Cryptocurrency Mistakes You Should Certainly Try to Avoid
Cryptocurrencies are known investments to offer high yields that could potentially surface from high-risk investments. But still, due to its unpredictable and volatile nature, there’s always that chance that you can either walk away with big bucks in your wallet or go home disappointed after blowing your account.
Before choosing to invest in any sector or market, it’s always important that you educate yourself about the investment to minimize mistakes and stay ahead of the market. Similar to how you’d make an informed decision based on score predictions, you can read up on tips you can use to avoid making unnecessary mistakes that could cost you in the near future. So, to save you time on what you should not do, we’ve put together a friendly piece to follow on this.
Mistakes You Should Avoid
Invest Without Knowing
Whether you’re dealing with cryptocurrency or another asset, you should always make sure you’re well educated and fully understand exactly what you’re getting yourself into. Allocate enough time to find beneficial resources and learn all the basics that go into crypto investing because the last thing you want to do is place your money in an unpredictable and risky market that could leave you losing lots of money.
Here are key points you should have thorough knowledge on regarding the basics relating to crypto money:
- It has no physical representation and is completely digital, existing only in the virtual world
- It’s universal meaning that it can be used across various borders and countries
- Transactions only occur online through peer to peer exchange
- It’s decentralized making it your sole responsibility to keep record of what goes on with your investment
- It’s encrypted meaning that you won’t be required to provide any of your personal information when needing to make an investment
Should you happen to encounter any problems relating to your investment, you can receive assistance from the following parties since cryptos are unregulated and completely decentralized:
- Central Bank
- Securities and Exchange Commission
- Depository Insurance Company
Assume Cryptos are Foolproof
Encryption doesn’t guarantee you complete security and to assume this with cryptocurrencies is a huge mistake to make. The fact that cryptos offer encryption simply means that there’s a level of confidentiality that has no relation to not being hacked or not having your funds or information stolen.
Because you’re dealing with a decentralized asset, you are solely responsible for keeping your digital money safe. So, to do this, here are some tips on how to protect your investment:
- Avoid sharing your keys with others
- Avoid leaving crypto coins in exchanges for extended periods of time
- Always store your coins in your digital wallet
Not Giving The Math Enough Attention
Always keep your eyes fixed on the prize when you’re making any kind of investment and focus on the investment’s profit potential. This, however, will not be possible if you don’t pay attention to the numbers.
By assessing things like transaction fees, price changes, and taxes, you can avoid events leading to excessive trading where profits could potentially turn to losses just because you make the mistake of not including things like fees and taxes in your computations.
Basing Decisions On Emotions
You’re likely to encounter acronyms like FUD, HODL, and FOMO when you’re dealing with crypto investments. Each one of these represents some form of strategy, however, they’re also driven by emotions which you should avoid when making investment decisions.
When you hold on to investments or buy and sell based on volatility and hype, respectively, you could become susceptible to losses, scams, and fly-by-night schemes. Also, by allowing your emotions to get the better of you, you could risk going against market sentiments and research stats.
Investing In A Single Cryptocurrency
Bitcoin happens to be the leading and most popular cryptocurrency of all of its kind. Though it is still experiencing a bull run as we speak, it is still able to plummet and trigger significant losses anytime.
For this reason, it’s always best to diversify your virtual assets with other cryptos that can also offer you returns just as good as Bitcoin like with Altcoin and Ethereum. So, as they’d say with putting all your eggs in one basket, we urge you to expand your investment portfolio and explore other options.