Everybody seems to be interested in crypto these days. The technology holds a lot of promise, which has led to many people becoming interested and gravitating towards it. Indeed, many researchers believe that blockchain technology, which owes its current popularity to the appearance of cyber coins in the financial market, will revolutionize the world, in both the real world and the digital realm. There’s still quite a way to go before that is achieved, but crypto investments are in constant bloom, nevertheless. Because what could be better than raising your funds while contributing to the development of an emerging technology?
However, when you’re getting into crypto, you must also be aware of the risks. While every trading venture comes with the typical hazards of making wrong decisions and losing significant sums of money in the process, there are also investment-specific risks that vary depending on asset. When it comes to crypto, you want to ensure you’re extra careful and take all the necessary precautions. Once lost, digital money is usually lost forever and can’t be regained in any way.
Invest in cold storage
Getting a wallet that does the job well is the key to keeping your crypto safe. While software solutions offer higher accessibility and are typically easier to use, their internet connectivity can also make them vulnerable to malicious attacks. Moreover, if you plan on investing for longer and amassing substantial amounts of crypto, you may be exceeding the application’s capacities.
That’s why hardware, “cold” storage is the preferable option for storing crypto. These gadgets look like USB drivers and are not connected to the internet. As such, they cannot be hacked when you use them on a safe device. Connecting them to a computer that has been infected with malware or using a public network to browse the web while your wallet is connected can expose it to viruses, but under normal circumstances, it is the best and safest option out there.
Each wallet comes equipped with a private key. This code decrypts your wallet and allows you unlimited access to your coins. For this reason, it’s essential that you never lose or forget your password. This will make the content of your wallet completely unreachable. Unfortunately, this is a relatively common problem for investors, and a great deal of crypto has become permanently lost due to this seemingly harmless mistake.
A trustworthy exchange
When you’re looking to get into crypto, you need to find an exchange that fits all your requirements and will use to perform your transactions safely. The best platforms will also help you better understand the differences between the various types of crypto and which would work best for you. As a general rule, you should try and pick the coins that are more established on the market, such as Ethereum. As one of the most popular choices on the market, you can rest assured there’s no scam involved behind it. When you’re doing your research on how to buy Ethereum, you should also focus on picking an exchange that can help you see your investments through. The ETH price registers fluctuations despite the coin being much more stable than its peers, so a clear picture of how values change over time will help you make better-informed decisions.
While exchanges offer the possibility of storing your holdings directly on the platform, it’s better if you avoid that option. In the event that the exchange is hacked, you would lose all your crypto. Spending so much time and money on transactions, you don’t want to face this scenario. Moreover, if the exchange folds, there can be no recourse to recover your money.
While exchanges typically have strong security policies in place, it doesn’t hurt to practice some extra due diligence. Make sure you’re not placing yourself under unnecessary risks during the transactions. In order to ensure that you’re choosing the best website for you, you might have to do some prior research and get a better idea of exactly how safe each of them is before settling on the one you want to use.
Don’t overdo it
One of the golden rules of crypto trading is never to invest more than you feel comfortable losing. While particularly important when you’re just taking the first steps in your crypto career, you should follow this rule even after you’ve got the hang of crypto. While it’s normal to want to invest as much as possible since it can give the psychological feeling that you’re going to see higher rewards, it is more likely to be an irresponsible choice you’ll regret in the long run.
When you follow this pattern, you won’t be hit so hard if the market experiences a sudden slump. If you put in a substantial amount of funds and the stocks crash, it can be a disaster for your finances and even leave you struggling for a while. This brings us to another important point: don’t trade the money you need to sustain your livelihood or meet your responsibilities. This is a surefire way to land in hot water from a monetary standpoint, which is a really unfavorable position to be in. If you feel that a specific investment carries a higher degree of risk and may leave you in debt, you should steer clear of it.
Sunk-cost fallacy
This phenomenon refers to the tendency to keep pursuing an investment even when stepping back would be more beneficial. This mentality can be challenging to avoid, as it’s easy to fall into the trap of believing you’ve already invested too much and gone too far to back off now. If you notice that your asset is underperforming at the moment, don’t be afraid to step away for a while. Buying more is an even worse scenario, but it’s not impossible to feel like overcompensating is the way to go. Not knowing when to take a break and pushing through can leave you reeling from the losses you’ll sustain.
When you’re looking to become a crypto trader, you should make sure you know everything there is about the best ways to protect your safety. It’ll make all the difference.
