Start Using Crypto – Essential Tips
|— You want to start using crypto, but it can be tricky to grasp. The more you know about the ecosystem, the better your chances are to enjoy the industry and explore exciting projects.|
— Remember to avoid risking your money by taking care of what not to do.
— Do your own research and get the facts before putting in the funds. When you do, go in small and avoid FOMO.
— There’s safety in secure storage. Remember: If you lose your keys, you lose your cryptocurrency.
— Proceed with caution and have fun! The space is exciting and full of opportunity; if you keep a critical eye you might discover some pretty amazing things in the space!
New to the space? Learn how to start using crypto and sleep like a baby at night
So you’re thinking about taking the step into the wild wacky world of cryptocurrency. You’ve overheard some mates chatting about it, done a little digging and discovered that the digital currency market isn’t quite as easy as ABC and 123. In fact, with over 8000 projects, it’s actually pretty complex. BUT you’re still intrigued by the industry and think you might be keen to dip your toes in.
Luckily, we can take the cryptic out of crypto and make approaching the market a little less scary. So, where do you start?
Start using crypto with confidence – knowing what to do and what to avoid
Before we get into what you should do, here are a quick recap of things on the shouldn’t list that we tackled in this article:
- Don’t buy or sell reactively based on volatility. When the markets are bound to move, your cryptocurrency doesn’t necessarily need to.
- Instead of paying too much attention to speculation and “expert” predictions of the price, focus on the fundamentals and other key metrics of a project.
- Avoid following TikTok and Insta-fluencers without checking their credentials. Confidence doesn’t equate to insight into the market.
- Don’t buy what you can’t afford to lose and certainly don’t go into debt to invest in a project. It’s risky behaviour and can get you in trouble.
Okay, that’s a quick crash course in what not to do. Here’s what crypto behaviour is worth practising when you start using crypto:
Do your own research (DYOR)
This one is the kingpin when you start using crypto: when you find a project that strikes your interest, do a deep dive into it before putting your money behind it. Conduct your own research into the key details and take a look at important things such as:
- The team, founders and key investors behind the project and get insight into their reputation. If there’s an air of anything less than legit, proceed with caution.
- The use-case of the project. If there’s an obvious and practical function, there’s more chance of a future than if a project’s key marketing strategy is towards money-making and profit.
- Read reviews and consult the community’s response to a project. The cryptocurrency community (especially those who have been involved in the scene for enough time to know what’s what) will be able to offer insight into a project and whether it’s worth your time and money.
Don’t FOMO and don’t YOLO – rather go for a dollar-cost average strategy
Spending a lump sum on a cryptocurrency because everyone else is (the classic “fear of missing out” strategy) or going in when a project is pumping might be tempting – but it really isn’t your best bet. More often than not, the market corrects itself and if you go in too aggressively, you’re standing to risk losing funds.
Instead of following the herd and buying into the hype (literally), rather go for a safer strategy that will see you accumulate increments over time. It’s like snacking rather than binging. Dollar-cost averaging (also known as DCA) is a safer strat where you invest the same total amount of money, but over time rather than all at once. This way, you can enjoy small wins without risking your money in one move.
Don’t put all your crypto eggs in one project’s basket
There’s a debate between concentrating your attention on one coin versus diversifying your funds in cryptocurrency. Some advocate for concentrating on one cryptocurrency to maximise the possible profits you can take from the coin, but there’s a pretty significant disadvantage behind this approach: It maximises the risk exposure if that project takes a dip.
Instead of putting all of your focus on one cryptocurrency, rather look to have a balanced selection after some serious research. It’s kind of like the Goldilocks approach: Find the sweet zone between over-concentrating and over-diversifying. This way, if one project underperforms, your entire crypto portfolio won’t take a massive knock.
Store your crypto securely
One of the biggest problems we’ve seen from those new to crypto lies in risky storage. Remember, the safety of your crypto lies in the safety of your storage. In the same way that your bank card or your cash is stored in a physical wallet, your cryptocurrency is stored in a wallet – but of the digital kind.
This can either be web-based (known as “hot”) or offline (called “cold” storage). Cold storage, like with a Ledger wallet, is not connected to the internet and stands less of a risk of being hacked or compromised. If you manage your wallet well, your crypto assets run the least risk and stand the best chance.
Start using crypto, embrace the space and learn on the way
If you’re genuinely curious about approaching the space, the best way to learn is to dip your toes in. Make sure you know the risks, steer clear of unnecessary threats and be careful where you put your trust and your funds.
Remember, the market is full of opportunities and potential! Go in slowly and explore the scene with a healthy amount of caution. The more you learn, the more you’ll see how exciting this space is!
Want to know more about the different coins on the block? Click right here to check out our School of Block episode!
*Please note this article is for educational purposes and does not constitute any type of investment advice.