Are you thinking about investing in cryptocurrencies? Bitcoin valuations stormed to an-all time here earlier this year, so 2021 should be a good year if you are considering investing in cryptocurrencies for the first time. With prices skyrocketing, you could earn a lot with your investment, but before plunging headfirst into the world of crypto, there are a few things you need to do first. Wisdom favors the bold, after all.
Consider the following before you make your first investments. By taking these steps, you will be less likely to make mistakes and more likely to find success on your journey aboard the crypto train.
#1: Check your finances
This is important with any investment you're planning to make, for one very simple reason. You don't want to invest money that you aren't willing to lose. You need to budget for EVERYTHING, including your household bills, your family's needs, and all of the other things that can be considered essential in your day-to-day life. If you were to lose that money, you could run into serious financial trouble, so you must never be tempted to invest what you can't afford. Sure, you could make financial gains when investing in crypto, but as with any type of investment, losses can be made too. While the market is looking good at the moment, you should still use your common sense before any investment decision. You will improve your financial security if you do, without the risk of debt and long-term money problems.
#2: Educate yourself on the subject
As with anything you're new to, it is important to educate yourself first. Even if you have people around you offering advice, you still want to learn more just in case their wisdom can't be completely justified. Learn more about the various cryptocurrencies that are on the market, and research crypto tools to help you make the most from your investments. To avoid trouble with the IRS, find out why you need a crypto tax calculator. And read books on the subject, read financial blogs, listen to podcasts and Ted Talks, and check out the relevant articles on our website. When you know more, you will be in a better position to make your first investment.
#3: Learn about common crypto scams
The volatility in the market isn't the only risk you need to consider when investing in cryptocurrencies. There are scams everywhere online, and it pays to be aware of them. If you fall prey to a scam, you could lose your cryptocurrency investment, and you could find yourself in further financial jeopardy. What kind of scams are out there? Well, they are wide and many. You could visit an imposter website, click on an enticing-looking email, download a fake crypto app, or follow a lead from a fake social media account. If you become a victim of a scam, you might then think twice about investing in cryptocurrency again, and that would be a shame if you were initially excited by the possibility. Check out this advice on how to avoid common cryptocurrency scams, and look for further information on new and developing scams online.
#4: Know whose word to trust
There are experienced people in the world who can give you advice, but you do need to be vigilant. As discussed above, there are also scammers out there willing to make a fast buck and there are also those people who profess to be experts but who really know little.
So, if you're looking to find somebody to invest in crypto on your behalf, or if you're looking for somebody to follow online, check the credibility of the person first. If they come across as arrogant or immature, or if they make the promise of easy winnings without very little effort, be on alert.
To get you started, here is a list of just a few of the Bitcoin and crypto experts that are worth following.
#5: Research crypto exchanges
Investing and trading in cryptocurrencies can be intimidating for beginners, and this is partly because of the risk of scams that we mentioned earlier. However, if you can find the right crypto exchange on which to trade, a lot of your worries can be allayed.
When looking for an exchange, the key bywords are safety and security. You can learn more by reading online reviews, checking articles on websites such as ours, and by examining what each exchange offers online.
To help you get started, check this list of the best crypto exchanges for 2021. Find out more about what each one offers and then commit to a Google search about each online. Discover what people are saying about them in relation to ease of use and security, and then register with the exchange that you believe is right for you.
#6: Look into storage options
As a new investor, you might not know how to keep your investments secure. We have already established the problem of scams, and these are sometimes instigated by hackers. They are coming up with ever-more ingenious ways to steal funds from investors, and unfortunately, much of this theft happens on crypto exchanges. For this reason, you need to find safe ways to store your cryptocurrencies. You can do this using cold storage (or offline wallets), as this type of storage is not accessible via the internet. Or you could use a hardware wallet for your Bitcoin and cryptocurrency storage. To find out more about both, check this article on how to store your Bitcoin safely. The article goes into other safety precautions too, so follow the advice given. With the right storage, you will have better peace of mind, and you won't need to become yet another victim of a callous hacking attempt.
There is much more to be said about cryptocurrencies, so if you're interested in this type of investment, check other articles on this site and look for further information online. As we suggested earlier, the more you can do to leam about the subject the better, as you will then benefit from the acquired wisdom.