The cryptocurrency market is rich with opportunities, and people all over the world are trying to ride the wave. Bitcoin is mentioned on social media every 3 seconds or so.
If you’re hoping to fatten your portfolio with crypto investments, you have to understand the blockchain network and how the technology works. Most importantly, you need to know what mistakes to avoid.
Read on for the most common cryptocurrency mistakes you should steer clear of.
Jumping in Without Research
You’ll always hit your head when you jump in without looking. A lot of new investors are losing money because they invest without understanding.
Study blockchain technology and how it dictates the value and performance of your cryptocurrency. Understand things like distributed ledger technology and consensus algorithm, and how they play a role.
Learn about Bitcoin, Ethereum, Ripple, and other important cryptocurrencies and what they’re based in. When you can decipher these variables, you’ll always make wiser investments.
Buying Based on Headlines
There’s a lot of noise around crypto at the moment. If you’re only following headlines, it’s difficult to know what’s fruitful and what’s a distraction.
Tokens like Dogecoin made significant headlines but have been plummeting consistently for a long time. Doom and gloom pontificators swore a decade ago that Bitcoin was a fad.
Doing your own research sets a foundation so that you’re not easily swayed by the headlines.
Failing to Craft a Strategy
After you understand crypto, bring your personality and goals to the forefront. This is how you create an investment strategy that will pay off.
If you’re trying to buy a house, retire, or pay for your children’s college, you might go slow and steady with your crypto investing. People who trade regularly might also have more risk tolerance.
Some crypto strategies that you might deploy include scalping, day trading, investing in an initial coin offering (ICO), and mitigating risk. You also have to decide between liquidity and holding onto assets for the long term.
Approach every trade with your strategy, and revisit it whenever you’re at a crossroads.
Forgetting About Security Measures
In a recent year, half a billion dollars in crypto were stolen due to several cyberattacks. Crypto is the new kid on the block, and it requires you to be vigilant when protecting yourself.
Only do business on exchanges that have top-notch security measures. They should have military-grade encryption, along with multiple steps of authentication when you log in.
The exchange should also keep detailed logs of each transaction. Any crypto OTC needs to have transparency and clarity between both parties.
Double down on these security measures by also investing in a crypto wallet. This wallet is a piece of hardware that stores all your coins offline. You’ll be able to retrieve them if you ever get hacked or otherwise compromised.
Avoid These Cryptocurrency Mistakes
Making cryptocurrency mistakes can put you in a hole if you’re not careful. Knowledge and research will help you build wealth with cryptocurrency, rather than operating out of fear.
We can help you with other investment questions as well. Study these crypto tips and check back for more articles related to finance and business.
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