CRYPTO BEGINNERS GUIDE: 5 THINGS CRYPTO NEWBIES SHOULD KNOW

CRYPTO BEGINNERS GUIDE: 5 THINGS CRYPTO NEWBIES SHOULD KNOW

This is a crypto beginners guide to the 5 things crypto newbies should know. Highly recommended for those new to the cryptocurrency market.

The recent cryptocurrency crash is not the first of its kind. If you check the epistemology of bitcoin, you’d find out that every crash comes with a strong rebound. The crash may not be the worst thing to happen. The worst thing is to see the market rise again and then you reminisce saying: ‘Had I known, I should have bought some coins back then’.

Talking about Cryptos may make people around you feel like you’ve lost your head. I keep getting questions inbox — is this not a bubble? Can this be ethically lawful to invest? This is gambling…and I get tired answering some of those questions. However, I tried to put this piece together for newbies, especially millennials who are marvelled by the magic of the crypto world. Alas! You can make good money with cryptocurrencies, in fact, a 1000% returns within a year is pretty common in the crypto universe. It is, however, equally easy to lose all of that money within the twinkle of an eye. Here are a few tips for those who are willing to join the train.

1. DELVE EXTENSIVELY BEFORE INVESTING

The first step in crypto consciousness is understanding the underlying technology – blockchain. Forget the tech jargons for now. No one needs to convince you of how revolutionary blockchain technology is. A good starting point is reading articles, checking online forums and vlogs discussing cryptos. You’d soon find out why governments and corporations are exploring this nascent technology and how they’re looking to integrate it to their systems, or why banks are fearful of Blockchain and cryptocurrencies as a threat to their existence and looking to clamp down its growth. This outlook will help broaden your mind to learning and seeing the possibilities of the potential of blockchain technology.

It is also important to not make the mistake of trusting someone else with your funds; that defeats the entire purpose of cryptocurrencies, which was created to empower everyone with true ownership of their money without trusting any third-parties such as the banks. It is extremely common for scammers to ride on newbies’ naivety in this unregulated market. This, therefore, calls for extra caution.

2. INVEST ONLY WHAT YOU’RE WILLING TO LOSE

In the cause of my extensive research in the early days, I’ve realized a very important rule of the thumb in the crypto markets — only invest what you’re willing to part ways with. This is because the market is exceptionally volatile, one which is fueled by hype and market sentiments rather than fundamental elements. This makes the crypto markets intensely risky; that’s why you have the potential to make loads of money or lose everything instantly. In modern finance, this is exemplified by the relationship:

Risk = Rewards
(Investments that are risky will tend to potentially give you higher returns)

Always exercise caution and please, do not mortgage your house or take out a loan to invest in cryptocurrencies; you’re only signing your death warrant.

3. FOCUS ON THE LONG-RUN

Cryptocurrency is not a “get rich quick scheme”. Do not have the sole mentality of pursuing short-term gains, especially if you do not have the necessary trading or technical skills. Let’s face it, many in the crypto markets have no idea what they’re investing in and are in this only for the short-term rewards. This is a recipe for disaster. It is imperative that every investment decision is based on thorough due diligence and patience. Do not be the guy who had 1700 BTC when it valued at $0.06. He sold it for $0.30 and was then lamenting when it reached $8.00. This was back in 2011. Imagine if he had hodled today, it would worth tens of millions today!

Hodl – or hodling – is crypto-slang denoting the act of holding on to your coins or tokens no matter what the circumstance is; be it in a bear market or a strong correction

You should always be focused on the long-term, as the technology underpinning cryptocurrencies are still in its infancy stages and it could take a while before the technologies and various innovations within the cryptocurrency ecosystem are ready for mainstream adoption. Short-term trading in this extremely volatile market could be disastrous, especially if you do not have any trading expertise.

(See also: Understanding Cryptocurrencies: Game of Thrones Edition)

4. DIVERSIFY YOUR PORTFOLIO

Your cryptocurrency investments should be spread across the market proportionally. There are over 1,600 different coins and tokens in the crypto space.

Never put all your eggs in one basket

Bitcoin (BTC) and Ethereum (ETH) are the oldest and biggest cryptocurrency around and represent the base currency of the cryptocurrency world. Therefore, it is recommended to always have a considerable portion of your investments in both coins as they are relatively stable and facilitates the exchange with other altcoins. (See also: Coins, Tokens & Altcoins: What’s the Difference?)

Thereafter, it is recommended to spread the rest across valuable altcoins with potentials of disrupting their space. Look for coins that solve real-world problems, not shitcoins. You must learn how to identify shitcoinsand coins with good fundamentals.

Shitcoins are coins that do not have good fundamentals and are created with the purpose of scamming the masses. They’re often associated with ‘pumps-and-dumps’ and ponzi schemes, and are a great way to lose your money.

A well-built portfolio is a solid foundation for better returns.

5. KEEP AN EYE ON YOUR PROFIT & LOSS

When I first started, I wasn’t taking cognisance of the amount of satoshi a coin was worth. I simply saw those figures as randomly controlled by bots. To the contrary, those numbers determine the value of your coin at any given time. The key to profitability in this area is to buy low and then sell high. You need to pay attention while placing a buy order and as well observe when the market moves in a bullish direction to count your gains. Here’s a guide to calculating your crypto gains. If you can pay good attention to this, you will most likely crush the crypto market like a superstar.