin investors make is telling everyone about their investment. It’s ok to educate people and tell them about Bitcoin and let them know how they can get started with Bitcoin. But shouting about how many bitcoins you own is a big risk.
Here is a scenario you need to consider:
Let’s say Ryan purchased 100 bitcoins (costing $10) in 2011. In September 2017, that same $1,000 investment is now worth over $400,000 dollars. People who remember him talking about his 100 bitcoins purchase have already told their friends about Ryan’s good fortune. While Ryan may have trusted his friends, he doesn’t know who his friends are talking to. Many of them might want to take extreme steps to get ahold of that money.
In short, since Bitcoin is not controlled by the government or any 3rd party, your security is ultimately in your own hands.
Image credits: FactorDaily
Believe it or not, such incidents have actually happened. You can read about some of them here and here.
So do yourself a favor… don’t tell the world about how many bitcoins/cryptos you own.
2. Don’t keep Bitcoin in exchanges.
Alright, so you have purchased Bitcoin from one of the popular exchanges like Coinbase, CEX, or any other exchange.
Most of these exchanges offer free wallets inside the exchange where you can hold your Bitcoin. However, you should never keep your coins in these free wallets for more than a day or two. In fact, I recommend you transfer it to your own wallet ASAP.
Again, Bitcoin is not regulated yet, and most of the exchanges’ T&Cs state that you are responsible for your own financial security. In the past, a few exchanges were hacked, and many users lost their coins.
If you want to read about one such scandal, here is an interesting Wiki page about the infamous Mt. Gox scandal.
Mt. Gox was not the first time, and it will not be the last time. And unfortunately, you can’t do much after losing your bitcoins.
Once they’re gone, they’re gone for good.
So, Harsh, where should I store my Bitcoins?
Glad you asked. Here are my suggestions:
You should ultimately be the owner of your private key. If you don’t own private key, that means you don’t own your Bitcoin. You can read about private keys here.
Do remember, this suggestion is only valid right now when Bitcoin’s price is around $4000. If the price goes up (you decide how much is a high price for you), you should never store Bitcoin on exchanges for any amount of time. Instead, immediately transfer your holdings to a mobile wallet or a desktop wallet. Again, if you own a lot, getting Bitcoin hardware wallet is a good idea.
Alternatively, you can create a paper wallet. Paper wallets are free and highly secure. But they take a lot of time and require a little technical know-how.
Summary of this section: Don’t ever leave your Bitcoin on exchanges.
3. Don’t monitor Bitcoin prices daily, or even weekly.
Treat your Bitcoin investment like any other investment; monitor the price, but not so frequently that it becomes an obsession. Many users get into Bitcoin thinking they will get rich quick, which can be true due to its high volatility.
However, this volatility also means the price could go down significantly in the span of a day or two. This may make you panic and sell all of your Bitcoin. This is one of the biggest mistakes that one can make. Moreover, monitoring the price regularly will create anxiety, and you will lose a lot of focus on your regular tasks.
Now, if you’re a day trader or seasonal trader, then this is an exception. However, if you have a full-time job or some other responsibility, treat your investment into Bitcoin as you would any other investment – focus on the long-term gains instead of the short-term fluctuations.
If you want to monitor the price, you can use apps like CoinCap and set up price alerts. This way, you will get push notifications when the Bitcoin price hits your target, and you will not miss out on knowing the milestones of Bitcoin’s bull or bear race.
4. Don’t rush to tell your girl/boy about your Bitcoin investment.
So you are dating the most beautiful girl in the world, and you plan to marry her. Would you tell her about your Bitcoin investment?
This is similar to number 1, but there’s an additional problem here that needs to be addressed.
In many countries, divorce is very common, and what comes with divorce, often, is a loss of a considerable amount of your assets. The laws about Bitcoin assets are identical to the laws governing all other types of assets regarding marriage.
I’m not a legal counselor, but I would advise you that you should not immediately rush to tell your future better half or recently married wife/husband about your Bitcoin assets. It can wait, and you will eventually let him/her know because you want your family to experience the freedom that your Bitcoin investment has given you.
My suggestion is to not hide the information that you hold a considerable amount of Bitcoin, but just let a few years pass by before you willingly divulge that information.
This is to ensure your safety if you live in a country where asset division is standard after a divorce.
If you are worried about what will happen to your Bitcoin investment if something terrible happens to you, in that case, you can create a step-by-step guide about how to access your Bitcoin in a locker that your partner can get to in case of any drastic event.
Disclaimer: In many countries, this tip doesn’t apply. However, based on your country and situation, make a wise decision.
5. Don’t tell your friends/relatives where your recovery phrase is.
Recovery phrases are the 12-24 word long seed words which you use when setting up your wallet. The rule of thumb is to keep this recovery phrase as secure as possible.
If you must, you can give half of the seed key to one person and the other half to someone else.
However, it’s important that you don’t tell anyone where have you kept your Bitcoin recovery phrase. It’s like telling someone where have you hidden your gold.
You can even use a brain wallet and memorize your seed or recovery phrase, but this is risky. If you do choose to go this route, make sure it’s IMPOSSIBLE to guess.
Because human beings are generally very predictable, anybody with a bit of social engineering skills can usually find out your recovery phrase, and you will end up with nothing.
Here is a quick summary:
Some of these tips are pretty obvious, but they need to be said over and over again. Many people make stupid mistakes, and it’s best to avoid any potential problems before they arise.
Do you have any more tips for Bitcoin investors? Let me hear your thoughts in the comments below!
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