It’s no secret that people have made lots of cash from Bitcoin. Even though people make millions of monies from BTC, keep in mind that many have lost millions of money on this cryptocurrency. Whether you are buying high and selling at low prices, losing keys, being scammed or getting hacked, you can lose money from this high-risk investment.
There are various ways through which you can purchase this cryptocurrency. For instance, you can buy bitcoin with a debit card. However, people make a few mistakes when they buy cryptocurrencies. In this article, you will get to learn some of the mistakes that people make.
Mistakes to avoid
1. Not prioritizing security
When buying cryptocurrencies, good security is a major factor. If you lose your crypto, chances are you will not get them back. This crypto eliminates the middleman when it comes to financial transactions by something known as blockchain technology.
Blockchain technology has some complicated details but basically, it helps you purchase things without having to use a bank or alternative financial institutions. You can access your crypto through private and public keys. One of the ways of losing money is by losing these keys. With no bank being involved, you can get help from someone who will reset your password.
2. Not understanding your investment
Before buying this cryptocurrency using your debit card, ensure you have enough knowledge on what it is as well as how it works. Many people on social media say that buying this cryptocurrency is a great investment. However, it’s not good to invest in something because other people are doing it too.
It’s advisable to do some research because it will help you avoid scams, come up with an investment strategy, and make decisions on your own on buying and selling.
3. Investing only in this cryptocurrency
The best way of protecting yourself against volatility is by having a diversified portfolio. Besides investing in other non-crypto assets, you can also diversify your crypto investments. This way, if cryptocurrency fails, you won’t lose all your money. It’s usually advisable not to exceed 10% of your portfolio when investing in crypto.
You can consider other safe investments like mutual funds, real estate, shares and stocks. If you wish to mix things in your crypto portfolio, you can choose from other coins. Research on coins that are well-established and that have reputable names. Every coin comes with a white paper which you can read carefully and understand what the coin does and those involved. Beware that fraudsters use fake coins to scam investors their money.
4. Going out of your pocket to invest
There is a lot of potential when it comes to investing in cryptocurrency. However, there is also uncertainty in it. Being an asset class, there is also little protection and regulation. You can end up losing all your money by just investing in crypto.
Never invest an amount that you can’t afford to lose. You don’t want to lose money but remember that crypto is very volatile and the big gains also come with huge losses. When the market cap is low, the risk and volatility is high. The amount you choose to invest will depend on your risk tolerance and personal circumstances. Make sure you are aware of the risks that come with this kind of investment.
When you decide to buy cryptocurrencies, you have to understand the market. Be sure to consult a licensed financial adviser or a professional before you buy Bitcoin. There are other uses that you can do with cryptocurrency. For instance, you can buy gift cards with cryptocurrencies.