The cryptocurrency market has become one of the most interesting financial markets of the past few years.
Huge price swings and crazy volatility are normal, and unlike the stock market, it’s always live.
Some investors have made significant returns thanks to the volatility of crypto, with the USD to ETH chart showing historical trends. Despite this, crypto can be a very risky investment.
Aside from the fact the price can change rapidly, the market is also plagued by issues with scams and hackers.
If you want to invest in cryptocurrency, you need to know about the major mistakes to avoid.
Not Understanding Cryptocurrency
Before you make an investment, it’s always a good idea to do a little research and understand exactly what it is that you’re investing in.
You wouldn’t buy stock in a company unless you know what that company does, and the same should be true for cryptocurrency. While the market can seem confusing, crypto itself is relatively easy to understand.
Some terms like blockchain and decentralization might be unfamiliar, but once you learn the definitions, it’s a lot simpler to grasp the basics of crypto and how it works.
Different cryptocurrencies often fulfill different purposes, and some do far more than simply utilize fast online transactions.
Make sure you know what a cryptocurrency does before you invest in it, and don’t get carried away by marketing hype.
Hoping To Get Rich Quick
A lot of cryptocurrency investors have seen the major gains that some people have made and think that crypto is a way to get rich quick.
While it’s true that it’s made some people very rich, those are mostly the early investors and the lucky few who got in at the right time.
That’s not to say that investing in cryptocurrency can’t make you rich, but it’s important to manage your expectations and avoid getting carried away.
Most of the people who make money in crypto are those who buy and hold long-term rather than those hoping to make short-term profits.
Market crashes are relatively common, and the value of your investment can easily be wiped out overnight.
That’s why it’s important to take a slow and steady approach and accept the risk that comes with investing.
Not Paying Attention To Fees
While a lot of crypto can be bought and moved around cheaply, fees are an issue.
Before you invest, it’s a good idea to take a look at the major crypto assets and how they work.
This should include looking at typical fees when making transfers. To move your coins around and even to make trades, you normally have to pay fees to the network and the exchange itself.
These are required for the network to operate, and are part of the incentive for miners to process transactions.
If you’re trading regularly, these fees can quickly eat into your profits if you’re not careful.
There are ways to reduce fees or avoid them altogether, but you’ll need to be smart and swap your coins in an efficient manner.
Always check the fees before you confirm a transaction, and look for ways to reduce them if possible.
Some coins have much larger fees than others, so it makes sense to avoid these when making transfers.
Not Keeping Your Coins Secure
Buying crypto is one thing, but you also need to keep your coins safe. Some investors keep their assets on an exchange, but this is risky.
Should the exchange go out of business, your coins could be at risk. This is why it’s always important to create a wallet to store them.
Crypto wallets essentially allow you to interface with your crypto on the blockchain, setting up transfers easily.
When creating your wallet, always store your seed phrase safely and avoid revealing your private keys to anyone.
If you don’t mind not being able to access your crypto quickly, investing in a hardware wallet is the best way to keep your coins secure.
There are a lot of different options out there, and they all offer a high level of security.
You should also be mindful of potential scams, avoiding anyone who offers to help you increase your investment or offering services that are too good to be true.
Unfortunately, scams within the world of crypto are common, and it’s easy for new users to be tricked by them.
Pay attention to who you’re sending your money too, and never give out your private keys.