Six frequent blunders are made by cryptocurrency speculators, they could be you, me, anyone in the. Let’s take a look at these blunders.
1. You’ve misplaced your backup keys
You are given a backup key when you create a crypto exchange account so that you can access your wallet if you forget your login information. This key is kept by some investors on their laptops or phones. It’s frequently forgotten in a day and age where we are so used to technology remembering all our passwords, that it can end up lost.
Laptops or phones are often stolen by people, or can end up broken. Lets say you break your phone or sell it and it just happens to have your key on it when you wipe it. That key is then lost, and so are the contents of your wallet. If your phone is stolen from you and your pin number is easy to guess like 1234, or you don’t have facial recognition. (Or if something happens to your face…) You could be in serious trouble.
It’s advisable to keep track of your backup keys in a journal and keep it somewhere safe and secure. Data cards can be picked up, stolen or corrupted so having a physical copy is really REALLY important. How do I know this? I lost my first Metamask key. Thankfully there was no cryptocurrency inside it but it was a harrowing experience that made me panic.
2. Using an Incorrect Wallet Address
Sending cryptocurrency to the incorrect wallet address is a common blunder. I’ve also made this one when trying to send Tezos to one of my friends, which cost me 70 quid plus gas fees!
When completing large transactions, performing a test transaction before transferring all of the needed crypto assets can be highly advantageous, and save you from the kind of experience I went through. (It involved a lot of rage, misery and panic!) Although you will incur additional fees (due to the fact that you will be doing two transactions rather than one), this is far preferable to sending the cryptocurrency to the incorrect address.
Before transmitting all of the needed crypto assets, always perform a test transaction especially when dealing with large sums of money..
3. Fear Of Missing Out (F.O.M.O.)
Fear of Missing Out is a screaming nightmare which plagued me during the last market crash this year (Jan 2022) This presents itself in scenarios such as selling an asset early to avoid losing gains which I almost did. I listened to some advice from members of our Facebook group Shiba Inu Coins Holders Worldwide. They kept saying to hold. Holding became hodling became mad panic, but I stayed strong and we saw Shib shoot high again recently which calmed my broken nerves!
Another horrendous situation is if you end up buying at the maximum because you are afraid of missing out on something essential, or fear of missing out on a great Initial Coin Offering (or ICO) which can end up with you losing a lot of money to a dubious and untrustworthy venture. People often lose money in Bitcoin or Ethereum trading as a result of their fear of losing their profits.
FOMO is difficult to overcome, but it is possible. Because of the craziness of the last dip, I wrote an article on how to HODL like a boss! If you’re like me and you panic a little too easily, this should help!
Create a set of rules for trading/investing on the crypto currency exchange or selecting a project, as well as restrictions on the maximum losses and profits, to do this.
4. Don’t put more money into something than you’re willing to lose.
One of the most common mistakes a lot of newcomers make is over investing money that they need to pay their bills, such as rent, food or mortgage in the hopes of doubling or tripling their money. Investing money you can’t afford to lose can get you into trouble if the coin’s value plummets after you purchase it. Of course, you never know when coins may appreciate or depreciate in value, so it’s best to play it cautious and invest only money you can afford to lose in the worst-case situation. If you follow the news and you know what you’re doing it’s a little easier, however… It’s never worth taking a silly risk in the hope that the next day your money’s going to the moon. I’ll have a lamborghini with fries thanks…
Always save some money incase things go wrong. I keep £1,500.00 of money at any point on top of last month’s earnings to ensure that if things go wrong in my life, I can protect myself and my family. I always see everything I’ve ever invested as lost money, as it helps me avoid emotional attachment to my decisions, as these can lead to foolhardiness. So always keep something spare, and never invest more than you’re prepared to lose!
5. Being a Victim of Scams.
As a moderator to a crypto group, we have to watch out for scams, which is increasingly hard with Facebook handicapping what mods and admins of groups can actually do. Several of our members have experienced being scammed out of crypto and it’s horrible! Ponzi schemes, phoney giveaways, and pump and dump organisations are all examples of cryptocurrency scams. Scammers may ask for your backup key (seed phrase) or pose as a social media influencer to obtain information from you. Never give this key to everyone. Not even your best friends. It’s not worth it! The only person you can trust with that information is YOU!
Stay wary from free gifts and dodgy login pages.
I also wrote an article on trusting ‘professional’/dodgy cryptocurrency investors shortly after a member of our group reporting they were scammed on another page.
6. Investing all of your funds in a single coin.
This is a common beginner blunder made by many cryptocurrency traders and investors. Rather than putting all of your money into one coin, diversifying your portfolio and investing in a few other coins is a good idea. If you invest all of your money into one coin, you are at the mercy of that coin, if it wins, yes, you can gain many riches and glory galore! But if it starts to sink into the mire forever… Consider having at least 8 coins: if one does not perform as well as the others, the gains from the top performers can more than make up for any losses. I tend to choose coins based upon a combination of past performance and also based upon what the coin does and the plans of the owners in the news on their site. I don’t generally trust many news articles unless they come from a source. The reason for example I trust SHIB is because of the ecosystem they’ve created with SHIB, LEASH and BONE for example and their constant work and burns to keep the coin strong. They are doing well! I have good reasons to trust Tezos, Solana and Algorand as well. Always understand a currency before investing in it. These are my 4 top currencies at the moment and they’re well worth looking into.
Before purchasing crypto assets from a reputable exchange, do your homework and make sure you know what you are doing, what you are investing in and why.
I hope this helps!