Bitcoin mistakes, how to avoid them and prosper in trading — CryptoEddy
There are a lot of Bitcoin mistakes that newbies or newcomers in the space make. Due to the reduced hype around Bitcoin in the last few months and the fall in prices of Bitcoin and altcoins, many people are not buying or selling cryptocurrencies. This does not mean that people are not succumbing to the old Bitcoin mistakes. Also, people who consider themselves experiences can also make the same mistakes.
Here are some of the mistakes that you should avoid when buying, holding or transferring your Bitcoins.
Not doing your own research is one of the top Bitcoin mistakes because many newbies trust the words of friends or strangers. Remember, you are investing your money in Bitcoin. You should understand the technology behind Bitcoin for you to trust in Bitcoin. If you will be listening to what people in the space talk on social media and believe that what they claim is the truth, you will lose a lot of your investment.
Do your own research, understand the market and have your own opinion of Bitcoin. Otherwise you will make so many other Bitcoin mistakes just because your limited knowledge of the asset does not help you in decision making. There are a lot of materials created that can help you gain freedom from following the crowd. Although following what people say might work for you in the beginning, it will not sustain your growth in the cryptocurrency space.
The cryptocurrency market is very volatile. One thing that can cost you is panicking over the changes in price. Panic does not only mean when the prices are down. People also buy when the prices are very high in fear of missing out (FOMO). Positive news surrounding Bitcoin often make people make the mistake of buying in high prices hoping that the price will keep increasing.
Note that such Bitcoin mistakes make people lose their investment as sometimes the news do not last long hence the price can sink lower. For short term investments, it is advised you study the market and buy at the best prices. Panic selling is also one of the Bitcoin mistakes that leave people regretting their decisions especially when the price picks up.
- Storing Bitcoins in an exchange wallet
Among the Bitcoin mistakes you can make, this is the most crucial. Exchange wallets strip you off your control of your coins. You cannot protect your Bitcoins if they are stored in an exchange wallet. For one, you do not have the private key. In case the exchange gets hacked, you can lose all your money. It is important to note that most of the highly used exchanges are centralized. This means that they are owned and controlled by individuals. Hacking into centralized exchanges is easy.
What you should do is store your Bitcoins in a secure wallet where you have control. The security of the coins will be in your hands hence you can make a decision on where to store the private keys as well as how to protect the wallet from being hacked.
Although hot wallets are better than exchange wallets, avoid the mistake of storing all your Bitcoin in the same wallet. This is unless it is a very small amount. It would be more advisable to store them in different wallets, if you do not have cold storage. This way, you will avoid some of the Bitcoin mistakes discussed here.
- Selling Bitcoin for shitcoins
There are dozens of good altcoins in the market that will give you value and good returns. These are not what I am referring to here. Before you can sell your Bitcoins to buy a new coin in the market, ensure that you have studied their technology, the team and also believe that they can be successful. There are good projects in the market with little support and your investment in them might not have any return.
Making the mistake of selling your Bitcoins for an altcoin that is backed by scammers will be among your worst Bitcoin mistakes. Once the altcoin team disappears with your money, you will have no way of ever getting it back. Again, do your own research before investing in a coin that you believe has potential. Otherwise it might be one of the shitcoins that will rob you of your money.
- Sloppy sending and spending of Bitcoin
When sending BTC, make sure that you insert the right address. Double-check that it is the right address before you proceed with the transaction. Sloppy sending of Bitcoin can have you inserting the wrong address and the Bitcoins will send to a different person. Once the Bitcoins are sent, the transaction cannot be reversed hence you will have lost them forever.
There are ways in which you can check the address to ensure it is correct. One is to check the first and last three digits of the address to see if they match. Different wallets also have the option of copy pasting an address hence it is unlikely that it will paste the wrong address. If you are the one receiving the Bitcoins, look out for the confirmations since they will be received in 6 confirmations.
If you are transacting with someone next to you, check out if the wallet you are using has the option of scanning the QR code. This will reduce the chances of you adding the wrong address.
Also, when talking about sloppy Bitcoin mistakes, you should not buy Bitcoin from PayPal, debit or credit cards unless it is absolutely necessary. The process might look quick and easy but there is a price attached which includes higher fees. If you are making regular payments or buying in large amounts, look for other cheaper options available.
The cryptocurrency community is very supportive. They support, encourage and offer advice on different topics. If anything is going on in the market, be sure you will find it in these communities. When you join the blockchain space, do not make the mistake of believing you can do it on your own.
Investing in Bitcoin will be more fun if you have a community of like-minded people around you. You will learn more from the community about trading Bitcoin, holding, the technology and also other cryptocurrencies. Although you will need to make your own decisions, the information on different communities will help in the process.
There are different crypto communities such as BitcoinTalk, Slack, CryptoTwitter, telegram channels and many more.
I understand that Bitcoin is backed by a technology that advocates for new actions and also the use of the internet. However, there is no need of you losing your funds because you abandoned the old tradition of writing things down or storing things in a physical location.
Some of these Bitcoin mistakes especially which relate to security of your money can be prevented by having a hard copy of all your codes, passwords and private keys. This does not mean that you write them and store in a folder on your computer. Unless this is preserved as a means of cold storage, then it can backfire on you.
You can write all of the passwords down and store them in a safe place. Also, printing them and keeping in a safe location will prevent you from loss. In case anything happens to your computer or phone, you can easily restore all your Bitcoins in a different device.
Veterans in the cryptocurrency space can also make some of these Bitcoin mistakes. Knowledge of the industry, the technology as well as the market trends will protect you from some of the mistakes that can cost you a lot. Keep learning. Learn from your mistakes. Join a good community and let’s keep the blockchain space growing. Remember that the price of Bitcoin does not validate the technology.
Originally published at cryptoeddy.com on July 30, 2018.