Buying crypto for the first time? here are five things you should know

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In recent years, digital currency has grown to new heights, especially Bitcoin and Ether, the two most widely known sub-types of cryptocurrency.

Many digital currency enthusiasts bet on cryptocurrency as a mainstream asset, but those who haven’t might wonder if they should dive into this or not.

If you are one of those who hasn’t entered the digital currency space yet, stick around to see why you should consider it.

Since Bitcoin has changed how people or businesses exchange money, cryptocurrency has made a name for itself as a secure and transformational technology.

Cryptocurrency has revolutionized the finance market by eliminating the need for an intermediary, a decentralized nature, secure monetary exchanges, and fast processing times.

As an innovative digital currency, cryptocurrency has proven that it is here to stay and is worth investing in. Apart from ensuring secure transactions, crypto is not governed by a central authority that can dilute its value.

Cryptocurrency is the key to multiplying wealth by offering an unlimited number of altcoins to buy and sell, like Ethereum, Tether, and Monero. Every investor’s goal is to maximize returns, which is what cryptocurrency is all about nowadays.

For instance, many are keen on investing in Ethereum because it is the most liquid form of cryptocurrency that can be exchanged quickly and isn’t susceptible to value-reducing risks.

By now, you’re asking yourself how can I buy Ethereum or whether or not investing a significant amount of your savings is worth it.

The short answer is yes and no. It’s you who has to decide. If you decide on investing, you might get significant returns. If you don’t, you might miss out on an opportunity.

But, if you’ve decided to take the plunge, here’s what you should know.

1.Do your research

As human beings, we are victims of ‘just because everyone is doing it, you should do it too’; we fail to realize that the outcomes are hardly ever fruitful, especially when investing in cryptocurrency.

Relying on obscure or self-interest-driven crypto platforms only misleads investors and results in substantial financial loss.

The critical factor to consider is that nobody gives away coins for free, so if you come across such applications that claim to do so, dig deep for authenticity.

Begin by finding a white paper, a publicly available document that states the blockchain’s mission and how it works.

A well-crafted whitepaper has all the relevant data, from statistics to formulas, that attract every prospective investor to invest in a particular currency.

Aside from the whitepaper, find the board of directors or the organizations responsible for developing the currency. It validates the legitimacy of a particular cryptocurrency project you are interested in.

Going in deep isn’t necessary, but you must know the people working on a currency to understand what you’re getting into.

You might feel that looking into an opportunity for prolonged durations will leave you empty-handed. However, it is always better to wait and gain less than to jump onto something and suffer losses.

2.Timing is everything

Investments are primarily about managing risks and maximizing gains. After gathering all the relevant information, you have likely developed an interest in cryptocurrency and want to grab one or two projects.

However, before pulling any irrational move, time your investment. Timing your investment is critical because digital currency is changing rapidly and is highly volatile.

This means that price fluctuations are likely, to alter the cryptocurrency sphere.

Though buying a new currency before it gains popularity or increases in value prompts people to invest, observing the industry trends and waiting for the right time leads to more fruitful outcomes.

Investing in cryptocurrency means putting your hard-earned money at risk; therefore, doing your homework before investing is crucial to ensure success.

3.Join a Cryptocurrency Community

Seeking guidance from the ones who’ve been in the game for a long time enhances knowledge and prevents you from making mistakes.

That is why, as a beginner, you should join an online cryptocurrency community, as it opens doors to interacting with several people; from traders and exchange platform owners to investors.

The world of cryptocurrency is sometimes overwhelming; thus, a community also serves as a communication platform where everyone shares knowledge and interests and discusses various digital currency-related problems.

Even for marketplaces, an online community is a tool for solving users’ queries through a hired moderator.

Additionally, as the crypto space continues to evolve, online communities serve as a ground for product announcements and launches.

A cryptocurrency community offers insight into how things work and the best trading opportunities that lead to huge profits.

5.Keep in mind the Unit Bias

Among the most common reasons investors lose money is they are misguided by unit bias. Investors often don’t realize that not every coin is created equal; several coins are available, each developed with a different value and purpose.

Understand the value of coins, especially the ones you are keen on investing in. You must be wondering now, ‘how to do that?’

The answer is by running a background check on the coin. Find every relevant information from how it was created to who is working on it.

Many investors only consider the whole unit of the given currency instead of the fractional quantity, which is what unit bias is about.

Aside from running a background check on the currency, you must conduct fundamental analysis.

It means looking at the price, whether you are buying high or low. Other metrics you must consider to avoid unit bias are market cap which shows an investor the crypto’s asset value and liquidity.

6.Choose a secure wallet

When investing in cryptocurrency, you need a wallet that holds all your earnings. While some wallets only support one type of cryptocurrency, others support multiple cryptos. It is hard to choose the best wallet because the best is the one that suits your needs.

Since the crypto world is ever-evolving, staying updated with the latest news is essential to go with the one that serves you right. Always remember that some of the ‘best-crypto wallets’ are malware. Always remember to download a crypto wallet from trusted sources.

A reliable crypto wallet must ensure that only you have access to your digital currency and has the security that matches your digital habits. You can choose a hot or cold wallet based on the number of transactions you carry out.

While hot wallets, otherwise known as online wallets, are used for making small trades, cold wallets are used for moving large sums, which is comparatively safe as they don’t require the internet to work.

Conclusion

Cryptocurrency has transformed the future of digital currency, promising investors significant returns on investment. However, success is only for the ones who know their way around the dynamics of cryptocurrency.

The challenge for any investor, especially for a beginner, is not to get caught up in the hype and make irrational decisions. The volatile and unpredictable nature of cryptocurrency makes it a risky investment, especially for those new to it.

Before jumping right into the digital space, it is crucial that you keep in mind a few things like the ones mentioned to avoid financial loss.