The Top 5 Mistakes by First-Timer Cryptocurrency Investors

by Andrew McGuinness     Jul 16, 2019

The cryptocurrency rush has taken over everyone looking to find the next best investment. But with this rush comes a lot of inexperience, causing many to fall into the same mistakes and pitfalls. Trading 101 advises us to know everything we can about a market or asset before putting our money into it; instead, many have rushed blindly into Bitcoin, Litecoin, and other cryptocurrencies, and have paid the price for their mistakes. Here are the top 5 mistakes by first-timer cryptocurrency investors that you can start to avoid today:

1) Impatience

Many who buy their first coin—regardless of which coin it may be—end up becoming addicted to the rises and falls of the market. When they don’t see that their money has doubled or tripled after a few days, they begin to feel bearish about their investment, asking all the wrong questions: Should I pull out? Is it crashing? Is it too late?

The answer is this: no, it’s not too late, and no, you shouldn’t pull out (unless you need your money right now). The cryptocurrency market is in its infancy—while Bitcoin may have already reached heights and continues to reach heights never before seen in this kind of market, many other coins are expected to follow its path. This is an investment that will take years before you see its true potential and growth. Stay patient.

2) Trusting the Wrong People

Some newcomers and “technologically illiterate” investors have opted to trust sharks and scammers who offer them easy ways to invest—simply give them your money, and they will hold your coins for you.

Many have lost thousands if not millions of dollars because of this. Trusting anything other than a popular cryptocurrency exchange can result in you losing every penny you put into this market. Don’t blame Bitcoin for your carelessness.

3) Mining

While mining was incredibly profitable several years ago, these days, you can’t turn a profit doing it unless you already have all the equipment to compete with the pros, which you most likely don’t. Mining takes up much more energy than the value of the Bitcoin that you would end up mining. Don’t think you can get free Bitcoin by mining on your single personal computer at home; many have been there, done that, and that ship has sailed.

4) Not Learning Enough

Bitcoin, cryptocurrencies, and blockchain technology are new innovations that the world has never before seen, and they take some getting used to before you can claim to have a full grasp of what they all mean. Reading an article or two on these technologies isn’t nearly enough to give you the confidence to understand what you are investing in.

Join communities and groups online with other investors, where resources and helpful tips are shared and where questions are answered. Teach yourself about the technology you area investing in, because it is more than just an investment: potentially, this technology can change the world.

5) Giving Away Private Keys

And the most vital mistake: giving away your private key. When you create a cryptocurrency wallet, you are given two keys: your public key and your private key. Your public key is the key that you can freely show to others, so they can send coins to your wallet. Your private key should be yours and yours alone—this key gives the user access to all the funds stored in your wallet. Getting fooled into giving away your private key is a common mistake amongst newcomers in this technology, and can end up with them losing everything.

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