Beginner's Guide - Top 5 Tips before investing in Cryptocurrency

 

Top 5 things that you absolutely need to do before investing into cryptocurrency, so that you can get off to a good start, you can sleep well at night, and manage your crypto assets like a Boss.

TIP #1: LEARN THE BASICS OF CRYPTO

Educating yourself about cryptocurrency is definitely the most important thing you can do to set yourself up for success. For generations, we’re used to storing our wealth in banks, and it’s someone else’s responsibility to safeguard and protect our money. But with cryptocurrency, that’s flipped entirely around.

YOU are in CONTROL of your MONEY! If you happen to loss access to your wallet, of if you send your coins to a dead-end or to the wrong person, there’s no help desk or support center that you can call up to try to reverse a transaction, that doesn’t exist with cryptocurrency. It’s paramount that you take security very seriously at the onset and understand how these system work.

For a lot of the cryptocurrency projects out there like Bitcoin and Ethereum, There’s actually no company. There’s no CEO. There are no shares. Instead, these are decentralized, peer to peer systems that operate much less like a company, and a lot more like the internet- where no single person or entity owns or controls it.

TIP #2: TRUST NOBODY AND DO YOUR OWN RESEARCH

There are lot of pump and dump schemes out there, there are scammers that will try to swindle you for your money if you’re not careful (even on platforms like Twitter), it’s kind of crazy. There are “shills” out there that are promoting these projects that they don’t really believe in, they are just trying to make you be the greater fool. So, you really can’t trust anyone. And if someone is trying to tell you that “This is the next hottest coin that you have to invest in”, you should really think about what are their motives and why would they be saying that? If it’s someone on the internet saying this, chances are there might be something up there. But if it’s a friend or a family member, then there’s less of a chance that they’re trying to trick you into something. However, that doesn’t mean necessarily that it’s good advice.

You definitely need to DO YOUR OWN RESEARCH, and not take anyone else’s word for it.

TIP #3: ONLY INVEST WHAT YOU CAN AFFORD TO LOSE

Do so with the understanding that every money that you invest could all go to zero overnight. Because at the end of the day, cryptocurrencies are programs. It’s software. Software is built using code, which comes from humans. And we’re not perfect, and code has bugs. It’s possible that a bug could get discovered that leads to a “black swan” events that could wipe out your entire investment overnight.

Aside from just bugs, there’s a risk of a 51% attack on the network, or the fear of quantum computing. There are user errors, like if you put your coins on an exchange, and that exchange gets hacked and the funds get stolen, or if you accidentally send your coins to an invalid address. The list goes on and on.

Cryptocurrency has only been around as an industry for about 10 years now, so we’re all kind of learning on the fly how to do it. It’s very much so an experiment, it’s early days, so make sure you’re treating it as such, and that you only invest what you can afford to lose.

 

TIP #4: HAVE A PLAN AND STICK TO IT

Let’s say you buy Bitcoin at $3,500 today, but then it sinks to $2,500 tomorrow, and then $1,000 the day after that. What’s your plan? Are you going to hold on to it or are you going to sell it and cut your losses? Are you going to buy more? Could you imagine the panic you’d be feeling if you didn’t think this through ahead of time?

Even on the flip side, so let’s say you buy at $3,500 today, but then it goes up to $4,000, and then $5,000 the day after that. What’s your plan then? Are you going to take profits? Are you going to stay in the market? You have to think these things through. So, some of the key things you need to be thinking about here are;

1.       what is your strategy for entering the market? Are you going to put a lump sum down at a certain price? Let’s say Bitcoin goes to $3,300, that’s may buy-in price… or are you going to take the other approach called “Dollar Cost Average” where rather than doing a lump sum investment, what you do is you take your budget and you chop it up into pieces, and over the course of time, whether it be weeks, months, or even years, you slowly apply that budget into the market. So rather than buying at a certain price and kind of being locked in, you’re buying all of the prices regardless of how the market is performing.

2.       Deciding. Is this a short-term investment, or is this a longer-term investment? Say 3-5 years.

And that’s what I personally recommend because the cryptocurrency markets are so extremely volatile in the short-term. If you were to buy Bitcoin today at $3,500 US dollars, what if it hit a 6-month downturn. Literally the day after you bought it? Like Everyone feels like that’s the case when they first get involved in crypto. It’s just kind of the rite of passage it feels like. If you have a long enough time horizon on this investment of 3-5 years, chances are you can escape that short-term volatility and if it trends up and to the right, then hopefully the future value of your investment is much larger that the initial investment that you’d be making today.

3.       Set your stop losses and your limit orders on whatever cryptocurrency exchange or mobile app that you’re using to make trades. Again, if you were to buy today at $3,500 for example, you need to know that if it sinks to $3,000 tomorrow, that might be the price at which you’ll want to pull your money out and to preserve your capital and to cut your losses. On the flip-side, if it goes up to $4,500, maybe that ticks the objective that you set for yourself. That could be the profit margin that you’re after. You have to know these things ahead of time.

 

Set your orders, and by having a plan and sticking to it – you’re going to be able to sleep so much batter at night. You’re not going to be glued to your phone all day checking charts and prices, and you’ll be able to conserve a lot more of your valuable brain juice.

TIP #5: GET A HARDWARE WALLET

In order to own cryptocurrency, you have to store your coins on what’s called a digital wallet. And these wallets come in many shapes and sizes. So, there’s Coinbase, for example, which is a service that will host the wallet for you.

There’s apps that you can download and run yourself on a desktop or a laptop computer, and then there are these physical, what look like USB sticks, these are hardware wallets and they are designed with a sole purpose of safeguarding and protecting your crypto assets. And my general recommendation is that if you own – or you intend to own – about $1,000 worth or more of cryptocurrency, then it makes sense to invest in a hardware wallet such as the Trezor, or the Ledger Nano X, or a Keepkey. Most of these hardware wallets you can snag for about $100 or less, so it definitely make sense and it’s not going to break the bank.