One of the things that draws in people the most about buying crypto is that they (mistakenly) see it as easy. Sure, executing a purchase and a sale only takes a push of a button, but they also see a lot of people (young people) who made serious money this way without having (in their eyes) any special skills or knowledge.
Sure, some people got lucky, but you need to give credit where credit is due and admit that there’s so much about buying crypto that you still don’t know. It’s not your fault, really; no one is talking about this, at least not to the degree that they should. With that in mind, here are the top six things no one told you about buying crypto (and they definitely should have).
Everyone talks about the early adoption, discovering the next BTC, and buying in early, however, is this really the best you can do with your money? These investments are risky, and the profits you’re making will not always be worth it.
Just think about it: you probably fantasize about buying a coin at $1 and selling it when it reaches $10,000. However, if we’re realistic, if you buy at $1, you’re selling at $10 or $20, and you’re going to be overjoyed when it happens. Why wouldn’t you? You’ve just made a profit of 2,000%.
According to crypto specialists like Kane Pepi from Techopedia, when looking at coins, instead of looking for the “next BTC,” you should just be looking for the next best one to buy. The best one to buy can be something as big and well-established as Bitcoin or Ethereum.
These coins can still see massive growth, and they have great utility even outside of investment.
In most people’s minds, the differences between exchanges are really not that great. They believe that it’s just the aesthetics, the color of the UI. After all, the value of the crypto in question doesn’t vary between exchanges. They just learn a few basic things about cryptos and randomly pick the exchange, and that’s it.
Sure, the values may not be that different, but some exchanges have higher fees than others. This difference can be significant. It can also seem insignificant, but multiplying it by the average number or volume of your trades may amount to a significant amount of money.
The security can vary widely. In fact, some exchanges are notoriously bad when it comes to this. Since you have money on the line, you want to be very careful.
Finally, different exchanges have limited selection of coins, while some may not abide that well with the regulatory environment matters.
You also have to understand that the volatility is high and that you just cannot predict it. You may try your best, but you absolutely won’t be able to pull it off. Even people with years and decades of experience in finance (since crypto has only been here since 2008) have trouble predicting the future direction of these charts.
The FOMO (Fear of Missing Out) is a dangerous psychological phenomenon that will push you to take action based on your sentiment, not the factual state of things.
The thing is that if you try too hard to time the market, one of the likely outcomes is that you might buy high and sell low. This is often like trying to catch a falling dish and breaking the entire kitchen in the process.
Sure, impulse trading is compelling, but long-term holding is often safer.
The best example of just how little people actually research this subject matter is the fact that they struggle even to understand something as basic as crypto wallets. For instance, there’s a difference between hot vs. cold wallets. Cold wallets are offline hardware devices that do have their use but can’t be used that actively in the process.
Next, you have the issues of security vs. convenience. With each new security measure you implement, your wallet becomes more secure; however, it also becomes harder for you to access. Take simple 2FA, for instance. It exponentially increases the security of your accounts and devices, but you cannot automatically log in or do it with just your password.
Another thing they don’t tell you is that not all wallets support all coins. There are some wallets that are designed to hold specific types of cryptocurrencies. This means that you might have to make more than just one wallet.
The biggest irony of crypto trading is the fact that while cryptos are, by their very nature, a global thing, different countries have different rules.
Sure, sometimes broader regions jointly introduce a universal regulation. However, for the most part, these laws are nation-based, as taxes are collected nationally and always within the local jurisdiction. The EU, for instance, can enforce GDPR, but it cannot collect taxes on non-residents or those who don’t primarily work in the EU.
Keep in mind that every transaction can be taxable, and every income is taxable if there’s an income tax in your state/country. In order to understand this, you need to understand taxable events. You are selling crypto, buying crypto, using crypto transactionally, etc.
For this very reason, record-keeping is essential, even when it comes to cryptocurrencies, and ignorance is not a defense. Just think about it: would the IRS accept the excuse that you didn’t know you have to pay for any other kind of income?
Fake exchanges and wallets are everywhere. Wherever there’s money, there are people who will try to steal it, and today, there’s more money in crypto than ever before in history. In fact, it is the era of a sweetspot for scammers, seeing as how users still haven’t learned how to protect themselves. They’re using these tools, but they don’t know how to use the correctly.
There are a lot of Ponzi schemes disguised as investments. People are always trying to be early adopters of new coins and new crypto concepts, which makes them incredibly susceptible to this type of scheme. We’re not suggesting that new coins are not worth investing but you need to check and vet them first.
Phishing attacks are common, but they’re especially devastating for people who deal with cryptocurrencies. So, to avoid a disaster, you need to always double-check URLs and sources
Learning the rules is mandatory before playing any game, so why would buying crypto be any different? Now, there’s a difference between knowing and knowing. For instance, if someone asked you if you know how to play chess, answering “Yes” could mean, “Yes, I know how the pieces move,” or “Yes, I’m actually decent at the game.” Before you learn the above-listed eight tips, you don’t know how to trade cryptos. You just know how the pieces move.
Disclaimer
The information on Coinsniper is user-generated and not verified. Coinsniper does not provide financial advice or facilitate transactions.
Also note that the cryptocurrencies listed on this website could potentially be scams, i.e. designed to induce you to invest financial resources that may be lost forever and not be recoverable once investments are made. You are responsible for conducting your own research (DYOR) before making any investments.
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