10 Things to consider before investing in Cryptocurrencies
Keeping one’s head above water in the cryptocurrency excitement is difficult for any investor. Individual and institutional investors are increasing, including digital currencies in their holdings. While this is happening, analysts have not stopped warning people about the risk of investing in cryptocurrencies due to their inherent instability.
If you’re considering putting money into the cryptocurrency market, you should do your homework just like any other investment. More information on what you should know before investing is provided below.
Let’s see the things you must consider before investing in Cryptocurrencies
Before putting money into cryptocurrencies, it’s important to ask yourself why. Numerous other investing options exist, many of which are safer and more secure than digital currencies.
Is the current faddishness of cryptocurrencies all that piques your interest? Or is there another factor that makes particular digital tokens more appealing as an investment? The cryptocurrency market may appeal more to some investors due to its unique investment objectives.
1. Never invest in anything you don’t fully comprehend
This is another timeless and applicable Warren Buffett phrase. Never put your hard-earned money in danger if you don’t fully comprehend the potential consequences. Learn the benefits and drawbacks of cryptocurrency investments. Dos and don’ts of investment should be considered only when you have a firm grasp on the potential benefits and drawbacks of investing. To begin investing, you must first learn the rules. Please take the time to read this entire piece before making any financial decisions. So that you don’t leave this page without at least checking out the resources I’ve linked to below, let me remind you that they are located at the very bottom of the page.
2. Do your Research
Spend at least 24 hours of concentrated reading time learning about blockchain technology, cryptocurrencies, and the precautions you should take before putting your money into the market for these assets. Keep in mind that there is no such thing as too much knowledge and that you should always be learning something new. A statement that held water a few months ago may be completely wrong now. You need to stay up-to-date on the latest in cryptos every day, as developments in tech, finance, investment techniques, regulation, and everything else are happening at a breakneck pace.
3. Get your Hands Dirty
Many advocates stress the importance of devoting significant time to learning about blockchain technology, digital currency, and financial markets. Instead, I propose that you start small and experiment with real money and exchanges to get your feet wet and learn the ropes. If you want to try this out, it’s better to do so with a small, negligible amount at first.. It’s recommended that you sign up for various services, purchase Bitcoin and other cryptocurrencies, engage in trading, and participate in a reputable ICO. An affordable investment can bring about these outcomes, and after you’ve gotten your feet wet, you can start bringing in the big bucks.
4. Learn the meanings of the terms “FUD” and “FOMO” and take care to avoid being swayed by either one
These are the two terms most likely to be heard while discussing the cryptocurrency markets. Your decision to ignore one of these sources of anxiety will ultimately bring you serenity.
FOMO: Fear of Missing Out
There was a huge rush of new bitcoin investors between November 2017 and January 2018. The fear of missing out (FOMO) drives most of these people. As a result of the market’s extreme bullishness, no new participants had the opportunity to research the sector before fully investing. In a few short weeks, some investors saw their wealth multiply by two or three times. After hearing these accounts, folks realized they couldn’t afford to pass up the chance. Because Bitcoin is currently trading at $6787, many of them will be destroyed today. Most people weren’t prepared for the 66 percent decline from BTC’s all-time high of $20089. Either they wouldn’t have entered at such lofty heights if they had done their homework, or they would have entered at such lofty heights if they had been ready for the lows. Contrary to expectations, however, many investors are selling their cryptocurrency holdings at a loss and getting out of the market.
FUD: Fear, Uncertainty, Disinformation
This is a major problem with the internet and social media in general. Most of the time, you will keep coming across bogus news, distorted photographs, tweets from fake accounts, and likes. Certain individuals and groups will deliberately sow confusion and misinformation to cash in on the widespread panic and sell their holdings. Learning the facts for yourself is your best defense against spreading false information. It’s important to trust but verify to dispel the FUD. Discuss any such information you may hear with the groups you belong to ascertain its veracity. Warning: Fear, uncertainty, and doubt (FUD) can be spread by anyone, including large and reputable organizations, startups, investment funds, and governments.
5. Although Bitcoin has received the most attention, there are many more worthwhile cryptocurrencies
It’s true that Bitcoin is frequently the subject of media attention. The media attention given to Bitcoin is so great that, to the uninitiated, Bitcoin has come to represent all cryptocurrencies. Only cryptocurrencies with solid projects behind them get my money. Since my money is going toward developing anything, I tend to refer to them as projects. Numerous promising endeavors exist with the potential to alter the way we now experience the world. The advent of blockchains powered by cryptocurrencies has made possible the creation of trustless, automated, and frictionless communities and markets, making possible what was previously unthinkable only a few years ago.
6. Learn to Track your Funds
In contrast to stock exchanges, cryptocurrency trading requires you to open accounts on dozens of websites. As of this writing, CoinmarketCap is tracking 1514 different currencies. Without the right technology, keeping tabs on all of these assets as they’re traded on various marketplaces will be tough. Try looking into several portfolio trackers. I use Cointracking as my primary investment tracking tool. Automatically import deals from multiple exchanges and keep tabs on your portfolio with helpful reports.
7. Better safe than Sorry
To overemphasize its significance would be a disservice. All appropriate safety measures should be taken. Scammers, hackers, phishers, impostors, and fraudsters abound in the cryptocurrency world. Be cautious if making a financial transaction or entering your passwords/private keys. If you want to access an exchange website, you should only do it from a Linux or Mac computer, with no extra plugins enabled and with the URLs bookmarked for future reference. You could spend a long time here listing all the examples. Those safety measures will be detailed in a new post I’m working on right now.
8. When investing, don’t take on more risk than you can bear to lose
As you begin investing in cryptocurrencies, you will keep hearing this. This advice is comparable to the “Terms and Conditions” seen on websites. Everyone signs the “Terms & Conditions,” but no one reads it. Everyone is aware of the advice to “only invest what you can afford to lose,” but no one does. There are numerous instances of people who borrowed money for investments, lost most of it, lost all of their savings, and are now unable to make their loan payments. I’m not the one to judge your risk tolerance or strategy, but keep in mind that You can have a lot more faith in the projects you have done your study on when you don’t have much to lose.
9. Join Online Cryptocurrency Community Account
Given the current interest in virtual currencies, developments in this field tend to be rapid because there is a large and active group of people discussing and exchanging information on 24/7/365 digital currency transactions.
Join our group to stay abreast of the latest developments in the crypto space. Reddit has become the go-to place for crypto fans. Many other online forums also have lively ongoing discussions.
10. Read Crypto currencies whitepapers
Information about the technical aspects of a digital currency is more vital than any amount of publicity. Finding the white paper for a project is essential to research before making any financial commitment. There needs to be one for every cryptocurrency initiative, and it needs to be easy to find.
Check the project’s white paper to learn about its goals, expected outcomes, and more. It is often considered a drawback if the white paper lacks statistics and facts about the project. The white paper is an opportunity for the development team to explain the project’s who, what, when, and why. 2 If the white paper is unclear or lacking key information, this may indicate deeper problems with the project.