The crypto industry has grown in popularity because of its high returns and rapid growth in value. Many people are using it not only as a form of long-term investment but also as a source of passive income.
5 Things to Know Before Starting Your Crypto Journey
Some investors, however, are still quite skeptical, simply because of the rising cases of scams and the loss of billions in various crypto exchanges. The recent Bitcoin crash also hasn’t helped the case, with the value of this digital currency going down by about half.
Nevertheless, many prospective investors still see many positives in the world of crypto, and they’ve got all the reasons to do so. For one, every cryptocurrency crash has always been followed by a strong rebound.
Going by what experts are suggesting, the recent crash might not be an exception. However, if you’re new to crypto, here are some things you need to know before investing your money:
1. Choose the Best Crypto Exchange
One of the best ways of making money in the world of cryptocurrency is through trading. Buying and selling Bitcoin, for instance, has become quite popular in recent years.
If that’s what you’re planning to venture into, then choosing a good crypto exchange should be your top priority.
You can start your research by going through this list of Australian crypto exchanges, if you’re located in Australia, and selecting the one that meets your needs.
So what are some of the factors to consider when choosing a crypto exchange?
- Transaction fees
- Supported payment modes
- Security and authenticity
- User experience
- Location of the exchange
Before making the final decision, make sure you do thorough research about the crypto exchange you have in mind.
Some of these factors can be found on the company’s user manual or FAQs page. However, to get a clear picture, it’d be more prudent to listen to what previous and current customers say about the exchange.
Go through various users’ feedback and see if they’re consistent with whatever the company claims to offer.
Remember, choosing the best crypto exchange will determine the security of your investment and the profits you can make.
2. Focus on Long-term Goals
You’ve already heard many stories about people making quick money through cryptocurrency. But how accurate are those stories?
Is crypto a get-rich-quick scheme? Most people who claim to have experienced such a smooth ride are usually scammers looking to take advantage of your inexperience.
Just like any other business, a trading cryptocurrency needs a lot of planning and patience.
As you plan to invest your money, make sure you’re doing so as a long-term investment and not to get rich within months.
Of course, it’s not impossible to make insane profits within a short period, but the odds are incredibly against you.
You might only end up losing everything because the risks involved are unimaginable. Also, keep in mind that crypto is constantly growing, which means there’s a good chance of you making even more money in the long run.
3. Invest What You Can Afford to Lose
Many investors have failed to make it past the first few months of their crypto journey because they lacked the much-needed financial discipline.
Just like gambling, you can either gain profits or lose all your investment in trading. Therefore, you should only risk what you’re willing to lose.
Sticking to this rule benefits you financially and helps prevent any social effects of losing a trade.
For instance, there are many reports of people falling into depression or various families suffering just because someone invested all they had and lost everything.
Inasmuch as trading cryptocurrency can make you rich, it can also mess up your socioeconomic life if you’re not careful.
4. Portfolio Diversification
Another significant factor you should know as a beginner is portfolio diversification. Investing in one coin can be disastrous for your crypto journey.
For example, take the current state of Bitcoin. You can imagine the losses you’d be making if all your investments—both short-term and long-term—were reliant only on this coin.
Therefore, you won’t be wrong if you expanded your portfolio and spread the risks as much as possible.
Fortunately, today, the cryptocurrency market comprises over 1,600 coins, which gives you all the options you need in your investment.
Bitcoin (BTC) and Ethereum (ETH) have been around for more than ten years. Apart from being the oldest, they’re also the most popular and most stable coins in the world of crypto.
Therefore, you should prioritize the two and invest a considerable portion of your money in them.
The rest of your investment should then be spread across other valuable altcoins. Remember, not all 1,600 coins are ideal for trading, so you should only choose coins with good fundamentals.
Always avoid shitcoins as soon as you identify them because they lack any reasonable value and are mainly used to scam new crypto investors.
5. The Crypto Market Is Always Open
Unlike other financial systems, crypto operates every day of the year, weekends and holidays included.
That means you can trade your crypto assets at any time without restrictions. The main reason why this is possible is the fact that the industry uses a decentralized system.
As such, traders are not forced to comply with a set of policies designed by a central body.
For instance, traditional financial systems don’t work on weekends or holidays because of government regulations and labor laws.
However, that’s not the case with cryptocurrency since there are no employed workers tasked with running and monitoring transactions.
Conclusion
Investing in cryptocurrency can be pretty exciting, especially after hearing many positive stories surrounding this industry.
However, make sure you read up and understand all the information covered in this article before starting your own crypto journey.
Choosing a good crypto exchange, for one, may determine your success in the industry.
Remember to learn financial discipline because trading digital currencies can be tempting, and you might end up losing all your investments if you’re not careful.
Once you’re armed with the necessary resources, make sure you focus on your long-term goals.
References
1. “5 Things I Wish I Knew Before Getting Into Crypto”, Source: https://www.forbes.com/sites/benjaminpirus/2021/02/27/5-things-i-wish-i-knew-before-getting-into-crypto/?sh=35e98e8d31bb
2.“The 10 Most Important Cryptocurrencies Other Than Bitcoin”, Source: https://www.investopedia.com/tech/most-important-cryptocurrencies-other-than-bitcoin/#:~:text=One%20reason%20for%20this%20is,communities%20of%20backers%20and%20investors.
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