By now, you know how to create a Coinbase account, send money to it and eventually how to send money to Binance to invest in altcoins. But what are the basics to become a cryptocurrency pro? Here is a crypto 101.
Invest only what you can afford to lose
First of all, the most important rule is to invest only what you can afford to lose. Many experts regard cryptocurrencies as the ultimate future. Others think of it as a bubble that is sooner or later to burst. If that is the case, losing money you need would hurt you. You should avoid that at any case.
Don’t go into debt to invest in crypto, even if it might be tempting. A bursting bubble would destroy your future. Many people have made that experience in the stock or the real estate market and you should not make the same mistake – especially since the cryptomarket is way more volatile than other markets.
Research is the first step to success
If you have made sure that you put enough spare money aside, you should do your cryptocurrency research. By that, I don’t mean reading a couple of comments on reddit. First of all, you should always check the projects website. Serious projects always contain a whitepaper and a roadmap. Read those two. If you understand them, you can go on. If you have any questions, get in touch with the developers on Twitter or Slack or ask about it in a particular subreddit.
When I started doing my research, I often encountered ICO’s (Initial Coin Offers) which had no subreddit or one that contained no comments. I immediately abandoned the ICO. Maybe you miss out on some opportunities, but when it comes to ICO’s, you should always play it safe. There are many scams out there and no comments on a subreddit is not a good sign.
After having checked whitepaper and roadmap, you should maybe read some articles or analysis on the project and then continue to elaborate opinions on reddit. Be careful and don’t get shilled though. Many redditors ride the hype train.
Don’t leave a lot of money in exchanges
Exchanges can get hacked and there have been many episodes in which people lost a lot of money. This is not about your account getting hacked but about the exchange getting hacked. You can have the safest password and two-factor authentication, if somebody hacks the bank you are eventually screwed. That is why you should never leave a lot of money in exchanges. The safest bet is a Ledger Nano S. It costs around 85 USD (due to high delivery costs) but it’s the safest way to store any of your coins. It will store Bitcoin as well as Ethereum, any ERC20 coins and many other altcoins.
Diversify your cryptocurrency portfolio to play it safe
If you aim to risk less, you might want to diversify your portfolio. A balanced portfolio should always contain a little bit of Bitcoin, Ethereum, and some altcoins. Don’t bet all your money on one horse unless you are confident about it and don’t mind taking higher risks. A balanced portfolio could look like this.
Pick a safe exchange
I’m a fan of Binance as they haven’t been hacked yet but in the end, you can lower your risk of losing money by selecting any exchange that has a high reputation. Bitfinex has been hacked in August 2016 but they have many happy customers nonetheless. Finally, you should not leave high cryptocurrency amounts on exchanges, whichever you pick anyway.
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