Crypto has reached all-time highs, so we’ve seen a lot of renewed interest in cryptocurrencies worldwide.
Cryptocurrency is a digital or virtual currency that can be used as a form of payment for goods and services. Unlike traditional currencies, these are not issued by central banks or backed by any other commodity.
Though there are over 1,500 cryptocurrencies available, 28 of them are engaged in 95% of transactions. Ethereum is the second most valuable cryptocurrency based on market capitalization.
Let’s take a closer look at Waypoint’s blog article to learn more about this cryptocurrency!
1. You Shouldn’t Put In More Money Than You Are Comfortable Losing.
The volatility of cryptocurrencies is not without its share of ups and downs. There have been many big drops in bitcoin’s history and some even larger ones for other altcoins.
If you feel a significant price drop will cause financial stress, it would be wise to reconsider your position. It would help if you avoided the FOMO (fear of missing out) and were stuck with more money than you are comfortable investing.
2. Most exchanges require KYC for account verification, verifying who you are.
Cryptocurrency is a common topic nowadays, but many scams exist. Finding an exchange that you trust with your data and identity is essential. You may have to wait a while to get verified on sales, so be patient.
Stick with reputable exchanges, such as Kraken, Coinbase, or Gemini, and watch out for scam exchanges that offer lower rates than spot rates and have no KYC process.
3. Beware! Don’t Be Fooled By Low Prices
If you’re on a budget but still want to purchase coins, buying ones under $1 in USD can be tempting. Keep this in mind. However, that market capitalization (market cap) is a better metric for determining whether a coin is overpriced. A coin’s market cap is its price times the number of coins available.
A coin will sometimes be less expensive because many are in circulation, but it still has a high market cap. An example can be detected with XRP. Make sure to research the “tokenomics” of a coin, so look at how many coins exist and what the market cap is. Try not to get caught up in this FOMO, and do a bit more research before you dive into a new currency.
4. Trade Groups- Greatest of Scams or Holy Grail?
Groups used to share a trading strategy through chat and quickly delete the conversation. They load up on a low-cap altcoin with low liquidity, signal that it’s going to pump, and then dump it on the people that bought it. The only people making money with this tactic are the ones at the top.
Be careful not to get scammed in this space. Scammers wait for opportunities to take advantage of you. They try to mislead you and send you something that isn’t what it appears to be.
Never make a hasty decision without doing your research first — the idea of “if it’s too good to be true, it probably is” holds regarding scams in this space.
It would help if you made yourself aware of fake support staff who might pretend to be from us to trick you into giving up your private keys or mnemonics. Remember, there is no free money — unless you were lucky enough to get in on the UINCH or 1INCH airdrop. Be careful when scrolling through things like Twitter, Facebook, and Discord.
5. Protect Yourself From Phishing Websites
Scammers may use special characters to make a domain name look similar to the existing domain. It will lead you to an unknown site, or they’ll ask for your personal information. Instead of using Google Searches, save a bookmark and visit your favorite site whenever possible.
Mining isn’t as profitable these days because you need the newest equipment and a very cheap source of electricity to make it work. Meanwhile, “cloud mining” schemes are becoming less and less profitable.
These temporary mining contracts will only drag you down in the long term. They’re explicitly targeted at newcomers who don’t know how mining works, and they will take hours, days, or even months to complete their contract.
Be aware of your country’s specific laws about capital gains. Keep track of all the transactions you make so you can calculate your cost basis. If you’re a high-frequency trader, use a program like coins or a coin tracker to keep track of all your trades.
6. Hardware Wallets Might Be Stupid, But They’re Effective
Investing in a hardware wallet is highly recommended if you have some coins. These devices offer a much higher level of protection with the added benefit of being very user-friendly. Trezor and Ledger are two popular models of hardware wallets.
Save your 24-word phrase to a secure, offline location. If you don’t go with an HW wallet, ensure the device you use is free of viruses or malware. And never save backups of private keys in plaintext on your computer.
7. Protect Yourself By Using Good Two-Factor Authentication
For your peace of mind and safety, it’s important to use two-factor authentication. While SMS 2FA is available, it’s not strong enough to defend against skilled hackers.
It means you could unlock an account and give away all the information without knowing it. We recommend tools like TOTP 2FA, Google Authenticator or AUTHY, and critical hardware devices like a yubikey for maximum security.
Changing your passwords frequently and using a password manager is necessary so you don’t reuse the same one. Hackers will use emails like this to capture your password and keep trying until they get it right.
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Crypto: What You Need To Know For The Beginning Investor was originally published in The Capital on Medium, where people are continuing the conversation by highlighting and responding to this story.
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