The Top 5 Do’s and Don’ts of the crypto space
6 mins read
1 mths ago
In the last few years, conversations about cryptocurrencies like bitcoin and how they have grown into profitable assets have spread like wildfire.
Although crypto might seem like rocket science at first glance, especially if you have had no prior knowledge or someone to guide your experience, it's pretty easy to understand. This is why we have combined the top do’s and don’ts in this article. You can think of them as the cardinal rules you follow to ensure you have a smooth transition into crypto.
These do’s, and don’ts will help you avoid classic beginner mistakes and set you up for success as a crypto trader or investor. Regardless of the reason you are getting into crypto; you need to keep these do’s and don’ts in mind always!
The Do’s or Best Practices of The Crypto Space
- Use A Trusted Crypto Wallet Provider Or Exchange.
You need to prioritise and never compromise on your security and the security of your asset. This means you must ensure that you choose a trusted wallet provider or crypto exchange when getting started with crypto. Cryptocurrencies are not physical currencies and cannot be touched but accessed through a crypto wallet. Therefore, if the security of your crypto wallet is compromised, you may lose all your funds. When selecting a wallet provider or a crypto exchange, you research to ensure it is valid and has the necessary security mechanisms.
Also, if you are trading crypto directly with someone, verify the person's identity and never use someone or an entity with poor feedback.
- Use 2FA Or A Password Manager.
Like every other industry, hackers seek to get rich off your hard-earned funds; as such, you need every layer of security you can get. Firstly, do not use a simple password. A good password combines upper and lowercase letters, numbers, punctuation, and special symbols. You can use a password manager to protect your passwords or if you are concerned about forgetting them.
A good password may not always be enough to deter hackers. However, installing a two-factor authentication (2FA) will provide additional security for your wallet. If scammers can access your wallet through your password, the two-factor verification method will keep them off. Ensure you use an exchange or wallet provider with 2FA and enable it on your device.
- Invest Only What You Can Afford To Lose
Crypto is not a get-rich scheme. Cryptocurrencies are highly volatile, and although you can record high profits from price fluctuations, you can also record losses. As a good practice for a crypto newbie, starting small is best. Don’t go all in at once! Invest only what you can afford to lose so that when prices decline, you aren't in debt or panicking to sell off at a loss.
You can use the Dollar Cost Average method and invest a small percentage of your wealth at intervals till you understand the market better.
- Diversify and Always Have A Trading Plan
Bitcoin is the most popular cryptocurrency but is not the only cryptocurrency. In fact, there are 6000+ cryptocurrencies in existence. The mistake beginners often make is to put all their wealth into one cryptocurrency. However, the price decline of that cryptocurrency can have them running helter-skelter in frustration. Diversifying your assets allows you to invest in other profitable cryptocurrencies. This way, when the price of a cryptocurrency is dipping, another one is rising.
At the same time, setting a plan or goal before you invest will help you know the best time to buy or sell your assets. However, be sure to research thoroughly before investing in any crypto asset.
The Don’ts of The Crypto Space
- Never Invest Without Research (DYOR)
Consider this the most essential rule in crypto: Always do your own research. There are a lot of scammers out there seeking to steal your hard earn funds. It can be by promising a non-viable coin is the “next bitcoin”, so you get easily swayed to invest in a worthless coin. You must be on guard and always research to know the true value of whatever digital currency you wish to invest in.
- Don’t fall prey to hype or Fomo (Fear of Missing Out)
One of the mistakes of crypto newbies is jumping on the trend or falling prey to hype about an asset that often is worth nothing. The pressure to earn money quick has led several crypto traders to significant losses. Don’t be in a hurry to buy or sell crypto because there’s a lot of hype. Take a step back, research, and evaluate the market before investing in any cryptocurrency.
In A Nutshell
Regardless of why you wish to invest in cryptocurrencies, you will need to know these basics. These do’s and don’ts will help you know when to invest, how to secure your crypto and profit from your investment. Like any other field you invest in, you need to ignore the hype, research and invest only in an asset you are convinced about while prioritising your security. Even as an experienced crypto investor or trader, your security is essential; you must always ensure its optimum.
Ready to start your crypto journey? You can get started by downloading the Yellow Card App, a praised user-friendly crypto exchange where you can buy crypto at cheap rates and in your local currency. At the same time, Yellow Card has optimum security features (2FA) and more to make your crypto journeys easy and seamless. You can easily start buying and selling crypto while staying updated on the crypto space.
Disclaimer: This article is meant to provide general guidance and understanding of cryptocurrency and the Blockchain network. It’s not an exhaustive list and should not be taken as financial advice. Yellow Card Academy is not responsible for your investment decisions.