Things To Know Before Investing In Cryptocurrency In 2022
Cryptocurrencies witnessed a massive rise in the number of new investors in 2021; with an increase of 36% over the previous year. This rise is partially attributed to many who have entered Cryptocurrency to gain quick profits; people who may not know the basics necessary to start trading.
Getting started in cryptocurrency is easier than ever before. One needs only to sign up to an exchange, create a digital wallet, and add some funds to start trading.
In this article, we will explore a few things you should know before you consider investing in cryptocurrency that will help you avoid risking your capital to bad practices or malicious individuals.
Get Involved In The Industry
It is necessary for new investors in cryptocurrency to develop their knowledge of how digital currencies work before starting to invest. Take your time in acquiring as much knowledge as possible. There are hundreds or even thousands of digital currencies; knowing which one to invest in and which one to avoid is a matter of education, planning, and sometimes luck.
If you do not have sufficient knowledge in computer science or have a coding background, you may find it difficult to distinguish the characteristics of one coin from another. Majority of coins are based on technical aspects of the blockchain; therefore, you should focus your first months of knowledge building on understanding the blockchain and its uses. This will not only make you a more competent investor, but it will also make you more confident.
When choosing a digital currency for investment, you should consider how these tokens are used and whether the currency is based on an innovation that makes it distinct from the rest: focus also on how they benefit the blockchain and what their practical uses are.
Invest An Amount You Can Afford To Lose
When it comes to cryptocurrency, there is an important rule that you must learn before starting; “Don’t invest what you can’t afford to lose”. The market is very volatile and therefore, it will be an unnecessary and risky strategy to start with a large capital outlay before understanding how it works.
Of course, there can be luck for beginners and you may find yourself making good profits, but one wrong move and you may find yourself hemorrhaging funds or losing them altogether. It is our opinion to enter the market with a small amount in the beginning, an amount that will not have consequences in your life should things go south.
Watch Out for Scammers and beware of FOMO
During your search for a project to invest in, you may find a lot of hype around a token or project. You may also find social media influencers are promoting a token and promise you riches if you invest in these coins.
Influencers and others on social media try to create FOMO (Fear Of Missing Out) for a particular project so they can get as many investors as they can to buy. FOMO refers to the feeling of fear and anxiety that you might be missing out on a potentially lucrative investment or trading opportunity.
You should always review the project whitepaper and utilise other ways, such as Verify Lens, to make sure that it is not a scam project that is designed to steal your money. When you find a project you are interested in, do not rush to buy. Do your research and make sure that you buy at the right time.
By understanding the common ways that scammers try to steal your information (and ultimately your money), you will hopefully be able to spot crypto-related scams early and prevent it from happening to you.
These are some tips you should consider when it comes to investing in cryptocurrencies. In the future, more articles will be published regarding cryptocurrencies and how to protect your capital. Make sure to subscribe to our newsletter to stay up to date with the latest articles.
