The term Cryptocurrency is not just limited to Bitcoin, but the concept has a wider view and scope. If you plan on investing in Cryptocurrencies, then you should only invest funds that you can lose. Cryptocurrencies require a lot of common sense to invest in and what you invest should not be the money you need on a day to day basis. Investors have to keep in mind the unique aspects of this market so that they do not lose their investments. Some of our tips are listed here:
Expect the unexpected
If you are up for some risky assets, then Cryptocurrencies are the right thing to invest in. There is huge volatility in Cryptocurrencies, and you cannot even begin to estimate the actual worth of the asset. Investors have to be mentally prepared for any outcome be it good or bad. Cryptocurrencies work similarly as options do in the traditional markets in terms of their risk portfolio.
Always diversify your Cryptocurrencies
The main thing to keep in mind when investing is diversification. You should diversify both in terms of where you keep your coins and what coins you buy. You can keep your coins on exchanges, local wallets, hardware wallets, etc. All of them have their advantages and disadvantages. You can exchange your coins on platforms like Bitpanda right away. (Check out our Bitpanda Review!) Or you can keep your assets long terms (Hodling) on a local wallet.
Keeping up with security
Two-factor identification authentication is the best option to protect your public wallets, like your exchange accounts. The two-authorization system can prevent frequent hacks. There are lots of hackers in this market, so make sure you keep a password which is difficult to guess so that hackers will not be able to crack it.
Hardware wallets like the Ledger or Trezor provide the best security for hodling your positions long term. You don’t have to have any technical expertise to use these devices while they provide excellent security.
Due diligence to be put in force
You should have the proper knowledge and understanding of the technologies underlying your investments. Information about these coins can be accessed through white papers found online on the index pages of most coins. All Crypto Whitepapers help investors to get accurate information about the potential risk and reward portfolio of an asset.
Avoid the herd
You should be cautious about all social media communities that try to pressure you into buying anything. These people are usually part of pum and dump schemes designed to defraud unsuspecting investors.
Rather than listening to others, you should have an investment strategy that is only for you.
Keep away from Mobile wallets
The main problem is that mobile phones are not secure enough yet to hold large amounts of assets. Investors are advised not to keep any information in their mobile wallets. Storing large amounts of Cryptocurrencies online overall should be avoided at all costs.
Understanding hot and cold wallets
Cryptocurrencies can be stored both online and offline, and it is imperative to use the correct method of storing your wealth. Currencies that are kept for a long period of time should be placed in a cold wallet and those which are used for liquidity can be kept in a hot wallet.