You may have heard tales of people striking it rich from cryptocurrencies, and now you want a piece of the pie. While the crypto world isn’t as chaotic as the Wild West during the Gold Rush, it’s pretty darn close. We’ve compiled a list of do’s and don’ts for crypto investors to help you navigate the crypto world and hopefully strike gold.
The first step is to do your research and understand what you’re getting yourself into. It’s easy to get caught up in the euphoria surrounding cryptocurrencies and jump right into the pool. Doing your homework entails not only learning about the specific coin you are considering, but having a fundamental grasp of the underlying blockchain technology that all cryptocurrencies are based on. A terrific resource to learn about how blockchain works and its impact on society is a paper written by the founder of bitcoin, Satoshi Nakamoto. It provides a broad overview of the blockchain consensus and is written in (sorta) layman terms.
If you’re feeling unfamiliar with cryptocurrencies, you probably want to turn to a beginner friendly exchange like Coinbase. And there’s nothing wrong with using
Coinbase you’re first couple of times to get familiar with the world of crypto investing. However, if you want to get serious about cryptocurrencies, you should transition to an exchange like GDAX. It may seem harder to use but you’ll save a fortune on trading fees.
A word of advice about storing your cryptocurrency: store them in your wallet, not the exchange you use. Exchanges are a great place to buy and sell cryptocurrencies, but they aren’t the safest place to store your coins. There has been concern about the ability of exchanges to protect customer data and coins in light of numerous exchanges being hacked and losing coins. Mobile wallets like Jaxx or Coinomi offer a more secure
method of protecting your crypto coins from hackers.
If you want to count yourself among the ranks of the cryptocurrency gurus, you’re going to have to learn the jargon of the trade. You should know that BTC is the ticker symbol for Bitcoin and that altcoins are any cryptocurrencies that are not Bitcoin. Knowing the slang of the crypto world will allow you to digest news faster so that you won’t be lost when everyone’s tweeting about how they’re “hodling” Bitcoin.
Don’t invest your life savings in cryptos expecting to make out like a bandit when your investment skyrockets. Cryptos are a very volatile security and are prone to huge swings in price. Just because they have been on a roaring uptrend in the past does not necessarily mean they will continue doing so in the future. Instead of draining your savings account, allocate a portion of money that you know you can afford to lose entirely. This way, if you lose all your money you won’t be unable to make ends meet. And if the cryptocurrency you choose does take off, you may be able to forget about that retirement savings account all together.
Do stay calm in the face of tremendous volatility. You might see your basket of cryptocurrencies double in value in a week, only to drop 80% the next. Don’t let this get to you and keep those nerves of steel. If you learn to ignore the short term price movements of these cryptos, you’ll have less stress and be able to make smarter investment decisions. You don’t want to be kicking yourself for selling your cryptos during a market sell off only to see the price break all its previous highs.
Once you dip your feet in the water, you’ll find that there are a wide variety of cryptocurrencies than you could have imagined. Just like in an asset portfolio made up of more traditional assets, it would be a wise decision to diversify your porofitol. It may seem like a good idea to buy up obscure crypto coins that seem to be flying under the radar, but many of these so-called altcoins fail spectacularly and do not emulate the success of Bitcoin at all. It’s fine to throw in some of these riskier cryptocurrencies that have a higher potential for return in your basket of cryptos, just make sure you include some of the ‘large cap’ cryptocurrencies like Bitcoin and Ethereum.
A final piece of advice would be to buy now. If you’re interested in purchasing cryptocurrencies and are fascinated with the blockchain technology and its potential to revolutionize the way we conduct commerce, now would be the best time to buy cryptos. Yes the price of Bitcoin and other cryptocurrencies have already skyrocketed thousands of percent. But, there’s nothing stopping the price of these coins to edge even higher. Just remember to follow our tips above and visit Wall Street Survivor frequently to get the latest updates on cryptocurrencies. We’ve already created a list of the best cryptocurrencies out there to help you get started on your crypto investing journey.