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Everyone can buy and sell cryptocurrency and get a profit. And it is the essential way to earn cryptocurrency. However, it is risky too. Even a small mistake when buying a cryptocurrency can lead to a loss of capital. Simple instructions will help you avoid this. Compliance with them will protect against fraudsters and other possible problems.
Buy and Sell Cryptocurrency
A novice user can make many mistakes when buying Bitcoin, each of which can lead to a loss of capital. There is a risk of transferring funds to an exchange created by fraudsters, overpaying for coins due to an overvalued rate or commissions, and entrusting assets to an unreliable platform. All this can be avoided by following simple rules. Here is a list of recommendations and invited industry representatives to supplement it with their own advice.
Choose the trading platform
1. Avoid Scam Platforms
When buying bitcoins, do not use dubious services. It can be expensive, and not just figuratively. Fraudsters create exchanges and exchanges to buy and sell cryptocurrency with the sole purpose of stealing user funds. If you transfer money to them, most likely you will have to say goodbye to them. Another problem is high commissions and incorrect rates. An unscrupulous service can sell you cryptocurrency at an inflated price or include hidden fees. In this case, there is a risk of losing 5-10% of the invested funds. To reduce this risk, it is better to look for a suitable trader through special data aggregators.
For example, at coinmarketcap.com and coingecko.com, you can sort exchanges by trading volume. Generally, the higher the number, the more reliable the platform. You can sort traders at the best rate through monitoring services.
2. Check the trading platform
Check the addresses of the site of exchanges and traders through which you are going to purchase cryptocurrency.
Fraudsters create clones of sites of popular exchanges, traders and crypto wallets in order to obtain user data such as login and password. If you go to a site like this and enter your personal information there, criminals can gain access to your account on a real exchange. When buying cryptocurrency, it is always important to carefully check the website address bar. The title may be practically identical to the title of this site.
For example, fraudsters may disguise the English letter I (uppercase i) as l (lowercase L). It is even safer to write the name of the site manually, and not follow the link from the search engines. Scammers buy ads for their fake websites. Because of this, there is a risk that a user who searches for an exchange, for example, using Google, stumbles upon a fake exchange office.
3. Read reviews.
There are many exchanges and exchanges, and an unscrupulous service can easily get lost among them. Before buying cryptocurrency through an unfamiliar platform, it is better to check reviews about it on the Internet. Perhaps, she was previously seen manipulating the exchange rate or has already embezzled client funds.
Choosing a storage method
4. Select the right crypto storage
Before purchasing cryptocurrency, select a storage location. Most analysts believe that the most important thing when buying Bitcoin is to think about its safe and convenient storage in advance and decide which wallet to use. This could be a custodian service such as an exchange or an online wallet. By using them, you formally entrust them with the management of your coins.
Therefore, it is important to choose a proven platform that can be entrusted with financial transactions on your behalf. There are private wallets such as Metamask, Tronlink and others. Access to them is possible only with a seed phrase. Only their owners have access to such wallets, so they are not afraid of technical work, political risks and asset freezes, the expert explained.
5. Keep your device secure.
Viruses and extensions in browsers from unscrupulous publishers are capable of replacing the addresses of cryptocurrency wallets on the pages of any site. When working with digital assets, it is worth abandoning the TOR browser. Some exit nodes of this browser belong to cybercriminals, and they can spoof wallet addresses on traders and exchange sites.
Choosing an asset for investment
6. Decide what to buy.
Analysts recommended before buying a cryptocurrency decide which part of the investment to invest in Bitcoin, and which part in other coins. Despite the 4x increase in the price of BTC last year, some altcoins have risen in price significantly more. They are more volatile and promise higher returns than the main cryptocurrency, the expert noted.
Altcoins include Ethereum (ETH), Bitcoin Cash (BCH), and Litecoin (LTC). PayPal added support for these cryptocurrencies along with Bitcoin in November.
You can invest in cryptocurrency through special crypto funds. In this case, you buy, for example, not Bitcoin, but a fund share, the price of which is proportional to the price of BTC. Such an investment can potentially be legally protected. With this method, it is important to choose a reliable brokerage company with good licenses, such as the EU MiFID license.
7. Invest only the money you don’t mind losing.
Since the beginning of 2020, the cryptocurrency market has been in a growth phase. During this period, bitcoin has risen in price 4.3 times, and ether – more than 8 times. But growth can be replaced by a long-term decline at any time.
For example, after reaching $20 thousand in December 2017, the bitcoin rate has been declining throughout the year. And BTC was able to rise above the previous record only three years later, in December 2020. Therefore, it is important to invest in cryptocurrency funds that will not be needed in the near future.
It is equally important to choose a cryptocurrency with great prospects. For comparison, since 2020, only Bitcoin has updated its historical maximum. Ethereum is close to a record, but in order to set a new one, it needs to rise in price by another 8%. And many other coins that peaked in 2020 are now 10 times cheaper. We are talking, among other things, about XRP and TRX tokens, which occupy leading positions in the market.
