Things That Beginners Shouldn't Do In The Crypto Space

Things That Beginners Shouldn't Do In The Crypto Space

By Jane1289 | Crypthusiast | 30 Apr 2021


The crypto space is so complicated just like how to decipher the nodes and codes on the blockchain. As a NOOB, you will definitely be lost in this huge space if you don't have any idea what's going on inside. From smart contracts, trading, swapping, staking, farming, lending, leveraging, saving, etc. And it's always skeptical what cryptocurrencies to invest in and actions to take because you always think of the consequences that might follow.

I was like that before too. I was always asking and researching before taking action or choosing crypto to invest in. There are a lot of things to consider to familiarize everything in this crypto space. Although sometimes, I find it tough to absorb, especially the programming terms that I haven't encountered before.

We have a lot of articles here in read.cash that are helpful to NOOBs. Users like @Eybyoung @Kryptlook @PVMihalache @CryptoMax @Pantera and more users are here to guide NOOBs with their articles about crypto stuff. You can follow them if you want to know more things about this crypto space. Some of my articles are about crypto as well, so you are free to scan my feed and read my articles.

But today, I will give some things that a NOOB should not do in this crypto space. This might be known to many here, but we always have new users on this platform. That is the reason why we always write articles that are helpful for beginners.

The first thing that you should not do here in the crypto space is;

  • NEVER SHARE YOUR PRIVATE KEY OR SEED PHRASE

https://www.cryptonovosti.rs/kljucno/coinbase-slucaj-nisu-vasi-kljucevi-nisu-vasi-novcici/

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Here in crypto space, we have this principle "Not Your Keys, Not Your Coins." Non-custodial wallets like Bitcoin.com, Trustwallet, and more are providing seed phrases. A beginner should keep that seed phrase and NEVER share that with anyone. It is also recommended to make multiple copies of seed phrases and better make a manual copy because, in case of uncertainties, you will be able to restore your wallet anytime.

The seed phrase or what we call seed recovery phrase or backup seed phrase is a list of random words which are needed to recover the fund in your wallet. Wallets with seed phrases will typically generate the words and will instruct the new users to write them down on paper or save it in a safe place.

It is also important to save the seed phrase because in case you lost your phone, or your computer breaks or your drives become corrupted, you can just download the same wallet and use the seed phrase to recover your funds.

Never share your seed phrase with others, because once they get access to your seed phrase, they can easily steal your funds from your wallet. So make sure to keep them safe, and as much as possible, make multiple copies like a manual one, or draft in your email, but DO NOT save it on your phone. Because if you lost your phone, then you will lose your fund as well.

And as much as possible, back up your wallet daily so all transactions and funds will be recovered once that uncertain thing happens. You should also provide an email address with a strong password and make sure not to share your email address with others as well.

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If you are using Bitcoin.com wallet, to back up your wallet, just go to Settings > Security Center > Backup Wallet. You can also click the "learn about keeping your assets safe" to know more info about this matter. And another way to make your wallet secure is by setting up Two-Factor Authenticator so you will be able to detect if someone wants to access your wallet or withdraw your funds.

Related Article: Things To Consider In Choosing A Crypto Wallet


  • DO NOT SEND YOUR CRYPTO WITHOUT DOUBLE-CHECKING THE DETAILS

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In sending crypto to other wallets, make sure to double-check the receiving details to avoid losing your crypto. It is not the same with sending your money to a remittance center that you can still go back and request to edit the details. In the crypto space, once you send your crypto to the wrong address, you will lose your crypto and it will only float on the blockchain forever.

Before sending, double to triple-check the receiving address. Do not send crypto A to crypto B's address. Some crypto also needs memo ID in sending, just like XLM. My first time to lose crypto is when I send the XLM (I earned from watching videos) from the Coinbase site to the Coinbase wallet without supplying the memo ID. I was wondering why my $10 XLM did not arrive after more than a week, only to find out that it needs a memo ID in which I didn't supply.

@PVMihalache also have experienced when he lost his $300 worth of crypto because he copied the wrong address.

Another thing to consider in sending crypto is the Network. For example, Ethereum-based tokens should be sent using the ERC network, and BSC-based tokens should be sent using the BSC network.

Compounding platform like Nexo is also a built in Ethereum blockchain, so do not send an ERC-token like USDT from a wallet that is not created under the Ethereum blockchain like Bitcoin.com.

DO NOT send USDT directly from Bitcoin.com to Nexo because USDT on Bitcoin.com is an SLP-based token created under Bitcoin Cash Blockchain while the USDT on Nexo is ERC20 created under Ethereum Blockchain, the same with USDT on Binance.

So if you are planning to compound USDT on Nexo, you can simply convert your others coins on Binance to USDT, then send it to Nexo. USDT lending on Nexo has the highest APY.

To know more about compounding on Nexo, you can visit this article, Earn While You Sleep With Crypto Compounding.


  • DO NOT INVEST BECAUSE OF THE PRICE

https://breakthroughgroup.com/insights/price-to-value/

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Most of the new investors are considering the prices when investing in cryptocurrencies. And since Bitcoin is expensive and not affordable, many people are investing in cheap cryptos. This psychological reasoning is actually risky, and many new investors have lost their investments because of the face value of the price with their expectations that it will grow in the future.

In choosing cryptocurrencies to invest in, you should know the tokenomics because there are a lot of factors that come into play that goes beyond just price. A Tokenomics comes from two words "Token" and "Economics" and it is the basis of knowing the quality of a token which will convince the new investors to invest in or to builders to help improve the ecosystem around the underlying projects of the certain token.

And to get a deeper knowledge about the crypto you want to invest in, first is you need to go through its Whitepaper detail. Then check the tokenomics' components which includes:

  • The Team. Credible projects should have a credible team and it is the basis of identifying if the token has the potential of gaining widespread adoption.

  • The Roadmap and History. The roadmap is important to check if the token has a clear goal in mind and what does it solve and provide. Also check the history to know if the crypto did successful projects in the past, or did it fails to fulfill its vision.

  • The MarketCap & Supply. The market cap is the indicator of the dominance and popularity of certain crypto. Basically, the higher the market cap, the more dominant it is and crypto with a large-cap is generally considered to be a safe investment.

     

    The supply is also the basis of choosing crypto to invest in. Many investors are investing in cryptocurrencies with fixed/limited supply just like Bitcoin with only 21M BTC maximum supply, because the pump in the price is almost guaranteed. But it is not only the basis of guaranteeing profits from that crypto because it should also have rising demand and a feasible halving cycle.

     

    For example, Bitcoin is expected to continue until 2140 and miners will receive rewards until that time. And by 2140, miners can control the price and Bitcoin would have a huge value by that year. It is the same thing with Bitcoin Cash as well since they both have the same limited supply.

     

    Another thing I have learned from @Kryptlook is, do not to choose cryptos with a huge supply because their prices will likely pump so slow compared to cryptos with small or limited supply.

  • The Accessibility. Also, consider the number of exchanges the crypto is listed on and if there is enough liquidity for the coin.

  • The Media Recognition. The prices of cryptocurrencies are also affected when there is hype in social media. Just like what Elon Musk is doing with Doge and other supporters of certain crypto. Positive hype can make the price surge and negative attention can plummet the price.

Related Article: Take This Consideration Before Investing In Cryptocurrency


  • DO NOT FOMO INTO A PROJECT, ALWAYS DYOR

https://steemit.com/whitepaper/@cryptoboiiii/dyor9do-your-own-research-justified-or-misused

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Many new investors always get the hype because of the soaring value of the new project, however, not all have the potential to maintain the soaring pace and they ended up like a wolf in sheep clothing.

The best thing to do before investing in any project or cryptocurrencies is again, DYOR or Do Your Own Research. The same with what I have mentioned above, check the tokenomics. It is very important to identify if the project is for a long-term run and if it will succeed in the future.

Check the whitepaper, the history, the roadmap, the team, the goal of the project, and the use case or the solution of the project.

I have also mentioned some beginner guides in this article Millennials Should Stop Wasting Money And Start Holding Crypto Instead: Crypto Guide For Beginners


  • DO NOT TRUST PEOPLE GIVING FINANCIAL ADVICE ONLINE

https://twitter.com/thinkandbeware

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This is one thing a newbie should not do in the crypto space. Scammers are everywhere and their targets are the newbies. They will give financial advice until they deceive someone and gain trust.

There are many Telegram groups, even on LinkedIn, and some individuals who will suddenly message you and will recommend some good platforms to invest in or will give you advice financially. I have encountered this before multiple times but all I just did was ignore them. It is quite tempting for newbies especially if they show you their proof of profits, but always be liable for your actions.

I am not telling you not to trust information about something in which you are unsure. This crypto space is really broad and newbies will truly find it difficult to learn everything about cryptocurrencies and blockchain. The best thing you can do is to study and do research regarding the certain crypto or project you want to invest in.


  • DO NOT DO LEVERAGE TRADING IF YOU DON'T KNOW THE BASICS

https://learn2.trade/leverage-trading

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We've been seeing posts and articles regarding profits in trading and those huge digits sometimes encouraged the newbies to try leverage trading as well. Leveraged trading is too risky and you might lose all your money in just a blink of an eye if the market suffers from a sudden swing. Even spot trading can be risky if you don't know the technical analysis and other basics skills in crypto trading.

Some crypto platforms like Stormgain offers newbies a trading field where they can practice using the demo account, and once you already know about leverage trading, you can start the live leverage trading using the rewards from cloud mining. You don't need to invest any amount, you just need to be patient in mining so you can have a fund that can be used for leverage trading.

And the reason why I stopped future trading in Binance is that it is quite frustrating to lose my hard-earned crypto in future trading once the market goes against my prediction. But in Stormgain, I won't have any regrets in case I lose my trades since the funds I used were just gotten for free from their mining.

There are many ways to earn crypto in the crypto space without trading. Here is my article about it. Earn More Crypto Without Trading

Related Article: Saving Bitcoin Cash Through Stormgain's Trading And Mining


  • DO NOT PUT ALL YOUR EGGS IN ONE BASKET

https://steemit.com/bitcoin/@bitcoin-city/don-t-put-all-your-eggs-in-one-crypto-basket

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Another important thing to consider when you are investing in cryptocurrencies and even in the stock market is to diversify your portfolio from the golden rule "Never put all your eggs in one basket." Do invest all your money in just one crypto because if uncertainties happen in that certain crypto, you will lose all your investment. Most cryptocurrencies either grow or plummet in prices simultaneously, but some are stable than the market as a whole.

So if you are planning to invest, divide your money across multiple crypto or projects instead of investing it all in one crypto. In crypto investment we have this saying, "the higher the rewards, the higher the risk," and diversification is the way to minimize the risk in your crypto portfolio.

Most traders are investing in Bitcoin because it has the highest ROI, but it is too volatile and too risky. Just like what is happening in the market today. Because of the drastic fall in Bitcoin's price, most of the coins are being affected. It is also important to invest in cryptocurrencies that are not tied to Bitcoin, and in some stablecoins like USDT, BUSD, DAI, and other stablecoins, as they are likely to remain stable (with very small price changes) despite a market crash.

Related Article: The Importance Of Diversifying Crypto Portfolio


  • DO NOT INVEST WHAT YOU CAN'T AFFORD TO LOSE

https://forextrader.live/2016/01/16/dont-trade-with-money-that-you-cant-afford-to-lose/amp/

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Last but not least, and probably you heard this everywhere, in any investment, always remember to only invest what you can afford to lose. Many people are willing to invest their entire bank accounts into random crypto they thought will surge in the future because of the hypes on Twitter and other social media.

Always consider the things I have mentioned above to minimize the risk and losses during the sudden market swing, or any global crisis such as a pandemic, and sudden government action against the crypto market.

Crypto space is a huge ecosystem where everyone is trying to take everybody's money. The people's investments are like fuels that keep the ecosystem running. But if the market goes to the south, then expect the consequences that you don't want to happen. Be prepare mentally and emotionally, and always beware of the risk.


The current situation in the crypto market is only an example that investing in cryptocurrencies is too risky and the market will be affected by different factors, that includes social media hypes and negative sentiments, political and economic crisis, regulatory moves, and governance.

We can't tell what will happen next, either the market will make a huge leap or this might only be the start of a longer market downtrend. What we can only do during this kind of market crash is to HODL on tightly and put on more patience and wait until the market recovers.

For beginners, it is truly tough to learn everything in just a short period. So continuous learning about how the market works, cryptocurrencies, and blockchain is important. And always conduct due diligence before taking any actions.

 

(Read the related articles if you want to know more guidelines about this market and cryptocurrencies)

 

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Jane1289
Jane1289

A crypto enthusiasts, a writer, a photographer, BCH lover, #Club1BCH


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Crypthusiast

Anything about cryptocurrencies

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