Cryptocurrency investment has become mainstream, thanks to the proliferation of crypto exchanges and the Bitcoin boom.
Like any other investment crypto has its own risks and rewards. Here are 4 mistakes and how you can avoid them when putting some capital in your cryptocurrency venture.
Not Knowing Enough About Cryptocurrency
Sure, you may know what a cryptocurrency is but what does it do, and which ones are profitable?
In purchasing any asset, some forethought and research is needed so you won’t fall into a scheme or find yourself losing money just because you don’t know how an investment works.
The good thing is that the world wide web has plenty of resources so you can educate yourself. You can read up on Bitcoin and crypto coins that are worth your money with the Bitcoin Evolution app.
Cryptocurrency are like stocks in that their value rises and falls depending on demand and a few other things. The natural way to make money is to sell when the value is high and buy when it’s low. Simply selling whenever you like won’t make you any money, and chances are that you’ll go bankrupt pretty quickly.
Trading apps will usually have a guide or algorithm that tells you when to sell your digital asset. Click here to learn more.
Assuming That Crypto Investments are Foolproof
It’s safe to say that all investments come with a risk, and the same applies to cryptocurrencies.
Although it’s decentralized and powered by Blockchain technology, there are times when your crypto coins can be hacked or stolen. Your wallet, which stores the crypto’s address and private key can be accessed by unscrupulous individuals. In the same vein, crypto exchanges can be hacked or experience a security breach.
That said, it makes sense to invest in a crypto exchange that has the latest security and encryption measures. Also, do not share your wallet information to anyone, or put all of them in the exchange’s storage system. Invest in a cold wallet or paper wallet so you won’t have to worry about these things.
Putting All Your Money in One Coin
It’s generally not a wise move to put all your investment capital in one cryptocurrency. No matter how stable it seems, or how the news or experts say it will make a fortune, spread out your money on several coins.
This way, when a certain cryptocurrency loses value you’ll still have others to fall back on. You can also divide up your investment by length of time- for example, you can put a third of your money in Bitcoin for long-term, a third of it in a new and promising coin and the last on a cryptocurrency lending company.
Letting Your Emotions Get the Best of You
Every action you make in crypto investment should be based on solid facts and evidence. You may sometimes hold on to a cryptocurrency even while it’s losing money, or invest in a fake crypto coin that promises ‘thousands of dollars’ in profit every day.