Cryptocurrency has been one of the main subjects in most finance-related discussions today, and rightly so. This industry has shown consistent growth over the past few years, with more people looking to get into the mix every day. The news about Bitcoin’s gains, which saw it hit an all-time high of about CA$85,000 and the recent rise of Dogecoin, has attracted the attention of many prospective investors. (2)
The financial rewards that come with buying and selling these virtual coins are quite commendable. Unfortunately, many beginners join the market blindly and end up making regrettable decisions that can hurt their pockets. Before committing to the world of cryptocurrencies, there are some things you must be aware of. You should also take your time to learn a few skills that’ll come in handy throughout your time as a crypto investor.
To help you out, here are important pieces of information you’ll need before stepping into the field:
- Know why you’re investing in crypto
The first thing you should know and always keep at the back of your mind is your main reason for choosing cryptocurrency as a form of investment. This field is huge and contains a lot of opportunities. As such, it’s easy to get lost to the point that you’ll lose focus even before making any progress.
It’s common to find people getting into crypto because it’s a trend. Doing this, however, is risky because you’re likely to be tempted to go for quick gains without sufficient knowledge. So, it’s imperative that you set your goals even before you start learning how the crypto industry works. (3)
For instance, if your goal is to trade virtual coins rather than long-term investments, you’ll have to take your time and research the basics. The good thing is that you can conveniently access this information by visiting various crypto-specialized websites, like Coinformant and many more. Here, you’ll learn how to buy digital coins and other important facts any crypto investor must know.
- The crypto exchange you choose determines your success
Another important factor you should know before starting your cryptocurrency journey is that exchange platforms play a crucial role in your investment. Following the growth of this industry, there’s been a rise in the number of crypto exchanges. Each of these platforms claims to offer top-notch customer experience, but you shouldn’t fall for these promises blindly. (1)
As a new investor, it’s recommended that you shortlist as many exchange platforms as possible. Once you have your list, there are several things you’ll need to do before deciding on the ideal candidate, such as:
- Check if you’re comfortable with the user interface. The website should be easy to navigate
- Assess the buying and selling process––it must be straightforward.
- Go through online reviews from previous and current users. Be sure, though, to do your due diligence because the internet is full of scammers.
- Confirm the transaction costs and any other related fees to see if they make financial sense to you.
- Only invest what you can afford
When it comes to investing in cryptocurrency, perhaps the most significant drawback is the number of financial risks you’ll have to face as an investor. Once you’ve put in your money, you can either come out with huge profits or lose it all. Therefore, it’s wise to invest an amount that you can afford to lose.
Most people fail to make any reasonable profits in their first trades. So, if you’re not careful, you might find yourself giving up during the initial stages, which could’ve been your learning phases. Remember, the market is very volatile, and no matter how thoroughly you study trends, there’s still a probability of losing your money.
If you want to succeed in this industry, set aside a given amount of money specifically for crypto trading. Think of this initial investment as your tuition fee and don’t attach any high expectations to it. Use the time to learn how to invest real money. Thankfully, most platforms offer you a demo account, but trading on this account is completely different from using real money because of the pressure and excitement involved.
- Be wary of unreasonable deals
If the deal is too good to be true, then, sometimes, it isn’t worth the risk. For instance, if you come across someone claiming that you’ll enjoy 100x gains, that’s a red flag. Sure, there are situations where you can gain mind-boggling returns, but they’re very rare. In fact, some investors still end up losing it all even on such occasions despite them being genuine deals.
Do note that there’s a high chance that quick-gain promises are geared towards scamming new investors. Scammers create a sense of ‘fear of missing out’ (FOMO) to push such deals. If you’re careful, you might invest your money where you shouldn’t, as you don’t want to lose the opportunity.
To avoid being a victim of FOMO, make sure you do your homework before making your next crypto investment. The internet is full of independent news sites and impartial reviews that can help you in your decision-making.
- Keep your keys safe
Once you’re in the field, you’ll need a digital wallet to store your coins. These wallets come with private keys that you’ll use to access your cryptocurrencies. To avoid losing access to your account, you must keep these keys safe. Equally important, you must store them away from potential intruders.
It’s not a wise decision to keep your keys on your computer. Instead, write the phrase down and lock it up somewhere safe. Also, try to memorize it if you can and use the locked-up piece of paper as a backup.
Experts and analysts always caution people of the unpredictable nature of the crypto market. However, you can easily lose focus once you’re bombarded with a continuous flow of tempting deals. As a rule of thumb, always do your research on the best digital coins to invest in and the ideal exchange platform. Consider your main objectives in this investment vehicle and stick to those goals. Lastly, prioritize the security of your virtual coins to avoid any unnecessary regrets and frustrations.
- “How To Learn Crypto: A Reading List For Newbies.”, Source: https://medium.datadriveninvestor.com/how-to-learn-about-crypto-a-reading-list-for-newbies-91e73debcd39
- “Bitcoin hit an all-time high of over $68,000—here’s how to calculate how much you can afford to invest in cryptocurrency”, Source: https://www.cnbc.com/2021/11/09/how-to-calculate-what-you-can-afford-to-invest-in-crypto-like-btc-eth.html
- “Why Should Anyone Invest In crypto?”, Source: https://www.investopedia.com/tech/question-why-should-anyone-invest-crypto/
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