What is the best strategy if you are a beginner with Bitcoin? A safe, conservative strategy is always best for a beginner. You don't need to take major risks in order to grow your Bitcoin portfolio. All you need is a good plan that fits your risk tolerance.
I remember being overwhelmed when I was getting started with Bitcoin. There was a lot to learn and no one really had any solid experience dealing with it. A lot has changed over the past few years and there are at least 7 different strategies that people are using (outside of mining) to build their Bitcoin holdings. Some are more safe than others and may be better suited for a beginner.
7 Ways To Get Involved With Bitcoin...
1) Trade Bitcoin For Other Goods or Services: A friend of mine had some Bitcoin that he was willing to trade in exchange for some items that I had for sale. It was a fair exchange based on what we both thought was a good value. There may be people in your life that have some Bitcoin that they would be willing to trade. Another thought is using a company like Open Bazaar. It works similar to eBay except that each transactions is made using Bitcoin (and other cryptocurrency.) If you have items in your basement you would like to sell, this may be an easy way to earn some Bitcoin.
2) Lend Your Bitcoin To Earn Interest. This is probably my favorite strategy for accruing Bitcoin. There are companies that will pay you interest if you're willing to let them hold your Bitcoin and lend against them. In other words, it's a lot like how a traditional bank offers you interest to store your money so they can turn around and lending it for other uses. Many companies that provide this type of service also offer guarantees that your funds will be safe and they will also pay the interest in Bitcoin. The company that I like most is a company call Blockfi. You can read "Blockfi Review: Earn Interest & Passive Income With Crypto" or review their website for yourself Here.
3) Own A Business That Accepts Bitcoin: When I first got started looking into Bitcoin I didn't have much money to invest. One of the solutions I found was to accept Bitcoin payments in exchange for products and services. Depending on what type of business you own this may be a cool and less expensive way for you to be growing your Bitcoin holdings. If you're interested in this idea read: "How To Accept Cryptocurrency: What, Why, & How"
4) Buy Bitcoin And Hold On For Dear Life (HODL) Everyone knows this strategy. It is a good strategy for someone who sees the long term potential of Bitcoin but doesn't really want to follow it from day to day. This is a long term strategy, and the idea is to basically hope that prices will continue to rise in the future. I do a fair amount of Hodling myself and this is not a bad strategy if you have money you can afford to speculate with. The downside is, it also leaves you at the whims of what the market and doesn't give you much control of growth (or loss).
5) Invest For Capital Gains: This is similar to buying and holding, with the exception that you are planning to buy low and selling high in the future. You have a plan of what prices you want to enter and exit the market at. In addition, this plan should also consider tax ramifications and transaction fees. You can also short sell your Bitcoin if you think prices are going to go down, but it is risky and probably not a beginner type strategy.
6) Day Trade: Day trading is basically trying to catch volatility. For example, if you bought Bitcoin this morning for price (X) and it goes up a certain percentage by the end of the day you would quickly sell and capture the difference for profit. This is a risky strategy because the market is very volatile and moves all over the place during a given day. In addition, your tax plan needs to be considered carefully due to higher short term capital gains taxes. This is also probably not a great beginner strategy unless you have significant formal training in day trading.
7) Use Leverage: Leverage is the ability to borrow money and buy an asset with it. You are basically gambling and trying to multiply your rewards. The downside is that it also multiplies your losses if prices moves against you. This strategy is not recommended as a beginner strategy. It is very risky you can lose massive amounts of money if you're not careful.
What Should A Beginner Do?
#1 Have Goals And A Solid Plan: Define what success looks like and then create a strategy to accomplish that picture.
#2 Start With Educating Yourself: Don't invest in anything you don't understand!
#3 Start With A Conservative Approach: Making money in cryptocurrency is easy if you stick to a simple, long term plan. Keep your strategy as low risk as possible to start and then work your way into more advanced strategies as you become more knowledgeable. For example, acquire Bitcoin then Earn Interest with it. This will consistently grow your portfolio overtime. From there you can get more advanced.
#4 Find A Good Mentor: Having someone who can guide you through the minefield will help you avoid costly mistakes, make more money, and point you in the direction of the best tools to use.
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