Cryptocurrncy market is growing, everyone wants to get into the ride. You can probably pick any of the top coins randomly and expect to profit. However I have noticed that there are a couple of mistakes that people repeat often.
Here are the top 10 mistakes that all newcomers to cryptocurrency should run away from:
1. Not conducting personal research
You will definitely run at a big loss if you buy cryptocurrency with your hard-earned money without understanding what it is and its value. You may get into serious troubles if you only listen and rely on the so-called crypto “experts” on social media and blogs.
There is no point relying on someone’s tweets or posts before you buy or sell crypto. The best thing for you is to conduct a personal research and make decisions based on the results of your research.
2. Don’t mine and expect huge profit
No doubt, early and original miners of crypto like Bitcoin and Ethereum would have been multimillionaires by now. However, don’t be tempted to spend a huge sum of money just because you want to start mining crypto without proper research.
Mining is only about buying your own rig, and you should know mining consumes a lot of electricity. Except you have access to cheap electricity and other required resources, it might not be worthwhile to mine. Besides, cryptocurrency newcomers are not advised to mine because of its technicalities.
Crypto newbies find it hard to be patient. They are easily overwhelmed with other people’s posts like, “Yes, there is a huge pump. Buy more” or “WTF, seems ETH is being dumped, it is better to sell now.” While information like this may be true, it is better to exercise patience because those who get rewarded the most at the end are the patient. For example, those who held Bitcoin for more than four years have really gained a lot. This would not be so if they had sold or dumped it when one Bitcoin was less than $1.
Don’t get it wrong. You can still make profits from short-term trading, but most people make losses. However, if you want to do short-term trading, ensure you a plan and follow the plan patiently.
Warren Buffett described stock market as a tool used for transferring money from those who are impatient to those who are patient. In this regard, one can refer to crypto as the stock market.
4. Selling when price is assumed to be high enough
No one knows what the worth of a token will be in the future. Someone who bought Ether when it was $10/Ether may never believe it will worth as high as $860 after some months. Assuming such person had sold his token when one Ether was $100, he would have regretted selling cheaper.
Always create a crypto selling plan for yourself. After making this plan, you must stick to it irrespective of the temptation. Whenever there is a price surge, if it is not in your plan to sell, DON’T SELL.
5. Failing to hold your private keys
This particular mistake is the most common and perhaps, the greatest mistake. Many people have lost a lot of money because they entrusted all the cryptocoins they had to an exchange that later had issues, or a crypto wallet service that later crashed. To avoid this disaster, it is advised to hold and keep your private keys.
6. Not finding good crypto-communities to learn
This is another thing most crypto newcomers fail to do. I was able to learn about crypto—and still learning—from great crypto-communities where I gained knowledge, support and motivation. Some great communities are listed below.
7. Transferring to a wrong wallet in a crypto-exchange
Obviously, this is a grave technical error that a huge number of people usually make, but it can be easily fixed. The solution to this mistake is to slow down. Double-check and confirm that the exchange wallet you are sending funds to is for the token you are transferring. Never make the mistake of sending ETH to BTC wallet or LTC to XVG wallet.
You may send different tokens to MyEtherWallet in as much as the tokens are ERC20, but never do this for exchange wallets. You will lose your funds or crypto if you do so. Ensure you send the right token to the right wallet.
8. Failing to keep hard copies of your digital credentials
This doesn’t mean you should save all your passwords in MS Word document, instead you should write the passwords and private keys on Word doc and print them. You can delete the soft copy after the printing.
Ensure that the hard copies are kept in a secured place. So, whenever your computer is stolen, crashes or compromised, you can use all these details to restore your accounts and crypto onto another device.
9. Failing to use 2FA or storing the recovery codes
Whenever possible, it’s essential to enable two-factor authentication (2FA) on your exchange accounts and wallets. You should also print your recovery codes on a paper and store offline. A lot of people have lost access to their accounts because of their insensitivity to account security or inability to find their recovery code. Customer support may not be able to help you if you are unable to provide your recovery code.
10. Fear of Missing Out (FOMO)
The Fear of Missing Out has pushed many crypto newcomers to make rash decisions that weren’t palatable at the end. Some have bought worthless or scam ICO tokens because they are afraid of missing out on such opportunities.
The truth is that several new opportunities come up every day in the crypto world. Therefore, you should patiently do your own research before investing in any crypto, and not because of FOMO.
These are the common avoidable mistakes that every newer to crypto should avoid. I have the belief that the article will help you in.
If you are aware of other common mistakes let us know in the comments below.