Jodie James, Freelancer
It seems as if the meteoric rise of cryptocurrency isn’t going to falter any time soon. Ever since their inception, these digital forms of currency have gone from strength to strength. What once was considered to be a passing fad is now a huge investment opportunity for those that wish to take the plunge.
However, crypto is a little different from other investments. So much so, that many people do not get the most out of it because of a tiny misunderstanding. You can prevent these mistakes by preparing properly. As such, here are a few pitfalls that you should avoid when investing in cryptocurrency.
Do Not Be fooled By A Low Price
The most common sentiment in investing states that you should always buy low and sell high. This strategy may work with regular companies, but cryptocurrency works a bit differently. You can make a good profit by buying and selling crypto at the right time; however, a low price may indicate trouble.
A low price for cryptocurrency may be the investment opportunity that you have been looking for, or it could mean that something is wrong with the currency. Unfortunately, you can’t just go blundering in like with the regular stock market. Take the time to read user reviews to make sure that you are getting a decent product and not falling victim to a poor choice of crypto.
Many investors choose to buy into cryptocurrency because of its security benefits. The blockchain codes are enough to trace every transaction, which means any stolen bitcoin can easily be found and returned. This does not mean that fraud does not occur.
Spoofing is a term used to describe fraudulent inflation or deflation in cryptocurrency. This activity creates a demand for the product and many people are willing to pay the price. Unfortunately, the fraudsters will then cancel these orders and walk away with the money.
It isn’t easy to spot spoofing until it has already happened, so you are better off sticking to the big names in crypto for your first investment. However, if you spot a small or unknown unit of crypto skyrocketing in price it is likely to be a fraud.
The idea of cryptocurrency can be difficult enough for the general public to understand. Unfortunately, this ignorance is enough for criminals to prey on.
Some nasty criminals may choose to create a fake version of a coin and lure in the uninformed. While it is a rare occurrence, it always pays to be on your guard around something you aren’t too familiar with. There is plenty of advice online from industry experts such as Paxful about where to buy Bitcoin safely. Always exercise caution when you are dealing with something new. If a deal seems too good to be true then it probably is.
Remember Your Log In
All of your cryptocurrency is stored in something called a crypto wallet. You should think of this as your personal bank that allows you to manage all of your investments. From here you can buy and sell coins, check the status of your investments, and trade with other users.
Since your crypto wallet is a purely online function, you will be asked to provide a key phrase when you log in. However, forget this key phrase and you may find yourself in a sticky situation. Most crypto wallets do have a key phrase retrieval process, but these are often long and arduous. You don’t want to miss out on an important sale at this time. Make sure that you always remember your log-in details, or at least keep them at hand.
Don’t Get Discouraged
The hardest part of investing in anything is the risk. There is no guarantee that the money that you put into a company will be returned, and it is the same with cryptocurrency. In fact, many new investors will lose money on one of their crypto purchases at some point.
The important thing to remember is that you should not let this discourage you. The landscape of digital currency isn’t simple, so treat your loss as a mistake and learn from it. Of course, it always helps if you start off with small investments. Only once you have learned the tricks of the trade can you make a large and informed investment in the crypto market.
Every new venture requires some patience and time to learn. Cryptocurrency may be new but that does not mean that it is impossible. Take your time and avoid the pitfalls above to ensure that you have the most success possible. At the end of the day, you should know enough about cryptocurrency by now to have a good start. However, if it stops being fun just walk away. You can always try your hand at something else.