As of the first quarter of 2022, there has been massive crypto growth and involvement in Africa. People are now starting to see the importance of joining this new financial system both as a source of income and as means of receiving payment.
Although due to its rampant growth the masses are taking crypto in and trying to earn something from it without knowing the basics. A good example is the famous Ponzi scheme, where people were robbed millions of dollars.It’s very easy to get caught up in the hype of news headlines. Below are some of the common mistakes we make when engaging into crypto.
Buying just because the price is low.
Low prices do not always represent bargains. Sometimes prices are low for a reason! Watch out for crypto currencies with falling user rates.Often, too, developers leave a project and it stops getting properly updated, making the cryptocurrency insecure.
Falling for scams.
Fraudsters sometimes contact victims by email or text with an “investment opportunity”. They promise to give investors double or triple the amount they have put into Bitcoin if they send their cryptocurrency to a particular digital wallet.
Spoofing.
Criminals can easily inflate or deflate the price of very small or unknown cryptocurrencies, creating fake buy or sell orders and sometimes sending the value of the currencies skyrocketing by hundreds of percent at a time.When unwitting traders rush in to try and grab a piece of the action, the criminals cancel the orders which they were never going to fulfill in the first place — and in some circumstances that can cause the price to crash.
Sometimes criminals will own a lot of a particular cryptocurrency (through pre-mining much of it before it is available to the general public).They can pump up the price by promoting it on social media, then selling it on crypto exchanges at higher prices. Then they disappear.
Fake coins.
With so many crypto currencies on the market, it can be difficult to tell what’s real and what’s not.When you invest in fake coins, criminals can steal your identity and often your hard-earned money. They do this through phishing – persuading you to click on links in emails that install spyware on your computer.Don’t take anyone else’s word for it and use as many sources as possible to do your research.
Going ‘all-in.’
Some of the more suspect trading platforms suggest you should maximize your money by betting as much as possible. This is a quick way to the poor house.Better crypto investment tips would be to only use a certain proportion of your investing capital say 5% and always keep an emergency cash fund that never gets invested in the market.
Thinking crypto is ‘easy money.
There’s nothing easy about making money through trading any kind of financial asset, whether stocks and shares, commodities like silver and gold, or cryptocurrency.Anyone who says differently is probably trying to trick you into making crypto mistakes.
Forgetting your crypto key phrase.
If you have a hardware wallet for storing your crypto offline, forgetting your key phrase is like losing the keys to a bank vault. Without your key phrase, all your cryptos will be irretrievable.
Buying high and selling low.
This is the easiest mistake to make and the one that will most likely get you wrecked. Crypto is extremely volatile and with large gains comes very high risk. Sure, it’s almost impossible to time the market perfectly when buying and selling, but there are some clear patterns you can follow to maximize your gains and minimize losses.
Following one-sided opinions.
How did you get interested in crypto? What are your sources of information? Friends, Twitter, YouTube, Reddit? Regardless of who it is or how good that source may seem, it’s always a good idea to diversify experience from different people to get a better picture of the market situation.
Not having a plan.
How much money do you want to make and how much risk are you willing to accept? When do you want to take some profit out or cash out completely either to re-enter at a lower price point or just cash out completely? Are you investing short-term or long-term?
All of the above are important questions and how you answer should go in line with your investment strategy. For example, it doesn’t matter how much you pay for Bitcoin if you’re planning to hold it long-term, as it’s almost guaranteed if anything can be guaranteed in crypto! it will go up in value over the years. Sure, there are better and worse moments to invest, but when you invest long-term, the only way is up. On the other hand, a low market cap altcoin may potentially give you far bigger gains, but if you invest when the price is too high, you may have to wait a long time for it to recover if it will even ever recover.
Lack of proper security.
Maybe not the most exciting subject but hugely important. Remember, crypto is unregulated and if something goes wrong, the chances of recovering your coins are close to none. There are plenty of fake profiles of crypto influencers on all social media platforms. Beware of the scammers on YouTube, Twitter, Telegram, etc. Especially on Telegram, you’ll also find a lot of fake ‘admin’ and ‘tech support’ accounts. Usually, they offer some crazy good giveaways or run offers where they claim to double your crypto in minutes, etc. If they want you to send them your crypto do not. Seems obvious but people lost a lot of money this way.
Either not having a diverse enough portfolio or investing in too many different coins.
This is a bit tricky because the content of your portfolio should depend on your objectives. If you want relatively safe coins to hold long-term, then you can pretty much just have Bitcoin and maybe Ethereum. On the other hand, if you’re investing in much riskier low-cap alt coins and hoping for much greater returns, then it’s sensible to not be overexposed and lower your risk by spreading your investment into new projects
Investing money you cannot afford to lose.
You should only ever invest an amount you can afford to lose. Of course, no one wants to lose money but you have to remember that crypto is extremely volatile and those amazing gains go in hand with the risk of huge losses. The lower the market cap, the higher the volatility and risk.
