This is a user generated content for MyStory, a YourStory initiative to enable its community to contribute and have their voices heard. The views and writings here reflect that of the author and not of YourStory.
5 Essential Tips Every Cryptocurrency Newbie Should Consider
This is a user generated content for MyStory, a YourStory initiative to enable its community to contribute and have their voices heard. The views and writings here reflect that of the author and not of YourStory.
If you are new to the cryptocurrency industry, you may feel overwhelmed. There is so much to take in and learn! Firstly, you must understand the underlying technologies such as blockchain and proof-of-work. Secondly, you must learn about the different cryptocurrencies themselves – Bitcoin, Bitcoin Cash, Ethereum, XRP, etc. Finally, you must explore how volatile this industry is and how to turn your investment into profit.
We’ve prepared 5 essential tips that every cryptocurrency newbie can benefit from. By taking them into account, you can hopefully minimize your risk and make more informed decisions while entering the crypto market.
1. Invest amounts that you can afford to lose
This is possibly the most important piece of advice we can offer. Do NOT invest money that you may need for something else. Let's say you have $5,000 in the savings account that you are keeping to purchase a new car. This cash has a purpose – you need it for something.
What would you do if you invested that $5,000 in Bitcoin and the BTC price against USD suddenly plummeted? Your savings are now tied up in cryptocurrency, and you may have lost a portion of your money meaning you can no longer afford that car! The cryptocurrency market is volatile, therefore you should only use disposable cash – money that you can afford to lose.
2. Don’t stick to office hours
In a similar manner to FOREX, the cryptocurrency trading market can be accessed 24/7. Investment platforms are not confined to standard office working hours. Furthermore, trading platforms and exchanges like Coinsquare, Kraken, and CEX.IO have users from all over the world wanting to buy and sell their investments.
You can easily trade cryptocurrencies at any hour of the day. This level of availability and access means that you must be vigilant. If you truly want to invest, you must be willing to check price trends regularly and monitor your investments frequently. As the cryptocurrency market is open 24/7, prices fluctuate massively.
3. Take advice from reputable sources only
If you try googling, you will find hundreds of articles offering magical solutions to cracking cryptocurrency investment. Furthermore, there are many people and businesses who claim to offer investment services – they will guarantee you a sizeable ROI. In reality, no one can ensure this. Moreover, there is no secret formula for making an investment.
When researching, use only reputable sources that have a proven track record of offering sound advice. Look at licensed trading platforms and exchanges for price trends – these websites all provide live and accurate data; any other source could be questionable. Additionally, many of these platforms will often maintain useful blogs that contain current news and advice.
4. Be prepared to hold on to your investment
We have touched upon the volatility of the cryptocurrency market already. Prices can change in an instant, which can result in a huge difference in the value of your investment. Many people make the mistake of jumping ship and selling their cryptocurrency at the first signs of danger.
For example, after the large drop in the price of Bitcoin in January 2018, many people parted with their investments to minimize their losses. By selling at the first price drops, you could potentially lose out in the long run. Sometimes it does make sense to simply remain patient and hold your investment. You have to consider the fact that any potential loss is only compounded when you sell your currency. If you hold on to the investment, even if it is making a loss, there is still the potential that the price could increase (and increase dramatically) in the future.
5. Invest in a high-quality and secure wallet
Some trading platforms provide an in-built wallet to store your cryptos. If you are using such a platform and are confident of its security, you may not need a separate wallet. But if you have a large number of coins and you don’t want to trade them, it’s anyway better to get a secure wallet.
A cryptocurrency wallet can be a piece of software or a device. It contains a private and a public key used to encrypt transactions in a secure manner. There are several notable wallets including Exodus, Jaxx, KeepKey, Trezor and Ledger. By using one of them, you can improve your level of security and keep your transactions safe.
Conclusion
These tips only scratch the surface of the cryptocurrency industry. We highly recommend doing additional research. You should take time to look at the different currencies, study the price variations within the market, read articles and reviews from experts. Be sure to find a reputable exchange to use for trading and protect your investment by installing a wallet. The cryptocurrency market is very flexible, which is convenient (as you can access crypto services any time you want) but at the same time quite risky (as no one guarantees that your investment will be profitable in a long run). Always keep up to date with the market trends and don’t make snap decisions.