You Need To Know .... Before You Crypto
Do you remember the first crypto exchange account that you opened up ? I do , and reflecting now realize how clueless I really was in 2019 ! In 2021 many people with little to no crypto knowledge experienced FOMO ( Fear Of Missing Out ) and followed the herd into the crypto waters unaware of the dangers lurking below the surface.
We each have the personal responsibility for our financial decisions and can not hold someone else accountable for bad crypto tips or misinformation. Let’s take a two minute dive into the basics.
Understand the risks ! Cryptocurrency is a high risk investment and while there are times the market can trade sideways for weeks or months there can also be high volatility compressed into a short period of time. There are scams and frauds as well so be aware that chasing high returns increases your risk exponentially. Do not invest more than you can afford to lose.
DYOR ( Do Your Own Research ) Any type of investment requires research before buying in. All too many people FOMO in and then start to do their research at the first sign of trouble. Have a basic understanding of how a blockchain and cryptocurrency works. Join an online community or a forum , take the time to read the ” white paper ” of a particular crypto you are considering investing in.
Beware of unit bias. Unit bias is an irrational perception that owning whole units of cheaper cryptocurrencies is preferable to fractions of more expensive ones. By nature we tend to associate a whole unit as having more value. Example : Today for $ 10 I can buy 803,735 SHIB or .00049621 BTC. Unit bias would naturally make us gravitate to spending the $ 10 on SHIB every time which may or may not be a sound decision.
DCA ( Dollar Cost Average ) You don’t need to be consumed with cryptocurrency to be a crypto investor. Markets fluctuate day to day and and the dollar cost averaging method will keep you from obsessing over prices. Whether you DCA daily , weekly or monthly have a plan and the discipline to stick to the plan and you will be better for it.
Selecting a cryptocurrency exchange. Some of the considerations when selecting an exchange are the number of coins you can trade , trading fees , security and reputation. Some exchanges have a ” Learn to Earn ” program where you earn small amounts of crypto for watching a tutorial and taking a quiz. I always recommend Coinbase for beginners and have included a link below for a deeper dive.
https://medium.com/coinmonks/coinbase-the-best-crypto-platform-for-beginners-219fcbf350d4
Not your keys not your crypto. This term simply means that if you do not have control of your private keys then you do not actually ” own ” your crypto. Using a hardware wallet is widely accepted as the most secure method for storing cryptocurrency. This keeps your private keys offline and inaccessible to anyone except the holder of specific access codes.