Top Five Things to Know About Digital Currency Before Making Investments
Do Your Homework
The first rule of crypto trading is to thoroughly study the asset you are planning to buy. There is a lot of information on the Internet on any crypto coin. You may start from a whitepaper that contains all you need to know about a certain coin.
It is better to avoid investing in assets you are not sure about. For example, if you can’t tell how a coin makes money, you should find another one with clear working algorithms.
Do not Follow Pseudo-Experts
There are many “pump and dump” groups that promise investors huge profits and give instructions on when and what to buy. Do not even consider joining such places because the consequences will make you regret it immediately. You will lose all the money you invested to these fraudsters.
Diversification is Key
Having completed the research of cryptos you are interested in, feel free to invest your money in a couple of different assets. A common financial motto fits perfectly in this case. Cryptocurrencies are similar to those conventional financial tools, like stocks.
Diversification of your investment coins will help you to ensure the lucrative outcome. You may even invest in different sectors and coins with different use cases.
Separate Email
Before you start investing, make sure you have an additional email that can be used only for this purpose, because your regular email may convoke a risk of a data breach. Moreover, add a two-factor authentication password security both your email account and exchange account. Then enable the same security measure for every service available in the list.
Use Crypto Wallets
As you know, traders can store digital currency with the help of offline wallets, which are called cold, and online wallets, which are called hot. Even though hot wallets are more convenient to use, cold wallets will be a better option for a beginner, as they can’t be hacked. So what is a solution? The perfect way to manage cryptos is to store cryptocurrency you plan on saving for a long time in a cold wallet, and keep only a small amount that you might use on a daily basis in a hot wallet.
By the way, a mobile phone is not a good means of storing your funds, as it is too risky. These devices are more vulnerable to different types of hacks. Don’t put convenience before security, it will take a high price.