Many people invest in cryptocurrency for either the wrong reasons or practically the wrong way or even both; and when their poor decisions get them burnt, they claim bitcoin and cryptocurrency entirely is a scam.
This post is intended to show you the best ways NOT to invest in cryptocurrency to avoid being a teller of stories that touch the heart.
1. Invest Ignorantly
Educate yourself. Learn from everyone but your investment decision must be your personal responsibility.
There are very few things that can be as stupid as putting your money into a system, business or technology you literarily have no idea about. You shouldn’t invest a single cent until you’ve spent time educating yourself on the space.
Never invest in a business you cannot understand ~Warren Buffet
Educate yourself, do your own research; read articles, watch videos and listen to podcasts. You cannot be too informed or knowledgeable about this subject.
More encouraging is the fact that there are tons of free quality information on practically every aspect of cryptocurrency investing on the internet. A few clicks around will present you some of the best contents on the space and on any particular cryptocurrency you are researching on.
More so, many bloggers and content creators will be glad to write about any topic you want to learn if you reach out to or drop a comment for them in that regard.
Your investment decisions and outcomes are your own personal responsibilities. Therefore take the necessary time to educate yourself before you commit your money into any cryptocurrency or project.
2. Invest to Get Rich Quick
Investing with the mindset of making quick millions is a sure recipe for disappointment and will most likely get you scammed easily –thus actually making some other faceless scammer richer.
Most people who invested in bitcoin and almost any crypto before 2017 actually became “overnight” millionaires and with dozens of such stories as Erick Finman and the Pizza Seller flying around many are tempted to believe they too can be next millionaire from crypto. Sorry to disappoint you, that’s most likely not going to be the case for you. True; it’s never easier to make a lot of money with cryptocurrency but it does take some deliberate effort, research and sometimes luck –being at the right place at the right time to make huge fortunes within a relatively short time but it’s not something that can be scientifically duplicated.
Don’t invest in cryptocurrency with the mind of becoming the next millionaire in your family. That mindset alone will most likely only lead you to invest in the wrong projects and platforms or take very unwise risks and lose our money. If you want to get really rich investing in cryptocurrency then you must be willing to learn and unlearn many things quickly; be patient, monitor, and manage your portfolio diligently and take calculated risks and educated guess.
Does it mean I can’t make millions easily with crypto? Not really; there’s a high probability of “getting rich quick” in crypto but not without performing your due diligence and investing selectively and responsibly.
3. Invest Out of Fear (FOMO)
The “Fear of Missing Out” (FOMO) is the main reason many people buy in at the top of a price rally.
A lot of people will never buy into crypto until they hear that the price has skyrocketed –thereby making the smart traders rich rather than themselves; washing their dollars down the throat of smart traders who are more than happy and fast to grab them.
In crypto investing, sometimes “timing” is everything. The right trade taken at the wrong time is still wrong.
The basic idea of investing in crypto is to “buy low and sell high” so you can keep a profit; this is in theory simple enough but in practice very difficult to execute without proper timing. More so, sometimes patience is all you require to turn a losing entry into a winning trade and profitable investment.
Remember, no matter how high an asset has appreciated in value or price it will come down to a previous or new low. Your job is to monitor, identify and seize the moment it reaches a new low and buy in at that point to join the next ride up.
Never trade out of fear of missing out on the profits earlier investors are making. If you didn’t buy at the bottom; you should wait for the next bottom. Buying into the profit of others in others is almost always a sure way to get hurt.
4. Invest In HYIPs and PONZI Schemes
More money was lost to HYIPs and Ponzi schemes in 2017 than was lost from the cryptocurrency crash of 2018. The year 2017 can be considered the year of HYIPs, PONZI schemes and all the best and most stupid ways to lose your hard earned money –From fake ICOS lead by lending coins of then to more organized scams like Bitconnect and Laser; cloud miners paying 20% daily ROI, Telegram bots paying 40% daily ROI –they’re all crazy and many poured in their money. They never got it back –not even their capital let alone profits.
Now any scheme, platform or project that promises to “double your money” within 1 to 30 days is obviously a scam or Ponzi at best –you shouldn’t even stop to think about it; they’re all scams no matter what white paper, blue paper, green paper, yellow paper, strategy or indicators they present.
Most times people who invest in HYIPS and Ponzi schemes actually want to get rich quick. Now the person who actually gets rich quick in a Ponzi or HYIP is the founders and if you are not the founder you’re already on the losing side. It’s just better you don’t participate.
5. Invest With Money You Can’t Afford to Lose
Never invest more than you can afford to lose –this is a golden business and investment advice that’s slowly turning into a cliché that is usually ignored.
There was a story sometime in 2017 or 2018 –can’t remember the exact year; of a man who sold all his family properties and invested the money in bitcoin. Of course, he made really cool money that could replace all he sold in ten places over.
Should you do the same? Yes! – If you want to sleep on the street or beg for food. What you cannot afford to lose never take a risk with it. Even when you’re confident of the potential future performance of the market it is still good you invest only as much you can afford to lose without developing a high blood pressure or worse a heart attack.
Some monies you certainly shouldn’t use to buy crypto; except of course you are fully prepared to face the consequences (whatever it is) if anything goes wrong:
- Never take loan or use credit card to buy crypto
- Never use your rent or kids’ school fees to buy crypto
- Never use Company money in your possession to buy crypto
- Never use money entrusted to you for safe keeping to buy crypto
- Never use your entire life savings to buy crypto
- Never use money you cannot afford to lose to buy crypto
However, if you can afford to lose all of your family fortunes, life savings, job, friendships, and livelihood (which I doubt) then, yeah, you can invest it all in and expect the best or prepare for the worst –you can only die once after all.
On a final note; remember –you never lose in crypto until you sell. If you’re already in the red, you’re better off HODLing for as long as it takes to be in profit before you sell –except you are actually holding a “shitcoin” (in which case we’ll advice you cut your losses by selling and move on). Every great project out there will appreciate in value given sufficient time.
Be educated, avoid (excess) greed, be bold, be patient, HODL.