How To Avoid the Crypto Quicksand
This is an article ‘How To Avoid the Crypto Quicksand’ by Marc Primo
Over a decade ago, you might have stumbled across a new buzz term in the world of financing called ‘Bitcoin.’ You might have been in the gym or a coffee shop when you overheard some guys talking about some form of digital money that is free from any government control and is private. Sure, this new type of financial asset would have piqued your interest back then.
However, with news about certain individuals getting caught in the cryptocurrency quicksand, it might not be as appealing to many since it first broke out into the mainstream.
So, what is Bitcoin or cryptocurrency, and how do they work?
For novice investors, the concept of digital money may be a bit complicated at first. A quick Google search will tell you all about digital transactions within a system that is encrypted and free from a centralized authority. But why invest in the many types of crypto coins out in the market?
The system in question essentially has to do with Blockchain technology. This system records transactions maintained across several block computer systems to ensure utmost security within a peer-to-peer network. In the last ten years, the cryptocurrency market has evolved dramatically. E-wallets and exchange services centered on digital money have emerged, while tech-savvy investors earned thousands of dollars from their cryptocurrency ventures.
However, there are always risks regarding money investments, including cryptocurrencies. Since it peaked in 2021, Bitcoin, the first and foremost type of crypto coin in the market today, has dropped to 55% in value, making 40% of investors lose their digital money fast.
In this article, we’ll tackle how not to fall trapped in the cryptocurrency quicksand by avoiding these five mistakes:
Never give away your seed phrase
Today, cybercriminals have also become very informed about how cryptocurrency transactions work. One of the main things they prey on are users who are way too generous in giving away their seed phrase.
In a nutshell, a seed phrase is a series of text codes that give users access to all their currency data within their e-wallets. These data may include funds and private access keys and can be easily breached by simply entering the seed phrase into illegitimate phishing sites. For other scammers, duplicating the landing pages of legitimate sites is another way to acquire seed phrases illegally.
To avoid this common cryptocurrency mistake, never give away your seed phrase on any site that may ask for it. Tag the site as a potential risk if these suspicious sites ask for your seed phrase and refrain from clicking any other link, downloading files, or interacting via direct messages, even on legitimate sites such as Twitter, Discord, or Telegram. Shutting down such sites fast gives you more security through prevention than trying to learn how these scammers can give you a one-up.
Securing your digital money in a Cold Wallet
The world of cryptocurrency involves two types of e-wallets, unlike the traditional bank e-wallets we use. Digital Hot Wallets are always online and connected to blockchain systems in real-time, making them more of an easy target for hackers.
However, if you want optimum security for your coins, Cold Wallets are physical gadgets that can store your cryptocurrencies offline and connect to blockchain systems via a private key whenever you need to go online.
The main thing to remember is not to store any amount of cryptocurrency inside your Hot Wallet that you think is not worth losing. Instead, keep your coins inside a Cold Wallet hardware device so you can prevent any unwanted security breach from external sources.
Other useful features for wallets include multi-factor authentication on transactions and money transfers, trades, or exchanges, and of course, securing your private keys and passwords.
Always make sure you send your coins to the right wallet
Another familiar mistake novice cryptocurrency investors make is sending digital money to the wrong recipients. The problem is that it’s easy to make this mistake, given that an e-wallet address is usually made up of garbled letters and numbers that could be as long as 24 characters.
You can easily avoid this mistake by using the ‘copy’ features on your e-wallet app and pasting the same on the ‘recipient’ field. Some wallets can rename recipients and assign their corresponding addresses for easier management. Unlike seed phrases, which you always have to keep secure, your wallet’s address can be shared publicly.
However, when sending money, by simply refraining from typing one character at a time, you get to secure your transfers and exchanges better. Make sure you double-check if all the information you provided is correct before you press ‘send.’
Be wary of unnecessary Gas Fees
Every digital money investor must pay ‘gas’ fees for cryptocurrency miners who ensure that blockchain systems are in tiptop shape. Knowing how to calculate the correct gas fees by reviewing network congestion keeps you from paying more than you should.
The basic rule is that the higher the network activity, the higher the gas fees, so make sure you perform transactions during low-peak hours. However, for time-dependent transitions such as trades or Non-fungible Token (NFT) mints, you might have to risk higher gas fees given their urgency. For every other minor transaction, you can use Etherchain’s GasNow site to check for ideal times to perform your transactions.
Never fall prey to get-rich-quick schemes
Lastly, it’s always best to take your cryptocurrency investments with a clear mind rather than give in to your emotions or hearsay. Yes, some individuals strike their lucky matches and earn a significant amount of money by investing at the right time, but often wise the same investment theories might not work for others.
Study your alternatives thoroughly, review analytics, and do not gamble away your investments due to fear, uncertainty, and doubt. Do not act impulsively, buy high when it doesn’t seem right, and never invest digital money you cannot afford to lose.
Avoiding the cryptocurrency quicksand means you’ll have to understand and accept that the market is always volatile and can be unbalanced. By focusing on how the trends pan out and being wary of price slippages and overleveraging, you can make smarter decisions when you go in and trade your coins.