Digital currency has become increasingly popular among individuals, retail investors, and institutions. However, investing in this industry requires thorough research to ensure confidence in your investments. In this article, we will provide several tips to help you confidently buy cryptocurrency.
1. Do Your Research
Conducting thorough research before investing in a project’s token or purchasing its assets is essential. To do so, you should start by checking out the project’s website and documentation.
Also, consider joining the project’s community on Discord or Telegram, monitoring its announcements and updates on Twitter, and connecting with the developers, founders, and other community members. This way, you can learn more about the project and its potential before investing your hard-earned money.
2. Not Your Keys, Not Your Crypto
If you plan to invest a good amount of money in cryptocurrency, purchasing hardware from a company such as Ledger or Trezor is strongly advised. It may seem expensive, but it’s well worth it.
Storing your assets in a software wallet like Metamask or any other crypto wallet on your computer or phone can expose them to malware or fake versions of wallets. Therefore, keeping a smaller amount in these wallets and moving the rest to a hardware wallet for added safety is better.
3. Beware of Scams
There have been several instances where individuals have fallen prey to online scams by clicking on suspicious messages sent via platforms like Telegram, WhatsApp, email, Facebook Messenger, and Twitter.
It’s important to note that no legitimate project will ever ask you to pay in advance or request cryptocurrency. It’s crucial to educate oneself on safeguarding against such fraudulent activities—the last thing you want is for scammers to wipe out your cryptocurrency wallets.
4. Do Not Share Your Private Keys
If you have already bought a hardware wallet or created an account on a cryptocurrency exchange, you must never share your private keys with anyone. Doing so would give them access to your portfolio, and they could steal all your cryptocurrency assets without you noticing. Protect your assets by keeping your private keys to yourself.
5. Not All Crypto Exchanges Are Legit
You may come across crypto posts on platforms like Reddit or Quora, where users discuss various cryptocurrency exchanges. However, it’s important to note that not all links shared on these posts are legitimate, and the same goes for some search results on Google.
The most popular cryptocurrency exchanges in the US are CoinBase and Kraken, but if you’re interested in other exchanges, you should conduct thorough research before making any decisions.
6. It’s All About Patience
Before investing in crypto, thoroughly research and identify potential projects. It’s important to understand that digital currencies are highly speculative, and any investment involves certain levels of risk. Carefully study the market to increase your chances of success. The world of digital currency is fast-paced and highly volatile.
7. Learn About Bitcoin and Ethereum
To master a skill, you need to focus on learning and practicing. If you want to understand the mission, values, and prospects of the web3 ecosystem, you should start by learning about Bitcoin. This includes understanding why Satoshi Nakamoto created it and the technology behind it.
Additionally, it’s important to take some time to learn about Ethereum (ETH), as this will help you understand the differences in the ecosystem and the multiple technologies that have emerged from it.
8. Search for User Guides
Getting started out with crypto trading can be a daunting task. But with proper research and experience, one can become an expert in this field. There are many resources available in the blockchain ecosystem that can guide and provide free resources about self-custody for new investors.
Luckily, most cryptocurrency exchanges offer tutorials and step-by-step guides that can help boost your confidence while trading, purchasing tokens, staking assets, or performing any other actions.
9. Try to Avoid Buying During Take-off
If your friends are pressuring you to buy tokens because they are going up rapidly at the last minute, it’s best to wait for them to fall before making your purchase. The last thing you want is to see your money decrease soon after buying. So, it’s better to exercise patience and make an informed decision.
10. Do Not Sell Your Home or Car for Trading
There have been cases where individuals have sold their properties or taken loans based on the value of their cars in order to invest in cryptocurrencies. However, if you don’t have enough assets to invest, it is recommended to start with what you are comfortable investing in and what you already possess. There are many decentralized lending apps that offer fixed and variable rates for lending and borrowing, allowing you to earn profits.
11. Perform Test Transactions
Cryptocurrency is different from banks. If you accidentally send your funds to the wrong recipient, you may lose your money for good. Test transactions allow you to verify that your wallet is functioning correctly, double-check that you have the correct address for the recipient, and confirm that the sending and receiving process works smoothly.
12. Expect Nothing
Investing in the web3 ecosystem can be a bumpy ride, so it’s best to come in with no expectations. However, the upside is that you’ll have the opportunity to meet many like-minded individuals and become part of their community. Actively participating in the ecosystem by asking questions and learning from your experiences is key to your growth in the crypto environment.
13. Always Check the Cryptocurrency Whitepapers
It’s crucial to consider the specifics of a digital currency while making an investment decision. Although word of mouth is important, it’s better to find the project’s whitepaper. Every cryptocurrency project must have a whitepaper, which should be easily accessible. If it’s not easily accessible, it’s a red flag to consider.
14. Learn About Blockchain and the Entire Industry
It is important to understand the workings of blockchain technology in order to grasp the crypto and web3 world. Every blockchain has a consensus protocol that ensures the accuracy of the ledger.
That said, there are different types of consensus protocols. Proof-of-work protocols require significant mining setups to validate transactions. In contrast, proof-of-stake protocols reward holders with the highest-stakes validation rewards.
15. Join the Web3 Community
As a new investor, it’s important that you connect with the web3 community. They are a helpful bunch who have been in this environment for years. By maintaining a close online connection with founders, mentors, creatives, and investors, you can learn about many other investment mechanisms in the decentralized world.
To get started, you can join the main blockchains such as ETH, Near Protocol, Solana, or Polygon. This will give you an opportunity to interact with technology, explore various projects, and expand your knowledge about the market.
16. Find a CPA
Before investing in cryptocurrency, it is important to familiarize yourself with the rules, regulations, and tax rates in the United States. Working with a specialized CPA can help you navigate the complexities of cryptocurrency investing, ensuring you have the knowledge to make the best decisions for your financial goals.
What You Must Know Before Investing in Cryptocurrency
It is crucial to emphasize the importance of researching assets before investing, considering how volatile and fast-paced the investment ecosystem can be. To begin, you should take a comprehensive approach by evaluating your personal risk appetite, investment goals, and portfolio diversification. Stay safe!