Investing in bitcoin is now easier and faster than ever before, thanks to online brokers like Robinhood and cryptocurrency exchanges like Coinbase and Gemini, but it’s far from risk-free. Many of the same dangers and traps that plagued crypto’s early adopters can now be a source of concern for newcomers. That isn’t to argue that navigating the crypto universe necessitates a master’s degree in computer science or finance; rather, some of the financial resources, protections, and patterns that investors have come to expect when trading stocks and bonds will alter when trading crypto.
First Mistake: You don’t buy the right stuff
If you decide to buy Bitcoin, make sure it is the real one. One of the most common errors made by new investors is buying the wrong currency. It’s not a Bitcoin just because it includes the word “Bitcoin” in its name. There are dozens of direct offshoots of the original cryptocurrency with the word “Bitcoin” in their names, including Bitcoin Cash, Bitcoin Gold, Bitcoin SV, Bitcoin Private, and many more. That’s not to imply these offshoots are terrible or scams; they’re just not the original Bitcoin, which has become extensively traded and quoted. But it’s not the end of the world if you buy the wrong coin. You can always sell it and buy the one you really want, perhaps for a profit.
Second Mistake: You’re not prepared for a wild, wild ride
If you enter this market, you’ll need steel nerves because the volatility is high. “Volatility is kind of off the charts compared to the analogue world or the traditional finance world,”.
It is advised that newbie investors should invest a small amount at initially, like as $50 per month, in a well-known cryptocurrency they understand, and then forget about it. The fluctuations in volatility might drive an investor insane if they are continually watching the market.
Third Mistake: You don’t double and triple check the address
Many beginner and experienced cryptocurrency traders have lost money by sending their coins to the wrong address. If you make a fat-finger blunder, unlike a bank wire transfer that can be delayed or a cheque that can be reversed, there is typically no redress.
Fourth Mistake: You forget your password
While only 21 million Bitcoins will ever be mined, fewer will trade since many of them will be lost forever due to users forgetting their digital wallet passwords. You can’t always call someone to reset your password, so if you forget or lose it, you’re stuck. According to Chainalysis, a cryptocurrency data business, almost 20% of Bitcoins produced so far have been lost in stranded wallets.
As a result, how you save your password is crucial and should be considered before you begin trading. The first step is to write it down on a piece of paper, but even that raises worries because it might be stolen and used by someone else. Paper is also not the most durable of materials.