Quick Guide to Crypto
Speculative buyers that are primarily interested in investment opportunities and profits, rather than the technological advancement and future applications of crypto.
Believers are individuals who view crypto as the future of finance, as well as a driving force for technological advancement for many years to come.
Non-believers are people who dismiss the technology as a passing fad, often suggesting that the cryptosphere is a “bubble.”
Regardless of the category you might fall into, there are some things to consider before pulling out your credit card and making your first purchase.
– Avoid the FOMO –
This is a universal rule for any financial market, not just Crypto. FOMO stands for “The Fear of Missing Out.” This feeling occurs when a price begins moving up and a person would rather buy in late than miss an opportunity for profit. FOMO is often the culprit of poor investment decisions. People who buy in at high price points or a currency’s all-time high (ATH) are often thought of to be suffering from FOMO. It is wise to make educated and calculated decisions when investing. Have patience and wait for the right opportunity to buy in. FOMO can also occur when an investor has consistently profited off a coin, but does not want to sell at any point, due to fear of losing potential future profits.
Remember: Any profit is better than no profit. Set goals and cash out once those goals have been met. Cash out when there is a strong likelihood that the market will experience a dip. This is referred to as risk management. It isn’t advised to risk losing all profits while attempting to gain slightly more profit. When the risk gets too high, get out.
– Educate Yourself –
Educate yourself about blockchain and all the new technological advancements the coins aim to provide. Research if each coin has working applications already in place. Figure out what problem is the coin addressing that isn’t being addressed by other forms of crypto. Is the project being developed by a strong team? Is the project partnered with reputable companies? These are all key factors that contribute the likelihood of a coin’s future success.
Another important skill to learn is how financial markets work. When you buy Crypto, you are not purchasing stocks. However, everything that has a market price must follow certain rules and trends. Crypto is very volatile, so it is especially important to learn about financial markets before diving head-first into it.
– Investment Style –
In general, there are two types of investors: day traders and long-term “hodlers.” Day traders trade crypto often, typically on a daily or weekly basis.
Day traders know their way around financial markets and Crypto in general. Because of this, they can plan ahead, analyze trends, and play the market more or less into their favor. Any cryptocurrency will work for them as long as it provides the opportunity for short-term profits. If you are new to financial markets, it is advised to avoid day trading due to its high-risk nature, as well as the transaction fees that come with frequent trading. Newer investors can face losses just in transaction fees if they are not careful.
Long-term investors, known throughout the crypto community as “hodlers,” research various cryptocurrency and blockchain projects and then make investment decisions based on what they believe has the most long-term potential. Factors that are considered include the technology, team, adoption of the tech, partners of the project, and various other factors. This option is recommend if you are newer to crypto and would like to invest while learning more about it.
– Choose an Exchange –
This isn’t too difficult. Currently, many exchanges have a backlog of identity verification requests, which may delay the process of depositing fiat and exchanging it for crypto. Coinbase is one of the most widely used exchanges. It is easy to navigate, even for beginners. However, it only offers Bitcoin, Litecoin, Ethereum, and Bitcoin Cash. Traders often transfer these coins to other exchanges in order to obtain alt-coins. The reason for this is that many exchanges do not accept fiat deposits.
If you would like more information regarding exchanges and trading platforms, the #useful-tools channel in our Discord server contains a wide variety of helpful information (a link is provided at the bottom of this guide).
– Don’t Rush –
This is very important. Do not rush trades! Remember, this is a volatile market! Hasty decisions often lead to hasty losses. It cannot be stressed enough, that you should never put money into crypto that you cannot afford and are not willing to lose. Do sufficient research before any investment. Research and analysis is key to making wise purchases. People have lost their life savings and worse, simply because they chose to enter the market naively and aggressively. Don’t invest based on blind trust in other peoples’ research. Trust your own research. This advice is not given with the intention of scaring away investors. This advice is given to encourage investors to exercise caution.
– Do Not Panic –
There are a variety of things that can have a negative affect on the mindset of a long-term hodler. Much like FOMO, “FUD” can lead to poor decision-making. FUD is Fear, Uncertainty, and Doubt. This occurs when someone spreads negativity about your investment, especially during a time when it is in a decline.
It is important to remember that markets occasionally require a correction or dip. This is healthy. It is not sustainable for coins to constantly increase in value. In crypto, it isn’t uncommon for a coin to correct over 30% without crashing. Manage your risk properly and get out when you should. However, don’t let FUD coerce you into a panic sell.
– Storing your Investment –
So, after all your research and analysis, you’ve finally decided to buy something. It is important that you keep your investments stored safely. Although day traders often keep their investment on an exchange for quick and easy access, exchanges have a higher risk of loss. These risks include hacks, or exchanges getting shut down while people still have their money stored in them. Though this does not happen often, it is still recommended that you store your investments in a secure wallet.
If you are a long-term hodler, you’ll want to have your own wallet, accessible only to you, to store your coins or tokens. This is the best option security-wise, because the only person who can access it is you.
Hardware wallets, such as the Ledger Nano S., are highly recommended. Although this method costs more, it is more secure than a downloadable wallet. If you would like to purchase the Ledger Nano S, it is strongly advised that you purchase the hardware wallet directly from the wallet’s official website. Individuals have been known to install malicious software that can steal all of your information. These altered devices are then typically sold on major online marketplaces or websites.
More information on wallets can be found in the #useful-tools channel on our Discord server.
There are many things to know when getting started in crypto. The cryptoverse is vast and filled with endless amounts of information. If you would like to discover more helpful tools for getting started or have any questions that are not addressed in this article, check out the #useful-tools channel in our Discord: https://discord.gg/Hr3EUH9. Alternatively, you can message me on Discord @DanBeGhostin’#1660.