Much like investing in the stock market, using cryptocurrency demands a lot of commitment. The rise of more altcoins means that the cryptocurrency market is not only saturated, but it is close to becoming the next phase of global currency.
Perhaps you already hold a Monero wallet for your current investments in altcoin, but you are still concerned about what could go wrong. If you’re worried about this, it would be good to know what exactly you’re doing wrong and how to avoid this moving forward.
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Cryptocurrency on a Whim
The prospect of cryptocurrency may be exhilarating at first, but it can lead to nowhere without any actual financial goals other than cryptocurrency itself.
These goals do not have to be grandiose nor visionary. A good start is deciding whether the investment is for long-term or short-term gains. This will determine many starting factors such as whether to mine or to invest, as well as which cryptocurrencies to pursue.
In the case of investing, another consideration is how much fiat money to set aside for the initial investment. You have to be sure that your financial circumstances can handle such a venture, keeping in mind the financial risks and unpredictability of the cryptocurrency market. Betting life savings and even living expenses on cryptocurrency could easily lead total bankruptcy.
Going in Blind
Most people who have taken part in the cryptocurrency market are not experts who can foresee the direction of the market, nor do they have the analytical skills to make frequently accurate predictions on market behavior. Because of this, it is non-negotiable to have at least a fundamental understanding of market analysis.
The behavior of cryptocurrency values can be just as erratic as the stock market, if not more at times, because it is a decentralized market. It’s important to be discerning of which cryptocurrencies to pursue and to keep. Not all altcoins are the same due to their variance in market caps, the external markets that affect them, and the purposes declared by their founders.
This leads some to invest either in a single altcoin or in dozens of them, but this goes back to having financial goals. Putting most of your money into one could lead to great losses in short-term while being in many could be too difficult to track, again leading to minimal gain. It is best to be selective, knowing what you want and which investments will get you there.
Haphazard Decision-Making
Getting into any altcoin means keeping up-to-date on everything that affects it. The effort that this entails usually leads most people to make decisions passively. Again, many fail to acknowledge that volatile nature of a decentralized market like cryptocurrency, so research will always be necessary to understand if your cryptocurrency is one that you can continue to commit to.
Many crypto traders buy when they see a lot of people doing so, and they sell for the same reason. Even if the common notion is to buy low, there could be particularly good reasons for the price of a certain altcoin to be going down. Investing in this coin will not likely yield any gain no matter how much time passes.
On the other hand, another altcoin could be worthless now, but since there is a solid vision and project behind it, it has great potential to rise in the future. It may be a bad idea in this case to sell just to minimize losses at that moment.
Once again, the solution is research and the right amount of skepticism. It is best to keep tabs on a few reputable sources for different purposes while cross-referencing your own observations on news that affects your virtual wallet.
Neglecting Security
Lastly, most people might think that all of the risks of going into cryptocurrency are simply financial, so they grow too lax on how they keep their data. They opt for any crypto wallet without a second thought, and they keep their passwords and seed phrases somewhere, only to forget about them.
Not all digital wallets are made the same, nor do they promise to hold cryptocurrencies the same way. Some altcoins have wallets especially made for them, and others offer certain features to help keep track of your finances. It’s important to choose authentic wallets made for the coins that you choose, especially those that promise security.
Likewise, there are many fraudulent applications, software, and phishing sites that offer functions as simple as being a wallet for all your altcoins, but they can promise to be as great as mining cryptocurrency from a smartphone. In reality, these programs could be doing nothing on the surface while breaching your data in the background.
On a final note, all of your pertinent information such as accounts, passwords, and seed phrases are best written down physically and hidden somewhere safe rather than on a digital note. This provides the best safeguards against any digital breaches, and at the same time, it certifies that you do not lose access to your altcoins especially when their values rise.
Once you’re confident that you won’t commit these mistakes, then you’re ready to take your first step into the cryptocurrency market. If you decide to invest in Monero, consider looking for a digital wallet with trustworthy security and a clean interface. This will ensure that your investment will be well-protected and any transactions you make using this tool is done securely.
About Carson Derrow
