- August 5, 2021
- Posted by: admin
- Category: Blog, Media
It has become public knowledge that cryptocurrency has made millionaires out of people. However, before you give in to temptation and dive into the darkness also known as crypto; here is some sage advice you should pay attention to before starting to invest in this lucrative industry.
1. Plan your budget wisely
Cryptocurrency is a very very VERY volatile investment. With no insurance or regulations in place, there is a chance you might be starring down an empty wallet if you are not careful. Prices of crypto coins can be likened to that of a roller coaster ride, with crazy highs and depressing lows; not to mention the sickening feeling in your gut when it drops into the red as well.
Case in point, only invest what you can afford to lose. Chances are, you may lose them all before you gain during your early stages. Stock, FOREX, bonds, etc traders tend to find themselves losing money when they first started out trading; what’s to say trading crypto isn’t the same?
2. Do your homework
If the volatility doesn’t kill you, the terminology will. That’s why it is important for beginners to start from the basics, lingo. A good way to do this is to surround yourself with friends who do crypto, chances are you will pick up a term or two along the way. Familiarise yourself with the trading platforms, fees, and taxes, as well as wallets; these are some of the key things you will definitely need to know when you start trading.
Read as much as possible on not just cryptocurrencies, but on which crypto coin you probably want to invest. Some key tips for choosing coins, pick those that have good use-cases; coins such as BNB are widely used as a payment method for tokens on the Binance Exchange (one of the largest crypto exchanges) and have good use cases. Certain cryptocurrencies offer really attractive features such as cashback, don’t just take their word for it; ask the devs or team about how it works and how it is delivered. If a token is legit, chances are they will be more than happy to indulge you.
Pro-tip: You may find hidden gems during this pandemic when certain markets are at an all-time low. There are tokens that are tagged to these markets and once the economy starts to improve, so will the value of these hidden gems. I.e. tourism and travel industry.
3. Confirm your data
Do not believe all that you see online. You might have stumbled upon a particular crypto’s whitepaper and get all smitten with its promises (or worse, a chart filled with only green candlesticks), but remember to verify the data! Not everything written in PDF is the truth; do some simple calculations, read up on their ideas and concepts to determine whether it is even viable in the first place. You do not want to buy into fluff talk.
Another tricky situation you might find yourself in; you might be in the midst of doing your research when suddenly you are added (or told to join) said crypto’s group chat. VERIFY THIS. Do not blindly accept invites or join just because you are told to do so, there are scheming people who carry out “PHISHING” attacks by imitating certain coins, causing you to unknowingly transfer or buy “fake” tokens. Think counterfeit goods.
4. Security and YOU
Picture this; you found wonderful crypto to invest in, got in early, and are now enjoying the fruits of your labor when suddenly you find yourself unable to log into your crypto wallet. Sadly enough, this situation happens all too commonly. When you create your wallet (if you don’t know what that is, you need to research more) you will be granted a “seed phrase”. DO NOT DISCLOSE THIS. A “seed phrase” is basically the key to your crypto safe, put it in the wrong hands and you may very well find your crypto wallet emptied out, and remember, there are almost no regulations or laws to protect you when that happens.
There are multi-signature wallets for those who are interested, whereby as the name states, requires multiple signatures in order to access the contents of such wallets. These come with their own drawbacks though, if you ever find yourself in a pickle with the other signatory, you might find yourself unable to access the wallet. So please make sure you work with people you know you can trust.
5. Starting small, lose small
You might want to start small by buying 1 coin, but really, you do not have to. Bitcoin is priced at US$40,047 per COIN, you do not need to have 40k in your wallet just to buy BTC; you shouldn’t actually. Most if not all cryptocurrencies can be divided down to decimals, so if you want to commit less than a full token, you may simply input the amount you want to spend with.
Pro-tip: Understand how tokens get their value/coin. Most new tokens start off considerably cheaper than their larger counterparts (i.e. BTC). Do take note that new tokens carry the risk of failing completely, dropping your investments down to near 0. However, new tokens also carry immense upside potential as your dollar is fully maximized.
6. It’s all about the emotions, NOT
Nothing good ever comes from acting out of fear or greed, so do not let it get the better of you. The volatile nature of crypto doesn’t help either, mainly because many people bet a substantial amount of their life savings on crypto, hoping to turn a quick buck. Oftentimes these people give in to FOMO, Fear Of Missing Out; they see a 50% spike in growth and instantly entered the market. This is not researched; this is peer pressure.
Hence, these people aren’t investors/traders, they are gamblers. So, hopefully with careful research and diligence, you will not make the same mistake as them.
7. Slow and steady wins the race
One of the best and safest ways to dive into the world of crypto is to practice Dollar Cost Averaging (DCA). Set aside a small pool of investable cash (which you can afford to lose!) and enter the market at regular intervals. Doing so not only limits your downside potential, but it also ensures that you are updated with the market at every step of the way. This in turn saves you time and stress, allowing you to stay vested in the long term. Anyways, good-quality cryptocurrencies are always here to stay, so why the rush?
Pro-tip: Certain cryptocurrencies, like TripCandy, allow holders to earn even when people are selling. One such method is via “reflections” whereby a certain percentage of a seller’s tax gets redistributed as tokens into your wallet! Limiting your downside potential even during a “dump”!
Read more: TripCandy, should you pay attention to this hidden gem?