There has been an increase in interest in cryptocurrencies and their prospects throughout the years. After all, many people have been inspired by the success tales of people who acquired Bitcoin early on and believe they can benefit in the same way. If you’re one of them, keep reading to learn about the common mistakes that rookie traders make and how to avoid them.
1. Investing without conducting due diligence
There are numerous cryptocurrencies available. While Bitcoin and Ethereum are the most well-known, anyone interested in crypto should familiarise themselves with other digital currencies. When you invest without conducting any study, you put yourself at a greater risk of losing money than if you simply follow the crowd. You can wind up investing in a doomed endeavor simply because someone told you to. Because you don’t comprehend the market, you can wind up selling out of panic. So, as a trader, the greatest thing you can do is learn about the cryptocurrencies you wish to invest in and how they operate. Avoid getting misled by flashy headlines by watching instructional films and reading reputable publications. When taking advice from strangers on online forums, be wary.
2. Failure to pay attention to transaction costs
When you buy cryptocurrency on an exchange, you will be charged trading costs. The costs imposed differ from one exchange to the next. As a result, fees are an important issue to consider when choosing a crypto exchange, as some costs can be rather high. I utilize the Gemini exchange’s ActiveTrader interface since the costs range from 0.25 percent to 0.35 percent, which is currently one of the lowest prices available. You should also consider foreign exchange rates in addition to trade fees. Before you can buy cryptocurrency, several crypto exchanges ask you to convert Singapore Dollars (SGD) into US Dollars (USD). Many people convert their money via their bank’s services. Finally, remember to factor in gas costs. When you make a transaction on the blockchain, you will be charged a gas price. This implies you’ll have to pay gas fees to transfer cryptocurrency from your exchange to your wallet. The high gas fees associated with Ethereum are well-known. However, you can choose how quickly you want your transaction to complete. The cost increases as the speed increases.
3. Leaving your cryptocurrency on a cryptocurrency exchange
When you store your cryptocurrency on an exchange, you run the risk of getting hacked. Your digital currency is only as safe as your exchange account. This is concerning because exchanges are merely digital websites and apps, and their records might be hacked. A hacker may only need to guess your six-digit PIN code to gain access. Some people still store their crypto on exchanges because they believe it is more convenient, but if you plan to keep it for the long term, I recommend withdrawing it to a personal wallet. A wallet can be conceived of as a cryptocurrency token storage device. They typically take the shape of mobile apps that store crypto and include additional security features like Two-Factor Authentication and security questions. There are numerous alternative options for storing cryptocurrency, but for now, I would recommend Trust Wallet and Atomic Wallet. Both apps can be found in app stores.
4. Sending cryptocurrency to an incorrect wallet address
When sending crypto to your wallet, use extreme caution. To receive the correct address, make sure you select the correct token. Every token has a unique address. You won’t be able to retrieve Bitcoin if you send it to an Ethereum address. Sending a tiny amount as a test sum is a popular recommendation for novices. If you’ve never sent crypto to that wallet address before, this is the prudent thing to do. After all, because there is no way to undo a transaction in crypto, it’s best to be cautious. A word of advice is to split your cryptocurrency between two or more wallets in case one of them goes down for maintenance precisely when you want to sell it. It’s also a good idea to have two or more exchanges available at any given moment for the same reason: if one of them goes down for maintenance, you’ll still be able to purchase or sell cryptocurrency.
The volatility of cryptocurrencies is precisely what makes it attractive as a speculative investment. You may believe you’ve already lost out on the Bitcoin craze, but this isn’t always the case. There is no better moment to invest in digital currencies if you believe they will shape our future. Just make sure you do your homework and only invest what you can afford to lose