Disclaimer: The text below is a press release that was not written by Cryptonews.com.
Investing in cryptocurrencies seems like an inviting prospect in 2022, due to the gradual mass adoption of blockchain tech and decentralised finance. If you’re one of the many who are contemplating getting into crypto as an investment or trading opportunity, you may be feeling uncertain regarding the safety of crypto, and whether it’s a good thing to invest in the first place.
Don’t Give In To Hype
Sadly, newcomers into the space can become disillusioned if they fall into the trap of false hype. Hype plays massively into FOMO, and there are those who want to take advantage of this when they promote tokens that are not a good investment. Known as “pump and dump” schemes, extremely wealthy “whales” use social media to inflate the value of a token, only to sell their load once the price reaches a desired high – sending its value plummeting downwards. Although, if you are interested in a token which has a lot of backing on social media, this doesn’t necessarily mean it’s part of a pump and dump scheme. But rather than investing in a token based on its social media status, it’s worth it to do your own research about the project and owners behind a token and smart contract.
Protect Your Holdings
When trading, crypto is typically stored short-term on exchanges such as Binance or Coinbase, in custodial wallets. Although such exchanges are high security custodians, some diligence is due to secure the funds you’ve entrusted to be accessed via the exchange. Here’s a few best practices for increasing the security of a custodial wallet –
- Don’t accept when a site asks you to save your password. Instead, write them down and store them offline.
- Enable 2 Factor Authentication on all of your accounts.
- Never share your computer screen through a live feed or through screen shots.
For larger and more long term holdings, a non-custodial wallet is recommended (refer to this guide for more detailed info on types of crypto wallets). These wallets are secured and accessed via a seed phrase and private key. Here are some best practices to protect your seed phrase and private keys –
- Never store it on any digital devices.
- Write it on more than one sheet of paper in 2 separate parts and store them in different secure locations. This way, if one part is discovered, they still won’t be able to access your assets.
- Store them on something more durable than paper, like a CryptoTag.
- Never type out your seed phrase or private key anywhere beyond your wallet software.
- Never share your seed phrase or private key with anyone.
Educate Yourself
To have a good investing experience, choose decent platforms and exchanges from which to obtain tokens. Never just click on links sent to you in DM’s from strangers on Discord and begin investing in those projects without being aware if the platform offering the tokens is legitimate. Look up all platforms you intend on giving your details to before doing so.
Traders not only need to be informed when it comes to platforms, but also on how to read the markets presented to them on those platforms. This is easier said than done – in the NFT space, there’s a good reason why Gary Vaynerchuk advises people to not invest money in NFTs that they are not willing to lose. Investing requires financial planning, self control, and strategy. Crypto trading requires technical analysis skills (amid other things) that not all will have the patience nor the time to build up. If you’re up to the task of doing a deep educational dive on topics such as technical analysis, the psychology of trading and portfolio management, then crypto trading may be for you. However, if you aren’t, you may benefit from social trading – where aspiring investors follow and copy a professional trader’s moves being shared with them through a social trading platform such as Tycoon. This copy trading platform allows users to see and replicate the trades of professional traders without having to move their funds onto Tycoon’s platform – it simply requires API access to your exchange.
Why Crypto?
Speed, convenience and profitability are three elements of online trading that attract a steady stream of new asset traders each year. But why crypto?
Cryptocurrencies are high risk, yet high reward – this can be seen as both a good and bad thing, but a token’s ability to suddenly hugely increase or decrease in value can lead to high returns for those who invest at the right time. This can be due to supply and demand dynamics triggered by the supply of tokens from the issuers/miners, and the demand for them by purchasers. For instance, the price of Ethereum roughly doubled between July and December 2021.
Another benefit of cryptocurrencies is that they offer users financial transparency. While our fiat financial systems largely rely on third party intermediaries to process transactions, crypto transactions are processed on the blockchain. This means every transaction can be viewed by anyone, and can be made without a middle party.
Lastly, crypto markets are more available than other markets, as they’re open for trading 24/7. Mining and transactions continue to be processed day and night, therefore traders don’t have to wait for any asset exchange to begin trading for the day if you want to buy, sell or trade cryptocurrencies. This is particularly advantageous for traders who are constantly on the go and want to make profits outside of ordinary working hours.
Is Crypto For You?
Once you look past the FOMO and fanatical social media stunts, you may begin to develop an eye for project legitimacy and token utility. Once you’ve adopted this familiarity with DeFi, crypto can be a fun and financially rewarding investment. Finally, self awareness is crucial. Taking the educational path to becoming a pro trader could be a dream come true for some people, whereas others may prefer to put their trust in a trading Tycoon on a social trading platform. Consider which type of person you may be, start small, and enjoy trading.
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