Make a mistake in crypto and you can lose everything! During the past 5 years, I’ve seen even experienced crypto users lose thousands of dollars from simple mistakes. One user sent thousands of dollars’ worth of a cryptocurrency called Ether to his Ethereum classic address. This mistake resulted in the destruction of all of his coins that he sent with no way to recover them or reverse the transaction.
Here are the top 5 mistakes that beginners make and how you can avoid them.
1. Buying crypto with borrowed money or money that you need for something else.
You don’t need to get big. In fact, buying in small volumes allows you to obtain alt coins at a cheaper price. Alt coins will often have low trading volumes, so coming in big just pushes the price up.
2. Not Looking After the Crypto Yourself.
If you don’t own the private key you don’t own the crypto.
Exchanges are not a suitable place to leave crypto, they get hacked and these cost users millions of dollars. Leaving your crypto with any third party always involves more risk than managing it on your own.
We have been taught throughout our lives that if you want your money to be safe then you need to deposit it into a bank account. The reverse is true for crypto.
3. Depositing small amounts of money onto crypto exchanges.
Crypto exchanges can charge large fees for making a withdrawal. Small investors can end up spending a large portion of their investment on withdrawal fees. Make sure you know the withdrawal fees before you deposit!
4. Buying expensive security devices to hold crypto.
There is no point in spending $200 on a security device to hold $200 in crypto. You can store private keys on a normal flash drive. You don’t need the fancy software and a button to increase the security of a drive.
5. Falling for Scams.
Avoid things like the promise of big or guaranteed returns, real projects talk about a problem they are trying to solve.
Ask yourself why you want to be involved with a coin?
When starting out, only buy coins that are up and running or at least have a minimum viable product that you can look at and test.