Key Mistakes to Avoid When Buying Cryptocurrency

There is a lot of excitement that can come with investing in cryptocurrency due to the potential value that can be made, however it is also a dangerous game for beginners.

Investing in cryptocurrency has become an incredibly popular pastime and activity for many, as virtual currency continues to enter the mainstream market. For instance, we know that we are able to purchase various products and services with these digital tokens now, while it is also possible to enjoy playing games online, too.

Indeed, perhaps one of the biggest movements that we have seen in regard to crypto and its mainstream status is through the rise of online casino sites such as Cloudbet; a reliable betting platform that provides punters with the ability to use their preferred virtual currencies. The Solana casino offering is considered one of the best around because of the games and bonuses that are available to punters that they can take advantage of.

Nonetheless, while there are a number of industries that are now making the most of cryptocurrency, it is important that those new to cryptocurrency and are considering investing in digital currency ensure they know what they are doing. These are just some of the biggest mistakes that are continually madeā€¦

Lacking Basic Crypto Knowledge

Many new investors fail to educate themselves on the basics of cryptocurrencies and blockchain technology. This can lead to disastrous investment decisions, as crypto assets are often complicated and volatile.

Investors must take the time to learn about how cryptocurrencies work before investing any money. There are many resources available online, such as guides, podcasts, and video tutorials.

Overlooking Fees

Investors often overlook the fees charged by exchanges when buying or selling cryptocurrencies. These fees can add up over time and eat into profits.

Most exchanges charge a small percentage of the total transaction value as a fee. For example, Coinbase charges a 1.49% fee for buying Bitcoin with a debit or credit card.

Investors should compare the fees charged by different exchanges before trading. Some exchanges, such as Binance, charge much lower fees than others.

Short-term Strategy

Cryptocurrencies are often incredibly volatile, which can make them tempting to day-trade. However, this is generally not a good idea for novice investors.

Cryptocurrency prices can swing wildly in either direction, and it is often difficult to predict which way the market will move. This makes it easy to lose money quickly if you don’t know what you’re doing.

Investors should instead adopt a long-term strategy and hold onto their cryptocurrencies for at least several months.

Using Online Wallets to keep Crypto

Online wallets, such as those provided by exchanges, are often not as secure as offline wallets. This is because they are generally more susceptible to hacking attacks.

As such, it is generally not a good idea to keep large amounts of cryptocurrency in an online wallet. Instead, investors should store their coins in a secure offline wallet, such as a hardware wallet.

Using Leverage

Many cryptocurrency exchanges offer leverage, which allows investors to trade with more money than they have in their account. This can amplify profits, but it can also lead to losses if the market moves against you.

Leverage is best used by experienced investors who know how to manage risk. Novice investors should avoid using leverage, as it can often lead to heavy losses.

Getting Scammed

Unfortunately, there are many scammers in the cryptocurrency space. These fraudsters often target new investors who are not familiar with the space.

Scammers may try to get you to invest in a fake cryptocurrency, promise to double your money, or simply steal your funds outright.

It is important to be very careful when dealing with cryptocurrency and only invest money that you can afford to lose.

Conclusion

Investing in cryptocurrencies can often seem intimidating, particularly when starting. But with some care and avoiding these errors, you may develop your confidence as an investor and avoid losing thousands of dollars because of ignorance.

Carolyn Coley is a blockchain reporter. She joined Smartereum after graduating from UC Berkeley in 2018.

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