7 Critical mistakes to avoid if you are interested in cryptocurrencies
Over the years, as the financial market understood the potential of cryptocurrencies, it soon became an attractive investment asset for investors. Although cryptocurrency investments had made many people rich in very little time, this doesn’t mean it is straightforward to reap off good profits from small investments. There are inevitable mistakes that one could make that might end up, resulting in losing investments. In this guide, we will discuss seven mistakes that you should avoid to get the best out of crypto investments.
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Not DYOR — Do Your Research
One of the significant mistakes one could make is just investing in cryptos just because they heard from someone that Mr. X made a million dollars overnight by just making some small investments. Although this is true in some cases but in parallel, many people lost their fortune just because they invested without any prior knowledge or research. It is essential to do proper research and then make a decision accordingly.
Even if you do not have so much data or prior knowledge, simple internet research from trusted sources could help you make better decisions. You could discuss with people with relevant experiences and learn from them.
Buying the Hype — FOMO
One of the significant factors that determine the value of cryptocurrencies is the overall hype and how the market perceives it. New startups try to create a lot of hype just for the sake of convincing everyone to buy, buy, and buy. As an investor, you should avoid jumping in just because of hype.
We have seen a lot of scams in the recent pastwhere just a fancy website convinced users to buy tokens, and in the end, it was all scam, and people ended up losing their investments.
Not securing Private Keys
Making cryptocurrency transactions require private and public keys. Public keys, as the name suggests, it could be made public to receive cryptocurrencies. Private keys, on the other hand, are unique and sensitive and must not be shared with anyone.
Cryptocurrencies are stored in digital wallets, and private keys are assigned to users that indicate the owner of the wallet.
Losing private keys is one of the top ways that lead to losing everything you have. Securing private keys is very important, as if your private key is compromised. It’s just like that you have comprised your bank account.
Always keep in mind that while receivinga transaction, the only public key is required, and if someone is asking you to share private keys, they might be scammers who will steal your data. Once the private key is shared, it’s like you have compromised all your investments.
As we discussed earlier that cryptocurrencies are stored in wallets that are usually online accounts that require a password to log into the account. Remembering the password is crucial when it comes to securing your portfolio.
If you lose traditional or fiat currencies, there might still be a chance to recover them, but when it comes to cryptocurrencies, they are not recoverable.
Cryptocurrency investments arecompletely irreversible; this means that once a cryptocurrency is sent to any address, it could not be reversed back to the sender. This is because the system is completely decentralized, so there is no record of how the transaction was made.
When typing public address, be careful even if you are copy-pasting the address. Some wallets may not have a user-friendly interface, so you need to be extra careful while dealing with the keys.
Not Learning How to Read Charts
Data is always available in almost every market, but it depends on you how you utilize the data for your benefits. When it comes to cryptocurrency investments, the history of the project and the data related to that project is very crucial in determining how you would trade your cryptocurrencies.
You could observe the reports made by the senior investors. In this way, you will get more confident about your investments. When you see charts, also observe the future projections and how the market is going to do in the future. In this way, your investments will be more fruitful.
Online reputable exchanges are also one of the best sources to keep in check how a particular currency is performing. Trading is all about knowledge and making smart decisions about that knowledge. When it comes to cryptocurrencies, it is important to keep in check the data, facts, and figures and then make decisions accordingly.
To store your cryptocurrency, it is important to use a secure wallet. A wallet is that it is secure from almost every kind of security threats. Plus, it might not be suitable for you to store all your currencies at one place.
Here are some general mistakes that you should avoid:
- Overall, the cryptocurrency market is so much volatile you could never really know how things will turn out, so panicking and selling all you got is not a good idea. If a coin is going down, there is a fair chance that it could make a comeback soon.
- When it comes to diversifying your investments, it could be a good choice to make investments in different projects so you could diversify your choices.
- Cryptocurrency investments are not co much of “winning by chance” investments, as there are skilled professionals who regularly seek knowledge and apply it accordingly and not rely on just the chance.
- Although confidence is a good thing while dealing with investments but make sure that this confidence doesn’t convert into over-confidence, overconfidence will make you make bad decisions that could affect your overall portfolio.
Now that we have discussed top mistakes and issues that investors and traders make while dealing with cryptos, we hope that our guide will help you to yield maximum out of your cryptocurrencyinvestments.
Which mistake do you regard as the most common in cryptocurrencies? Let us know on our Instagram.
! Disclaimer: This is not financial advice, just the author’s views regarding the subject matter. This is for reference and informational purposes.