Considering most the meteoric rise of Bitcoin and other cryptos in 2017, it’s no wonder that people from all over the world have been absolutely devoured by what seems to be one of the best investment opportunities for quite some time now.
Undeniably, crypto investing is a high-risk/high-reward business, but, as shown by many in the course of the crypto history, with a bit of luck and forward thinking the payoff can be incredible.
Ok, so you’ve made up your mind, you got over most mental obstacles, and you’ve finally managed to get your hands on some Bitcoins, or at least a fraction of a Bitcoin (or any other cryptocurrency you deem worthy).
In this guide, we look at some of the best practices you should know in order to ensure that your cryptocurrencies stay as safe as possible after your initial investment in such blockchain technologies.
Keep Your Investment as Much of a Secret as Possible
One of the worst things you can do after you’ve bought cryptocurrencies is to tell the world about your investment. The main reason why you want to avoid this is that Bitcoin, and other cryptos, are not controlled by any third party or government, which means you’re fully in control of your funds and, thus, 100% responsible for their security.
We’re not saying keeping it a secret from your loved ones, or very close friends you know don’t have a big mouth. What we’re saying is never go online and tell people you have Bitcoins, and never speak out loud in public about it. And, whatever you do, don’t ever tell people exactly how many Bitcoins/cryptos you own.
Believe it or not, there have been numerous cases where people were blackmailed or scammed when various criminals and hackers found out they have crypto (usually from close friends).
Don’t Tell Anyone Where Your Recovery Phrase Is
This is somewhat related to the previously mentioned step, and it’s also a tip meant to ensure the absolute safety of your Bitcoins or cryptos. Recovery phrases are 12-24-word-long seed words which are used to set up and recover your wallet.
Remember this: anyone knowing your recovery phrase can access your funds. A good practice, in this case, would be to give half of the seed key to a close person and the other to someone else. Of course, bad things happen, and we all die eventually. So, if you want to make sure that your Bitcoins don’t go to waste after a potential bad incident, then you might even consider putting it in your will so that your loved ones can make use of your money.
Never Keep Cryptos in Exchange Wallets
This is probably one of the biggest mistakes most crypto newbies are guilty of– they keep their newly acquired coins and tokens on their exchange wallets. Sure, exchange wallets are free, convenient, and, at first glance, make a lot of sense, but storing them on exchange wallets is highly inadvisable and is a very dangerous affair for some reasons.
For starters, most cryptocurrency exchanges are not yet regulated (as the whole point behind cryptos is to promote decentralization). Currently, the world of cryptocurrencies is a modern-day wild west, which means that nobody can fully guarantee that your funds stay safe. There’s no regulating body holding exchanges responsible for returning lost money.
It’s also important to grasp the idea that even though you can store coins and tokens on exchange wallets, you’re not exactly in control of the said wallet. This means that if the exchange is shut down by government intervention, you can lose your funds. The same applies in the case of attacks, and hacks of which there have been many these couple of years.
Therefore, we recommend transferring your cryptos to your OWN wallet as soon as possible. The end goal is to OWN and FULLY control your private keys. Literally, all wallets should offer a better security level than exchange wallets are capable of delivering. If you don’t own large sums, then you might as well opt for something that offers convenience such as a mobile or desktop wallet. However, if you want to ensure that your funds are really safe, then a hardware wallet is probably the best choice.
The best thing is there are numerous good options currently on the market such as Ledger Nano S, Trezor, KeepKey, and even CoolWallet S.
Don’t succumb to FOMOs, FUDs
There’s no getting around it: the crypto world is riddled with FOMO (fear of missing out) and FUD (fear, uncertainty, and doubt). We will say it right off the bat, crypto trading and crypto investing are not for the faint of heart.
These FUDs and FOMOs are often related to social media exposure, and most of the time it’s related to more-or-less fake news. A mistake that many inexperienced traders do is they get into a coin thinking they will get rich quickly. They will buy into a coin thinking that it’s a good opportunity to make quick money, without ever considering making a plan, or at least without considering that this is a very good long-term investment opportunity.
Of course, the crypto market is renowned for its sometimes eye-watering volatility, and yes, prices can vary so much in a day that you could make a profit. But, the main rule when dealing with cryptocurrencies is to don’t panic and HODL, the acronym for “Hold on for dear life.”
If you’re a seasoned trader, then this advice is not particularly aimed at you, but monitoring the price of your coin obsessively can lead to some very bad decisions. Monitoring the price regularly can potentially create anxiety which, in turn, might make you want to sell all your funds which is not advisable.
At the end of the day, it’s important to note that everybody makes mistakes, it’s human nature. However, understanding the crypto sphere and having a good understanding of your mind can decrease the chance of mistakes by a whole lot.
Evidently, some of these tips might seem pretty obvious, but knowing them will definitely help you make the most of your investment and avoid potential problems that might arise. Finally, remember this: don’t make trades or sell your funds entirely based on fear. These types of decisions should be made based on calculated predictions or good economic strategies and not FOMO or FUD.