Beginner mistakes with cryptocurrencies

✔️ Information reviewed and updated in June 2024 by Eduardo López

With the fashion of cryptocurrencies, it is logical that you have decided to turn to see this market as a good way to invest your savings. However, you have to be careful with mistakes, as cryptocurrencies seem to be very attractive to generate more money.

Unfortunately, not everyone makes the right decisions when it comes to investing in cryptocurrencies. So that this does not happen to you, here we will tell you what are the 9 most common mistakes when investing in cryptocurrencies. In this way, you can avoid them and thus, not put your investment at risk.

➡Error 1: Investing money that is not from your savings

They say that the money we invest should be money that we do not need, that is, with which we can take certain risks. This translates into investing savings and not, for example, the money from our car or the mortgage payment.

One of the most common mistakes, especially by newbies, is to invest all your money without saving anything for expenses or future unforeseen events. This is a bad decision because in case of losses, you will be left with practically nothing. We suggest you make a budget to avoid this problem.

 

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➡Error 2: Take good care of your private key

To buy cryptocurrencies it is necessary to open an account in a Wallet, which is an electronic wallet. At the time of doing so, you will be given two different keys, one is the private key and the other is the public one. Always, always, always take care of your private key.

This key is used to enter Wallet so, if you lose it or it falls into the wrong hands, they could enter your account and steal all your cryptocurrencies. The public key has no problems, since it allows you to view your account in visitor mode, so there are no risks.

➡Error 3: Learn about how transfers work

You should know that there are different types of cryptocurrency transfers and an error in these could cause your coins to be lost on the Blockchain. For example, if you transfer Bitcoin to a NAVcoin Wallet, you can say goodbye to your coins.

Many users make this mistake and believe that it is the responsibility of the technical service to recover them or even file lawsuits for scam, when in reality, those coins have already been lost. Finding out about how transfers work and what modalities the Wallet uses is very important if you don't want to suffer from this.

➡Error 4: Do not use two-factor authentication

Security is a crucial issue in the investment and management of cryptocurrencies as there are more and more hackers in search of innocents to steal. That is why taking advantage of all the security tools of the platforms is very important.

One of the perfect examples is two-factor authentication which uses a very advanced and hacker-difficult security system to protect your Wallet. If you want to prevent a hacker from stealing all your money, it is better to activate this option when opening your account.

➡Error 5: Learn to analyze the new cryptocurrencies

Another fairly common mistake is getting into the excitement generated by the launch of a new cryptocurrency without first having studied it thoroughly.. And there are cryptocurrencies that from the beginning are destined to have a less than encouraging performance.

If you want to invest in a new cryptocurrency, we definitely recommend that you do some deep research on it. Analyze how your Blockchain works, determine what its course will be and check who is behind its launch. We also recommend that you read all the terms and conditions around it.

➡Error 6: Get carried away by trends

If you see that everyone is buying Bitcoin and you are going to buy, or you see that everyone is selling and you are going to sell, this is one of the most serious mistakes. Getting carried away by trends reflects nothing more than the fact that you don't know how to analyze when is the perfect timing for cryptocurrencies.

To avoid losing everything due to a bad decision, we recommend that you learn to analyze the times and changes in the value of currencies. If you see that everyone has sold, wait a bit, perhaps the value will go to heaven again, or, on the contrary, you may be able to buy more at a lower price.

➡Error 7: Not measuring its volatility

One of the points against which all cryptocurrencies face is that they are usually very volatile, which greatly complicates their operation. One day they can be worth thousands of dollars and the next, a few hundred.

Cryptocurrencies are volatile so we must take this into account when making an investment. Our money will not always go up and up so we must consider that at some point we will run into losses.

 

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➡Error 8: Not considering the price of a cryptocurrency

This is a very common mistake and is generally due to misinformation as people think that they are either very cheap or very expensive. Rather, this will depend a lot on the currency you choose as not all of them trade at the same level.

For example, Bitcoin has a much higher price than Dogecoin so if you want to invest in Bitcoin it is better to have a larger budget. This basically applies to all cryptocurrencies since not all have the same value and the same market price, as well as the same volatility.

➡ Mistake 9: Don't diversify

To conclude, you must consider that not diversifying your investments is one of the most serious mistakes because it is as if you have all the eggs in your basket and you fall, they all break! That is why it is better to divide them into several baskets so that if one falls, they will not all break.

So so that you don't have to suffer because you lost all your money to a bad investment, it is better to diversify into various cryptocurrencies. Having your money in several cryptocurrencies will help minimize the risk posed by volatility, even more so if you have everything in a single currency.

 

Eduardo Lopez

Editor and Copywriter

I am Eduardo López Martínez, I was born in Madrid, Spain and I am 48 years old. I am a journalist and I am part of the Brokersdeforexconfiables.com team. Do you want to know a little more about me? I invite you to read my biography.

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