The prospect of massive profits has tempted people from all walks of life to invest in the cryptocurrency boom. Yet reputable cryptocurrency websites caution first-timers not to go in blind as they start investing, and to keep in mind some common errors along the way.
Top 4 Rookie Mistakes in Cryptocurrency Investing
While it’s natural to make mistakes during the early stages of your investment journey, being aware of these common pitfalls will help you avoid costly slip-ups and increase your chances for profit.
- Investing more than you can afford
If you need to refinance your house, sell your car, or borrow money when you can barely pay your bills, then you’re already doing it wrong. Cryptocurrency investing is no different from traditional investments – there’s a high degree of risk, and you can’t expect to be an overnight millionaire.
While the future of the blockchain and cryptocurrencies looks bright, treat it as a hopeful gamble. Stay positive about the potential, but only invest what you can afford to lose.
- Not caring too much about security
Securing your wallet, private key, and exchange is critical for keeping your online investments safe. You can lose your entire balance if any of these are compromised. Unfortunately, many beginners fail to secure these elements, making them vulnerable to hacking attempts and fraud. Three excellent ways to up your security are:
• Cold storage solutions – use hardware wallets to protect and verify your transactions
• Having multiple locations for your private key – print out or write down your keys and hide them in multiple locations that only you have access to such as a safe
• Using encryption – encrypt the text file or folder that contains your key
- Starting the investment with mining bitcoin
There was a time when mining was the hottest way to make money in the crypto sphere, but those days are long gone. Today, mining requires a large number of computers, exceedingly complex calculations, and tons of money, time, and other resources that do not make financial sense for the average person. Therefore, individuals who want to begin investing should avoid mining and focus on the blockchain and cryptocurrency instead.
- Falling for “easy money”
There are a lot of scammers who prey on novice investors whose sole focus is making a return on investment. A classic scam in the industry is called the High Yield Investment Program (HYIV). They ask users to send money to the company and guarantee significant daily, weekly, and monthly returns without specifying how they intend to grow your earnings.
A good rule of thumb is to choose digital asset management companies that impose a minimum term (some as longs as 24 months) in which your funds will be invested. Check the company’s portfolio and background, as well as their partners. Study cryptocurrency news to find out existing scams.
Always keep in mind that there is no such thing as instant returns when it comes to investing in the blockchain, and any company who promises that is probably running a scam.
Protect Your Investments in the Blockchain
Learn as much as you can about the crypto world and investing before you even buy a single coin. The more you know, the more capable you are to make good decisions. Instead of doing it on your own, it’s an excellent idea to work with a digital asset management firm that can guide you throughout your journey in the blockchain.