For beginners, cryptocurrencies like Bitcoin have numerous pitfalls. How beginners navigate around the pitfalls and what you should absolutely avoid as a crypto beginner.
1. Bitcoin is not a typical investment
Having some skin the game, i.e. participating in the BTC course, is helpful for developing a certain curiosity about crypto currencies. Because with your own participation, interest in cryptocurrencies seems to come naturally. Questions such as "How does our monetary system work", "How does the ECB work" or "What makes good money" rarely arise in everyday life (at least in this part of the world). Bitcoin, however, encourages a healthy interest in precisely these questions.
2. Hand over Bitcoin custody to third parties
The not your keys, not your coins bon mot exists for a good reason. Because holding Bitcoin means demanding monetary sovereignty. But anyone who deposits crypto credit on Bitcoin exchanges allows third parties to control the private keys, i.e. the keys to digital assets. Similar to banks, exchanges can refuse or delay the payout of BTC. Various devastating Bitcoin exchange hacks have already illustrated the dangers of centralized Bitcoin custody.
If you want to be on the safe side, you should always keep your Bitcoin on your own wallet, ideally in cold storage.
3. Let yourself be chased by volatility
The Bitcoin market is highly volatile. This is mainly because BTC is an entirely new type of asset. Nobody knows how high the price can rise, let alone what will become of the No. 1 cryptocurrency when it grows up. These uncertainties about the possible risks of an investment are what make the price unpredictable. It is therefore advisable not to squint too often at the price and to make buying or selling decisions based on the short-term price development. Market observers are therefore increasingly recommending a so-called buy-and-hold strategy; that is also easy on the nerves.
4. FOMO: Chasing the “next big thing”
Coingecko, one of the largest course sites for cryptocurrencies and tokens, lists over 6,000 different coins these days. These include delicacies such as the Meme Coin Dogecoin (DOGE) and SpankChain (SPANK), a token that was created exclusively for payment processes in the adult industry. Over 800 projects have a market capitalization of over one million US dollars. The attraction of jumping on one of the fast-growing coins and doing the "business of a lifetime" is seductive. Price gains of 50 percent and more are not uncommon in the wild world of crypto currencies. It should not be left unmentioned at this point that such moon gains usually do not generate sustainable growth.
In the long run, BTC has always been the “safest bet” in an already risky and volatile market environment. So: keep calm and listen to Bitcoin.
5. FUD: Handing over fear, uncertainty and doubt
Bitcoin has been running like clockwork for ten years. Apart from two brief interruptions of the client in 2010 and 2013, the protocol has been working smoothly since its inception. The website Bitcoinuptime.com puts the uptime of the crypto currency No. 1 at a whopping 99.9 percent.
Even so, supposed risks and bad news such as efforts to ban Bitcoin are still spreading like wildfire. So that Fear, Uncertainty, Doubt have no influence on your trading decisions in the future, the following applies: keep calm and read the crypto compass.
By Shaukat Goraya (Freedom fighter, Journalist and former mayor under the dictatorship of Pervez Musharraf in Sargodha, Pakistan)
