While both gambling and investing are reliant upon odds, investing ensures that the odds always remain in your favor.
This is why research and analysis both play a large part in investing. On the other hand, gambling relies on the randomness of sheer dumb luck.
The cryptocurrency market is an extremely volatile one with prices regularly fluctuating within just a matter of minutes. Hence one could be forgiven for confusing investing in the cryptocurrency market with gambling.
This could not be further from the truth as evidenced by the fact that Bitcoin, Ethereum and an assortment of other cryptocurrencies have become popular investments. With proper research and a thorough understanding of the crypto economy, it is possible to make several lucrative investments.
Before we begin, it should be noted that the knowledge we’ve gained has been garnered from hard experience. Hence this should be treated as a guide for the less experienced investors.
So here we present to you with 5 things every crypto investor should know.
- Have a safe way to store your cryptocurrencies
This may come as a surprise to some and gospel to many – the cryptocurrency market is a dangerous one. Due to the unregulated nature of the industry, scams and theft are commonplace. And oftentimes victims have little-to-no legal recourse once they’ve fallen prey.
In such cases, prevention is always better than cure. This is why it’s vital that you ensure that your cryptocurrencies are safely stored in secure e-wallets.
As you’ll most likely be using a hot wallet i.e. a wallet that is connected to the internet at all times, security should always be at the back of your mind.
You’ll want to make use of a reputable e-wallet service provider with a proven track record. After all, it’d be a terrible waste to have all your hard earned cryptos be stolen by a thief.
Finally, you can also use Tezro Encrypted Messaging App if you need to exchange messages. It is safer than Whatsapp, Telegram and Messenger and it’s intended to serve the purposes of crypto users.
- Remember that cryptos are not a passive investment
A word of warning to all potential investors out there. Cryptocurrencies are not for the faint of heart and are wholly unsuitable for passive investors.
For example, in the wake of overwhelming global uncertainty, investors began turning away from the traditional stock market. Instead, all of that liquidity was focused on snapping up as much cryptocurrencies as possible – an event which saw Bitcoin prices rising steeply.
With so much volatility in the market, it can be entirely possible for fortunes to be made or even lost in mere minutes. Thus when investing your hard-earned cash, you’ll want to keep an eye on market conditions in order to monitor your investment.
- Diversify your risks
While cryptos may be a volatile investment, the multitude of currencies on offer makes risk diversification easy. This is why it’s always wise to invest in a basket of different currencies.
Such a strategy allows an investor to spread out his/her risk over a wider area hence reducing the likelihood of a massive loss being incurred during a crisis.
Besides parking your cash in mainstream cryptos like Bitcoin and Ethereum, you’ll want to invest in a variety of stablecoins. Stablecoins are cryptocurrencies backed by real-life assets such as foreign currencies – thus ensuring a lower degree of volatility.
Always ensure that your e-wallet supports a wide-variety of cryptocurrencies thus making it easier to diversify your portfolios.
- Never invest emotionally
Investing is strictly a numbers game and emotions do not have a role to play in it. Given the amount of misinformation and speculation floating around, it’s extremely easy to fall prey to FOMO (known as the fear of missing out).
This is why it’s best to conduct your own research and take action only when you’re absolutely certain. These measures will prevent you from making any emotional decisions that can cost you dearly.
The cryptocurrency market presents us with plenty of opportunities to profit and strike it big. By keeping to these 4 basic rules, you can protect yourself from investing like an amateur.