Articles
October 2, 2022

7 Crypto Mistakes To Avoid For New Investors

7 Crypto Mistakes To Avoid For New Investors

For any new investors, whether you’re thinking of stocks, forex, or crypto, you’re inevitably going to make mistakes. Often, some people are naive and wide-eyed, thinking they’re going to make a huge return on investment, the risk is minimal, and you're guaranteed to make money. That couldn’t be further from the truth.

You’re entering a new and confusing space. You’ll be overwhelmed by crypto terminology and are likely to fall foul of some of the biggest crypto mistakes. However, we’ve put together a guide detailing the most common errors and how to avoid them.

So, read on to better equip yourself before stepping into the world of cryptocurrency trading and investing.

Common Mistakes In Trading Crypto

1. Not Using A Secure Crypto Wallet

When you first purchase cryptocurrency, you’re probably using an exchange. Beginners often make the mistake of keeping all their crypto in here rather than putting it into a secure crypto wallet.

When you use an exchange, you don’t officially own this cryptocurrency because you don't have the private keys to the wallet it’s stored in. There have been instances when market conditions would be conducive to buying more crypto or selling for a profit. However, exchanges have stopped processing transactions meaning you miss out.

If you keep crypto in your own secure digital wallet, you’ll always have full ownership and be able to use it as you see fit. Furthermore, you can decide how secure your wallet is rather than settling for what the exchange provides.

2. Losing Private Keys

One of the biggest crypto mistakes you can make is losing your password, seed phrases, or private keys. You’ll have seen news articles over the years about people who have millions of dollars of bitcoin locked in digital wallets they can’t get access to. This is because they lost all the important information needed to get into the wallet.

We suggest storing multiple copies of these seed phrases in secure locations – preferably not online. A good idea would be to keep one in a personal safe in your home and another in an external location. Perhaps a safe deposit box or storage facility.

3. Get Rich Quick Thinking

FOMO and getting rich quick thinking burns many traders before they even begin. Many newbies get drawn in by seeing the millions of dollars other people have made, and they want a slice of that pie. However, they don't see all the losing trades, blown accounts, and years it’s taken to grow a wealth-generating portfolio.

Rather, you should focus on a long-term mindset, set realistic goals, and stick to your plan. Ultimately, this will help you think rationally when choosing which crypto investments work for you. Trying to get rich quickly is the fastest way to go broke. Be patient, be thoughtful, and be emotionless.

4. Getting Scammed

It’s difficult to avoid scammers in cryptocurrency, but they are definitely one of the crypto mistakes to avoid. Fresh-faced investors, especially non-tech-savvy ones, are prone to falling into the trap of different types of scams – particularly trading bots and phishing emails.

Always keep your seed phrase to yourself – never enter it on any suspicious website. And, if it sounds too good to be true, it probably is. Don’t believe people promising your massive ROI for investing with them – it isn’t true.

Check out our blog on avoiding crypto scams for more detailed information {INSERT LINK}.

5. Entering The Wrong Wallet Address

Once a crypto transaction has been processed, there’s no guarantee you’re getting that crypto back. Not even if you made an honest mistake. When transferring cryptocurrency, you need to double and triple check the wallet address is correct. If it isn’t you send it to the wrong person, and they are not obligated to give it back to you. In fact, you’ll never know who it is anyway.

As blockchain technology is decentralized and takes no personal data, there’s no way of you finding where that crypto went and contacting the wallet owner. There are some services that could help recover the crypto, but it’s costly and may not be worth it.

6. Errors with Order Prices

Another of our cryptocurrency mistakes that comes down to a typo. Some platforms make it incredibly simple, showing the dollar amount vs. the cryptocurrency value in an easy-to-understand format – which is user-friendly for beginners. However, some assume you’re an expert and in the know.

When placing an order or listing an item for sale, a typo could cost you thousands of dollars. One example of someone selling a popular NFT for 0.75 Eth instead of 75 Eth. In total, they lost over $300,000!

7. No Basic Crypto Knowledge

It’s easy to get swept up in the hype of crypto. However, one of the biggest crypto mistakes you can make is to jump the gun before you have any basic crypto knowledge. Take some time to read crypto for beginner's articles, discover trusted sources of news, familiarize yourself with terminology, and find the best exchange and wallet for you.

In Summary

High on the list of our top crypto tips is to not jump in head first. It’s an exciting industry with the opportunity to make people very wealthy. However, it can ruin your financial situation even faster. Take your time, learn, educate yourself, and make rational decisions. You wouldn’t invest in the stock market without understanding what you’re doing, so don’t do it with crypto.

When the time comes to get yourself a secure crypto wallet, check out Escrypto and our range of customizable options.

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