The cryptocurrency trading world has experienced extreme volatility. It has made investors become millionaires and even paupers. The loss of crypto coins can be because of wrong predictions, getting hacked, losing wallet keys, or falling for scams.
BitcoinBasis is a platform dedicated to cryptocurrency and blockchain topics. It shares all the current developments in the crypto landscape. It even protects investors from making wrong decisions or erroneous assumptions. Here are some biggest mistakes people need to avoid while investing in crypto.
Not considering security seriously
Good security is crucial when you buy crypto because if you lose your crypto coins, you will be unable to recover them. Blockchain technology allows buying goods without any need for a financial institution or bank. It is accessible using private & public keys. If you lose the key your crypto coins get lost.
As there is no regulated institution you cannot approach password reset requests. The one who got your wallet keys will control your crypto coin. Some security essentials to consider –
- Choose a reputable exchange – even if blockchain technology is encrypted or cannot be hacked, you cannot feel the same for the potential crypto exchange you plan to buy or invest in. There are scams about fake exchanges designed to steal cryptocurrencies. Check the security credentials of the potential exchange.
- Choose wallet wisely – Wallet protects your crypto keys. There are cold and hot wallet types to choose from. A hot wallet is similar to the one you carry in your pocket. They are less secure because of the 24/7 connection with the internet. They are suitable for the small amount necessary to trade or spend. Cold wallets are offline physical storage devices. They can cost a little more but are safest for Bitcoin storage.
- Protect computers and smartphones – You can trade, buy or sell crypto using any device, the mantra here is to prioritize its security. Use a 2-factor authentication, non-guessable, unique, and encrypted password. You also need to protect devices from viruses or malware attacks.
Important tip – Never lose your wallet password or share information with anyone.
Not gaining cryptocurrency investment knowledge
People never buy shoes without trying. In the same way, before investing in the crypto trade market you need to gain an insight into its working, benefits, and drawbacks. On social media, people say that Bitcoin is a lucrative investment and you need to give it a try. Stock investors must realize that lack of cryptocurrency knowledge may cost them. Never act because everyone else is doing. A little research can help in planning a strategy, making informed decisions, and avoiding getting scammed.
Investing in Bitcoin-only
Portfolio diversification protects investors against market volatility. Just like you would in non-crypto assets, you need to diversify crypto investment. If Bitcoin value collapses, you will have other crypto assets that can mitigate the loss. You can consider other cryptocurrencies like Ethereum, Tether, etc., and potential safe investments like mutual funds and stocks.
Buying cryptocurrency has lots of advantages but there are also plenty of uncertainties. Crypto is still in its infancy and there is hardly any regulatory authority controlling it. It is advisable never to invest in crypto more than you can afford to lose.