In most chat groups, the first question I am always asked is, what crypto can make me the most money? Firstly, with crypto, as with any other investment, it isn’t about making a quick buck. Most people out there attract you by claiming they bought a Lamborghini by investing U$ 300 in crypto. Yes, many made money in 2020 when Bitcoin surged from $6,000 to $40,000 within a year. Similarly, DogeCoin turned into an overnight obsession for retail traders, partly because Tesla Inc.’s CEO Elon Musk posted an image on Twitter of a “Dogue” magazine cover, featuring a whippet in a red outfit. This pushed the coin to grow from $0.0028 to $0.078 in 24 hours! It is evident that following the pandemic, cryptocurrency is poised to take over the future, yet it’s not too late to dive into it. Below are some tips to help set you up for your crypto journey.
1. Research is key:
With blockchain moving the internet towards a transactional one, understanding the key projects in the eco system will ensure you make an informed decision when buying your crypto assets. It is similar to investing in traditional stocks; know the company and the people behind it before you invest. Blockchain based decentralisation isn’t limited to the financial sector, it will touch every industry in the future.
2. Choose the right coin for you:
There are over 6,200 different cryptocurrencies listed in CoinGecko, and it’s important to understand why some of them are more widely used than others. Similar to how national currencies have different prices, different denominations, and different rates of inflation, a coin of lesser value doesn’t make it a bad deal. Having the top 12 coins in your portfolio can be used to fund your purchase of Bitcoin in fractions over a period of time. Some altcoins have outperformed Bitcoins growth in 2020. Early investment into these assets could be rewarding over the next decade, similar to those who invested in Bitcoin 10 years ago.
3. Ensure your account is secure:
Needless to say, ensuring the safety of your investment is critical. An easy but effective way to start is by creating a dedicated email account used solely for your trading. Ideally, it shouldn’t give a reference to you in any way, and passwords should not be stored on your browser, but written down. Use at least 12 characters, and avoid the usual cliches of your pet’s name or other familiarities. When hackers use password hacking tools, the first thing they do is to flag frequently used words, which can then be used to break passwords. For example, use 4&B0hD#3k$6b instead of Pumpkin1985; you get my point. Add in two factor authentication by installing Google Authenticator, or read the article on PC Mag which further explains the different options available for this purpose.
4. Wallet vs Exchange:
When you hold your Crypto in an exchange, it’s held under their private key, not yours. A good mantra to keep in mind when investing in crypto is, “Not your keys, not your crypto”. Simply put, your cryptocurrency could be at risk if it is kept long-term in a centralised crypto exchange. Therefore, when you are not trading your crypto, always store it in a wallet. You can learn more about this in my previous article.
5. Purchasing your first Cryptocurrency:
The most cost effective channel to acquire cryptocurrency is via Pier to Pier (P2P) buying, as most leading exchanges now offer this solution. I don’t recommend using credit cards to purchase crypto, as you will incur high commission rates and cash withdrawal fees in most countries. However, the recent move by VISA into this space might change this in the future. You can check the leading Crypto exchanges on CoinGecko, though at present, Binance is the leading exchange and has recently begun operations in Sri Lanka as well.
Crypto is still developing, and you will hear many pros and cons with regards to it. There will always be negative sentiments, however, it has been fervently embraced by many tech billionaires and financial advisors, including Elon Musk, Robert Kiyosaki and Chamath Palihapitiya; which brings us back to my first point, the importance of research. With more and more mainstream financial institutions getting on board, crypto will become more secure and reliable over time. My advice is to keep investing in it, and not miss out on what could potentially be the largest paradigm shift in our lifetime.
One thought on “5 Tips before buying your first Crypto”
This blog was… how do I say it? Relevant!! Finally I have found something that helped me. Thanks!