The earning possibilities cryptocurrencies offer can be exhilarating at first and taking it all in can be overwhelming as a newcomer. Just like any other financial instrument, many people end up getting burned because they lack knowledge of the instrument in question before they invest. However, it is possible to steer away from common mistakes if you are thoroughly prepared. Here are some of the most common mistakes first time crypto investors make.
Not Doing Your Research Properly
One of the biggest mistakes newcomers make is just jumping on a red-hot currency without understanding the fundamentals. What does the white paper look like? What’s the cryptocurrency market cap? Does the crypto have an actual use case? How robust is the technology behind it? What are experts saying about it? Don’t make the mistake of buying into a crypto simply because it’s “cheap” or “going to the moon”. Do your own research, check the numbers and come to your own conclusions before you make any decision.
Don’t Let FOMO Get to You
You should never let FOMO, or fear of missing out, push you into irrational reactions. It can be easy to jump onto new cryptos thinking they’re going to be “the next bitcoin” just because you don’t want to miss the train this time. When it comes to cryptos, the possibilities are endless and sooner or later you’ll eventually find another winner down the road with enough patience.
Expecting You’ll Get Rich Overnight with Mining
Some may be thinking one step ahead and opt for mining instead. The idea that you could just let your computer sit and earn some coins may look like a great opportunity for some. Yes, while it may be true that those who started mining Ethereum or Bitcoin early are probably mega rich right now, that ship sailed long ago.
Unless you have tens of thousands of dollars to invest in a few hundred mining rigs and have access to cheap energy and storage space in the middle of Siberia, chances are you won’t turn a big profit. Crypto mining takes an insane amount of energy and some jurisdictions are even talking about applying special energy rates for crypto mining, so unless you have the proper backing and experience to do so, you should probably forget about mining.
Only Focusing on Bitcoin
While Bitcoin is often the gateway coin to other cryptocurrencies, there are so many other possibilities out there. Try to look at other coins and see which ones are offering a real possibility and room for growth. Also take a look at how ICOs work and consider investing in a few first so you can get a hang of it. Great ICOs often offer a much better return on investment than more established coins. If you want to learn more about altcoins and how to buy them, sites like Crypto Head have advanced guides on how to do so.
Cryptos can be a great investment if you understand what you’re getting into. Don’t expect to get rich overnight and don’t jump head first into a new crypto because some popular YouTuber said so. Do your own research and understand the fundamentals of cryptos first before you make any move.