Bitcoin and Cryptocurrency for Beginners: Top 6 Common Mistakes that Make Starters

As veterans in the crypto world, we want to forget, but cryptocurrencies are very complicated for newcomers. Because what do you have to invest in as a starter? What should you pay attention to? Which mistakes should you absolutely avoid in order not to lose too much money? These are logical questions that require clear answers. See this advice as a simple checklist: ’Bitcoin for beginners’. These are 6 common mistakes that new crypto investors make.

 

Bitcoin and Cryptocurrency for Beginners

 

You can start investing in Bitcoin and other cryptocurrencies if you only have some money to invest. This must always be money that you can miss: the price of Bitcoin can indeed fly in all directions. We have noticed this in recent years. But now that the markets are low again, this is the perfect time to step in. Please take the tips for safe use in this article to heart before you begin your adventure. Everything is conveniently summarized in this article!

Bitcoin For Beginners

In order to prepare yourself well for the risks involved in investing in cryptocurrencies, it is important to first read correctly. This article can help you because many people make the same mistakes at the beginning. We briefly discuss the 6 most common mistakes of novice crypto investors. With this, you immediately learn some important terms in the world of crypto! We will discuss the following topics:

  1. Doing in-depth research yourself (and not blindly accepting advice from YouTubers);
  2. Do not panic good coins when they collapse (the market is very volatile);
  3. Buy during dips in the market, not when a currency suddenly grows strongly (not ’FOMO’);
  4. Moderate your expectations, the market can collapse en masse (do not expect golden mountains);
  5. Never send money or crypto-tokens to the wrong wallet (always check your address);
  6. Do not start crypto mining as a beginner (this is often not profitable on a small scale).

To this, I want to add some useful tips. This is absolutely no financial advice, but my personal opinion:

  • Diversify your portfolio with approximately 5 altcoin coins, but always keep the largest Bitcoin (BTC);
  • Focus on market volume, not on a price per token. This is a big beginner’s mistake;
  • In the same street: focus on value compared to BTC or ETH, not USD or EUR;
  • Remove your money from trading platforms such as Binance as quickly as possible, send it to a secure wallet;
  • Do not be tempted by airdrops or obscure ICOs. If it is too good to be worth it is possible a scam;
  • NEVER give your passwords, seed phrases, or private keys to third parties, even if it seems official;
  • Take part in communities and ask critical questions to the team of the projects in which you invest!

Bitcoin and man

1. DYOR: Doing No Own Investigation

Everyone in crypto-land has its own agenda. If someone owns a certain currency, he will, of course, praise the sky. People with influence in the industry also participate in this, although it is sometimes more subtle. With interests that are big and where the big money rolls, nobody can be trusted, except yourself. Therefore always do your own research: the abbreviation used in the world of crypto is ’DYOR’, or Do Your Own Research.

There are many things you have to pay attention to when doing this ’own research’. Sometimes it takes a few days before you start to get a little bit of all the ins and outs of a crypto coin. Personally, I pay attention to these factors:

  • What is the function of the crypto-coin?
  • Is there a practical use for the token in the real world?
  • Does it fill a niche?
  • What does the whitepaper say? Read right!
  • Is there a roadmap and what are the plans?
  • Does this give room for growth?
  • Who is behind it, is the team professional and has experience / good advisers?
  • Which part of the total number of tokens is in the possession of the public, is it decent enough?
  • Is there mining or strike?
  • Are (master) nodes used?
  • How long has the cryptococci already exist and what is the market cap, is there room for growth?
  • On which trading platforms is the cryptocurrency currently available?
  • What is the price trend compared to ETH / BTC in the last week/month always?
  • Is there talk about the token on social media like Twitter, Reddit, YouTube?
  • What kind of people are there in the community?
  • Serious types or screaming empty heads?

2. FOMO: Do not Go With Hypes

If you have never been actively involved in share prices and stock trading, it is wise to stay away from day trading or swing trading by definition. This means: do not participate in market sentiment. In short, I like to observe the following rules:

  • Do not sell if there is still room for growth;
  • Do not buy when a crypto coin grows in value, but only during a dip;
  • Do not buy when news comes true, then you are too late;
  • Be someone who invests for the long term, not someone who goes with the market sentiment;
  • Buy when there is blood on the street, not when everyone dreams of his life as a millionaire.

To avoid going into hypes. If news comes out, a currency is released on a new trade exchange, or if a new partnership is forged, ignore it. Do not do the Fear Of Missing Out (FOMO). You have to invest in that currency for a long time. If the news is known you are already too late.

By doing good research (DYOR), you can ensure that you put money in a cryptocurrency for a long time before these kinds of FOMO scenes. I like to periodically collect my profits when the FOMO breaks out, and enjoy all panicking people. Because the real profitable method in these times where altcoins can still grow strongly is only one strategy: HODL.

3. HODL: Being impatient does not pay

It happens again and again: beginners who think that they can start day trading and can, therefore, win big wins. Nothing is further from the truth: first, start making some profit by doing good research on projects. Even if you have a background in ’ordinary’ shares, it is good to leave all the technical analyzes behind. The crypto market is, in fact, less rational than the regular stock exchanges. Moreover, almost all coins are under the influence of King Bitcoin’s share price.

What I always endure is: I ignore all hypes (no FOMO), do good research (DYOR), and buy good projects during a major market dip. After that it is simple: Hold On For Your Dear Life (HODL). This term has become established in the world of crypto with many traders. Even if your currency collapses 50% or more: if the fundamental value of the currency remains intact, it will return to its All-Time High (ATH) in no time. HODL is a good strategy when you are convinced of the project and you are deep in the red due to the wild maneuvers of Bitcoin.

I always think: Be patient, and the profit will ultimately be yours. But also periodically take your profit if you see your chance (cascade is the best, so you minimize the risk of a potential new dip). This way you can be sure that you are not too late with selling (the bulk of) your crypto coins.

Bitcoin and Cryptocurrency

4. LAMBO: Moderate Your Expectations

When moon? When Lambo? If you spend a bit longer in the world of ’fast cryptocurrency’ you will see these infantile questions come regularly, mainly in Telegram groups. Often they are inexperienced investors or adolescents who think they can get rich with and invest in ’the new Bitcoin’. But you and I are of course better than that.

Let’s not ignore it: every crypto-investor does it for profit. But the golden mountains certainly also have deep valleys. That is why we must have realistic growth expectations. Here some quick tips (no financial advice):

  • A coin can drop as fast as it can grow. In one day + 10%? Expected tomorrow −10%;
  • The community claims a 10x value increase in 1 year? Never expect such a bizarre growth, even if it is possible;
  • If a cryptocurrency rises sharply, your profits will be on time, because a strong decline immediately behind is normal;
  • Invest what you can miss, only play with your profit, not with your savings;
  • You are not a day trader, HODL and stay with your personal goals!
  • NEVER put all your money in one currency that claims to be ’the next Ethereum’. Diversify and minimize risk!

5. WALLET: Avoid typing errors

A cryptocurrency wallet is a location where you can safely store your cryptocurrencies. This is always preferable to keep on trading platforms because they sometimes want to be hacked. We, therefore, want to avoid that risk: we put our digital money into a digital wallet. A wallet is actually a kind of safe. This is by far the safest method an offline hardware wallet, such as the Ledger Nano S or Trezor hardware wallet.

Each wallet address has a unique code, which you have to enter, for example, if you want to buy Bitcoin. Trading platforms also give each unique account its own wallet address, which you can use.

A common mistake is to retype this address incorrectly. NEVER do this!

If you type an address incorrectly and send money, then this has disappeared forever. I know enough people who have lost thousands of dollars because of this. So make sure that the wallet addresses are correct, by copying and pasting them. And you still have to check several times before you send. A smart method is to make a small test payment, so you can be sure that you have done well. So you can never lose large amounts of money.

Bitcoin mining

6. MINING: Profitable Or Not?

Many YouTubers and other crypto-wannabes will tell you that it is profitable for beginners to start mining cryptocurrencies. But please do not fall into this trap: investing in a good mining rig is very expensive, and the question is how long it will remain profitable in a volatile market like that of cryptocurrencies.

Where a few years ago with a simple laptop in no time what Bitcoins had mined, it is now very expensive and complicated to set up a BTC mining rig. The average costs at the beginning of this year for the mining of 1 Bitcoin were already around $ 4,000, according to a JP Morgan study. These costs will only grow as the scarcity of the currency increases (and with that also the computing power needed for mines).

It is often the case that there are many affiliate programs for crypto cloud mining, which are mainly promoted for the profit that a YouTuber or other social media thinks can be obtained. Do not fall into this newbie trap without knowing exactly what you are doing, just focus on investing and good crypto coins and leave the mincing of cryptos to the professionals. We certainly do not say that mines always produce a loss, but if you are not at home in the world of the blockchain, it is better to avoid this complicated industry.

Learning Invest in Bitcoin

It will take a few months before you get through the world of fast cryptocurrency. No worries, we all make beginners mistakes. I also started stopping small amounts of money in completely obscure projects. And I was once so stupid to think that a coin like Ripple was so cheap and therefore could still grow a lot because Bitcoin also went to $ 10,000. Oops.

And I too have been sweating when it took several hours for the BTC I bought on Bitonic to arrive at Binance. I have also invested in projects where I did not know what it actually was, but had read good things about it. Yes, I too have sinned enough during my learning period. That is normal, and you will also go through that as a starter.

If I can say one thing as a conclusion: learn quickly, fail quickly, and adjust your strategy until it works. Take the tips in this article to heart. And whatever you do, enjoy things that you experience as an investor in Bitcoin and other cryptocurrencies. Because it will change your life forever.

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