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Five Mistakes New Crypto Investors Should Never Make

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Five Mistakes New Crypto Investors Should Never Make

Investing in crypto is a brand new adventure for most people. This might be the first time you’ve made the decision to step into this new, exciting world.If so then congratulations! It’s a wild and exciting ride, full of mind-bending potential and a lot of risk.That risk can be mitigated if you know what you’re doing and follow some key principles when it comes to investing in crypto. But I often see new investors to the crypto world make a number of crucial, silly mistakes that can be avoided. Here I will outline five mistakes that new investors in crypto tend to make. If you can avoid these five mistakes it will go a long way to making your adventure into this exciting world that little bit easier…and potentially far more profitable.With that said, here are the five mistakes every crypto investor MUST avoid:

1. Starting big and making costly little errors

The first mistake new investors into cryptocurrency make is they go too big too soon.

They get so excited about getting into cryptocurrencies that they neglect to take the time to understand the fundamentals of how to use crypto.

And that leads to mistakes. Tiny errors that turn into costly errors. The most common error known to the crypto world is making a typo on a wallet address.

Get a wallet address wrong and you can lose everything in one fell swoop. For example, let’s say you’re sending your bitcoin from an exchange where you just bought it to a wallet you own.

And the bitcoin wallet address looks something like this… 1VjqGKz6tseprHieZM3HUA2ZjjSvFpt9dL But you enter that address even just one character wrong — like this: 1VjqGKz6tseprHieZM3HUA2ZjiSvFpt9dL Can you even spot the difference there?

If you sent your bitcoin to the second address you might never see it again.

If you’re lucky the wallet address doesn’t exist yet and your transaction will simply come up as an invalid transaction, and bounce back to your wallet.

But if the address with the error is an existing wallet, then it will go to that other wallet address, and you’ll never know who the owner is. And if you’ve just sent two bitcoin over then chances are they’re gone.

You must make sure you get your wallet address 100% correct when sending bitcoin or any crypto through their respective blockchains.

It’s why I always recommend that, if you’re starting off with crypto and sending to a new address, start small. Send just 0.05 bitcoin to start with. Make sure it hits the wallet you expect it to hit, and only then send the rest. If you can eliminate this mistake, then you’ll be well on your way to getting the confidence to operate more safely on the different crypto blockchains.

2. Not having a plan of attack

Another huge mistake new investors to crypto make is not understanding why they’re investing in this space to start with.

For example, are you investing for short term trading gains? That means buying and selling in and out of crypto quickly to make incremental gains. Or are you investing long term, for 5–10 years with a view to hold your crypto as a store of value? Or are you looking to buy crypto with price appreciation in mind, but along the way want to use that crypto to buy goods and services in the real world? Knowing what your crypto is for (it might even be all three) is important, because that determines how you will buy and store your bitcoin.

Get this wrong and you can see opportunity disappear before your eyes — or put a long term plan at unnecessary risk. Let’s say you’re keen to do some short term trading for your crypto.

That means you’ll want to be trading them on an exchange like Poloniex or Bittrex. You need to move fast to grab opportunity when it pops up. But if you’ve got your crypto over on a cold storage wallet or just a separate online wallet, then you’ve got to send it into the exchange before you can trade it. That takes time.

By the time your crypto clears to your exchange wallet, the opportunity may have disappeared. Or there’s the flipside of that equation. Let’s say you want to keep your crypto for then next 10 years. But you’re storing it in a wallet on an exchange. Exchanges hold the private keys to wallets, not you. That means if the exchange disappears, goes bankrupt or someone hacks the exchange, your investment is at risk.

You could see your crypto stolen or simply vanish. If you want to hold crypto long term, you need to get it offline and onto a cold-storage device like a Trezor wallet or a Ledger Wallet.

When you have your strategy right and you know what you’re planning to do with your crypto, then you’ll know how to best store it. Get it wrong, and you put your whole strategy in jeopardy.

3. Getting caught up in the noise

It’s hard now to ignore all the noise in the world of cryptocurrencies. It’s even harder to ignore it when you know where to find constant information about it.

You see, the mainstream media is just starting to cover bitcoin again. After it traded at US$3,000 the mainstream took notice and decided this was newsworthy.

But they’re still not really getting involved in cryptocurrency…yet. However the crypto world is starting to appear more on the pages of outlets like Forbes and Bloomberg and CNBC. And they apply their typical mainstream, ‘traditional’ mindset to the crypto world and how it works. They focus on ‘market cap’, they talk about the incredible price rises and falls.

They compare it to stocks, gold and fiat currency. But they never talk about its decentralised nature. You’ll never hear them price things in ‘network value’. They never talk about how it threatens the very existence of the global banking system. They refuse to admit they know very little about the technical side of things, or how this is a true revolution.

They love to talk about bubbles. They often mention ‘tulip mania’ and the ‘dotcom’ bubble. They say the crypto world is for ‘hobbyists’. Some out-and-out call it a scam. And if you listen to it enough, you can get swept away in the noise. But if you remember what’s really in play here, remember the opportunity and the revolution taking place and that will play out over the next decade and beyond, you can ignore the noise and focus on the important aspects of crypto. If you find you’re getting caught up in the noise, read my book, Crypto Revolution: Bitcoin, Cryptocurrency and The Future of Money to realign your brain into what’s taking place right in front of our eyes

4. Blindly chasing ICO returns The ICO craze.

You better know about it, because I’ve already seen people burnt badly by it. And ICO — an Initial Coin Offering — is often when new cryptos decide to raise fast money to help their development. Often these new ICOs will have a great idea, a developer team, a white paper, a nice website…and really nothing more. They’re trying to raise money in the same way a Kickstarter project might. Except there’s no product to buy or sell yet. It’s nothing more than an easy way to capitalise on a hyped up, hot market where people’s fear of missing out (FOMO) reigns supreme. People have seen the kinds of returns bitcoin and Ethereum have delivered, and they want to be in on the ‘next bitcoin’ or ‘next Ethereum’. And some of these ICOs are raising tens of millions of dollars in the space of minutes by issuing new cryptocurrency — or tokens.

Often there’s a huge shortage of tokens on issue, too. That means hordes of people miss out on the ICO. That drives demand higher on constricted supply. Then when these coins hit the secondary exchange they often scream higher in value, sometimes doubling, tripling or even more in the space of a few hours or days. Many blind investors barely know why they wanted to invest in the ICO to begin with other than the fact it was a new ICO. And when these tokens hit the exchanges they buy blindly at peaks, expecting even more. The problem is these coins almost always crash hard from their peaks. Often 30%, 50%, 70% sometimes more. In some instances they can end up being worth less than their ICO ‘price’.

Don’t make the mistake of allowing the hype of ICOs and eye-watering hourly gains blind you to investing without the prerequisite knowledge. Jump into these ICOs blindly and you will get burnt. You will lose money. And you will quickly become one of those mainstream types that think this is all one big bubble.

5. Short-termism

Not far from the blind ICO mania is what I call ‘short-termism’. This is where ‘investors’ want to make a quick buck. They’re in crypto for fast cash, nothing more, nothing less. They’ll often chase the ICO money. They’ll often bemoan the fact that the price of Bitcoin or Ether can and does crash 10%, 20%, 30% on a regular basis. Those who only see the short term will enter the world of crypto and then exit it just as fast — and then complain that it’s one big Ponzi scheme. If all you see when you look at crypto are dollar signs, then you’ve completely missed the point. This isn’t supposed to even be related to a fiat monetary system. It’s supposed to be a system outside of government control, anti-establishment, an alternative financial system. And in order to get there, to see the truly life-changing potential returns come into play, you need to have a longer term vision of all this. You need to open your mind to the picture in five or 10 years’ time

An alternative monetary system made of decentralised digital currency doesn’t happen overnight. Replacing old money with new money is a process. It will still happen relatively fast, but it won’t happen overnight. So don’t expect 100-times your investment back in a month. In our view it will come. But with a short term mindset you’re setting yourself up for disappointment investing in crypto. That’s not to say there aren’t huge short term opportunities. And ultimately we can show you how to catch those. But they’re not for beginners. You need a year or two in the crypto world to safely navigate that minefield. If you only see the short term, you’re making a mistake that plenty of others have made before

Keep an eye on the big picture, and we think you’ll do nicely

About Bernie Fitzpatrick

Life is your opportunity to achieve great things and by owing 3 technology blogs I have the opportunity to share my knowledge with you. Success in any business online or off comes from focused commitment to helping others by providing a great service or products. This will always be our main focus at Lostintechnology.com - to provide one of the best technology review sites on the net. Giving you the latest tech tips, tricks and news, We love feedback, so please let us know if we can do things better.

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