4 mistakes too many new cryptocurrency investors make

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Investing in crypto can be easier and faster than ever, now you can choose to invest through online brokers like Robinhood and SoFi Invest or crypto exchanges like Coinbase and Gemini, but that’s far from it. ‘be a foolproof company. Many of the same risks and pitfalls that upset crypto pioneers can still cause headaches for those entering the field today. That’s not to say that navigating the crypto universe requires a master’s degree in computer science or finance; rather, it means that some of the financial resources, protections, and models that investors expect when trading stocks and bonds will be different when trading crypto.

Learning the rules of this new digital investing game is essential and could potentially save you from making mistakes worth thousands or even millions of dollars. Here are some mistakes new crypto investors often make when getting started, along with some things to consider before taking the plunge.

Mistake # 1: You’re not buying the right things

If you do decide to buy Bitcoin, make sure it is the genuine item. One of the biggest mistakes new investors make is buying the wrong coin. Just because it has Bitcoin in its name doesn’t mean it’s Bitcoin. There is Bitcoin Cash, Bitcoin Gold, Bitcoin SV, Bitcoin Private, and dozens of other direct offshoots of the original cryptocurrency that have the word Bitcoin in its name. That’s not to say that these offshoots are bad or scams, it’s just that they aren’t the original Bitcoin that has become widely traded and listed. But if you buy the wrong part, it’s not the end of the world. You can still resell it and buy the voucher, hopefully at a profit.

Ready to get started in crypto? You can buy Bitcoin, Ethereum, and other cryptocurrencies through online brokers like Robinhood and SoFi Invest or crypto exchanges like Coinbase, Gemini, or eToro.

Mistake # 2: you are not prepared for a mad, wild ride

You will need nerves of steel if you enter this space as the volatility is extreme. Compared to the analog world or the world of traditional finance, volatility is a bit off the charts, Arizona certified financial planner Theresa Morrison told Marketwatch.

Morrison recommends that new investors first commit a face amount, even as low as $ 50 per month, to an established cryptocurrency that they understand, and then forget about it. The fluctuations in volatility are such that if an investor is constantly watching the market it could drive him crazy.

Additionally, if you are new to crypto, you may want to stick with cryptocurrencies that you know and understand at the start. I like that my clients look at the established coins first, the Blue Chips of crypto, if you will, namely Bitcoin and Ethereum, says Erik Goodge, an independent certified financial planner based in Indiana.

Mistake # 3: you are not checking duplicate and triplicate address

Believe it or not, many new and seasoned cryptocurrency traders have lost money by sending their coins to the wrong place. Unlike a wire transfer that can be interrupted or a check that can be voided, there is often no recourse if you make a big mistake.

I have a good friend who traded Stablecoins and he sent USDT to a USDC address and lost $ 4,000, said Adam Blumberg, a financial planner in Houston. He texted me saying this transaction was two days old and he didn’t know what was going on. When he emailed me the transaction I told him he accidentally sent it to a USDC account and asked if he could call them to fix it and I was like no, let’s go , you should have called me before you did.

Ready to get started in crypto? You can buy Bitcoin, Ethereum, and other cryptocurrencies through online brokers like Robinhood and SoFi Invest or crypto exchanges like Coinbase, Gemini, or eToro.

Mistake # 4: forgetting your password

While there will only ever be 21 million Bitcoins mined, less will be exchanged as many of them are simply lost forever as people have forgotten their digital wallet passwords. You often cannot call someone to reset your password, if you forget or lose it you are blocked. About 20% of Bitcoins mined so far are lost in stranded wallets, according to Chainalysis, a cryptocurrency data firm.

Therefore, how you store your password is essential and should be thought through in advance before you start trading. Writing it down on a piece of paper is the first step, but even that has its own concerns as it can then be stolen and used by someone else. In addition, paper is not the most durable material. I have clients who wrote down their passwords and kept them in a special place in their home, Blumberg said. But a few years ago, when Houston was hit by those terrible floods, many of those carefully hidden passwords dissolved in the swamp water.

Blumberg recommends putting the password in a fire and flood proof container or keeping it in a bank safe. Instead of writing it down on paper, he saw some customers get their passwords stamped on metal that could withstand the elements.

Ready to get started in crypto? You can buy Bitcoin, Ethereum, and other cryptocurrencies through online brokers like Robinhood and SoFi Invest or crypto exchanges like Coinbase, Gemini, or eToro.

About the Author: CyrusSanati has been a journalist and financial columnist for nearly two decades, covering a wide variety of topics from energy markets to digital currencies. His work can be seen in a variety of publications, including the Wall Street Journal, The New York Times, Fortune magazine and Breakingviews.

See Also: What You Need To Know To Start Investing In Cryptocurrency Right Now

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