A huge number of people have at least thought about investing in crypto. The blockchain systems of finance are growing quickly, and plenty of us want to make sure we don’t get left behind.
You may have also heard some of the stories about people who have made an incredible amount of money in the past having invested in cryptocurrencies in their earliest stages or even mined the coin to generate wealth.
As with any investing system, there are potential mistakes that can be made. In this guide, we’re running through five of the mistakes you should avoid if you want your investments to be profitable and avoid losing money.
Not doing your research
It can be tempting to jump right in and start to buy crypto and see how it does, but this is not always a good idea. The people who have the most success when it comes to trading are those who do their research. This could mean understanding what factors are likely to influence the industry in the coming days and weeks, or tracking the Luna price to see the very best time to buy.
Try not to rush in, you can take a little time to work out which cryptocurrencies interest you the most and learn which will offer the best growth opportunities as well as the most security.
You may even wish to improve your skills by studying online. There are plenty of opportunities to learn more about the industry.
While the majority of cryptocurrencies are trustworthy, you should absolutely do your research to learn more about the company in question. Sadly, whenever there is money involved, there are also likely to be scammers involved, and there have been a couple of cases of this happening in the cryptocurrency sector.
Just be sure to do your research and trade at a reputable place and you should be fine, but once again this boils down to doing a bit of research.
Forgetting about the fees
New investors may forget about the fact that there are some fees involved.
For example, similar to when you convert money to go on vacation and are hit with some fees, this is also possible with crypto. A lot of crypto exchanges give you the lowest fees and they are also a very simple way to trade, so this can be a good way to trade with minimal fees.
Always check your fees, especially when using a credit card to buy. Some credit cards charge fees that can be 3-4% or even higher. This means that if you are buying a lot of crypto then there is the potential to get hit by a big fee, not what you want if you are trying to turn a profit.
Not using a cold storage wallet
A cold storage wallet is not the same thing as an online wallet. Cold storage wallets usually come in the form of USB sticks which have advanced encryption (both hardware and software) to help protect your currency. Your funds are stored using keys. Without a secure system to save these keys you may be vulnerable to hacking.
Online wallets take a bit of this out of your control too. It is possible that an online wallet held with either an exchange or another company could be hacked and your crypto stolen without you having done anything wrong. Make sure you think about the best way to store your currency safely.
Not thinking about the long term
Crypto seems to be here to stay, and this means that any investment should be seen as a long-term opportunity rather than a quick fix or a short-term turnaround.
Some people are guilty of this after hearing stories of people investing and managing to make a huge amount of money when a crypto takes off a few months later, however, the short-term outlook may be one of the worst investment strategies.
Nobody knows exactly what is going to happen in the future, but it definitely seems that crypto will become more mainstream and potentially a lot more valuable. Don’t think of this as a way to quickly flip a currency for money.
Summary – Getting started with investing in crypto
By avoiding these mistakes, you can ensure that you don’t end up losing your money easily and that you have a good chance of a positive return. Doing your research and buying responsibly is always a good idea for those who want to invest in cryptocurrency.