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Explainer What Is Cryptocurrency scaled

Explainer What Is Cryptocurrency scaled

5 Common Crypto Investment Blunders

Jay Speakman by Jay Speakman
February 23, 2022
in Investing
Reading Time: 4 mins read
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According to recent research, there are approximately 52.3 million cryptocurrency investors worldwide. And what is one thing they all have in common? They’ve all made mistakes. Managing risk includes avoiding the obvious while also being aware of more sophisticated threats to your crypto investment portfolio.

It’s all too easy to get caught up in the excitement of news headlines and rush headlong into a crypto investment based on sheer FOMO. Crypto investment mistakes are common, so we’ve listed a few of them below.

Common Crypto Investment Blunders

1. Buying solely for the sake of a low price

Low prices are not always indicative of a good deal. Prices are sometimes low for a reason. Keep an eye out for cryptocurrencies with declining user rates.

A good example is developers abandoning  a project, and it ceases to be properly updated, rendering the cryptocurrency insecure.

2. Scammed

Cloud Multiplier Scams

Fraudsters may contact victims via email or text message with an “investment opportunity.” They promise to give investors double or triple the amount they put into bitcoin if they send it to a specific digital wallet. These are known as cloud multiplier scams.

REMEMBER: Free money offers should never be taken seriously.

Spoofing

Criminals can easily inflate or deflate the price of very small or unknown cryptocurrencies by creating fictitious buy or sell orders and sometimes sending the currencies’ values skyrocketing by hundreds of percent at a time.

When unwitting traders rush in to try to get a piece of the action, the criminals cancel the orders — which they were never going to fulfill in the first place — causing the price to crash in some cases.

Criminals will occasionally amass large amounts of a specific cryptocurrency (through pre-mining much of it before it is available to the general public).

They can inflate the price by promoting it on social media and then selling it at a higher price on cryptocurrency exchanges. They then vanish.

Virus-infected crypto wallet

The best crypto advice will tell you to stick with well-known crypto wallets like Ledger, Trezor, Exodus, or MetaMask.

Sketchy wallets on Google Play or the App Store can steal your cryptocurrency funds using malicious code.

The fake coin

With so many cryptocurrencies on the market, it can be difficult to distinguish between what is genuine and what is not.

When you invest in counterfeit coins, criminals can steal your identity and, in many cases, your hard-earned money. They accomplish this through phishing, which involves convincing you to click on links in emails that install spyware on your computer.

Don’t take anyone’s word for it; instead, conduct your own research using as many sources as possible.

3. All in

Some of the more dubious trading platforms advise you to make the most of your money by betting as much as possible. This is a shortcut to the poor house.

Better crypto investment advice would be to limit your investment capital to a certain percentage — say, 5% — and to always keep an emergency cash fund that is never invested in the market.

4. False belief: Making money with crypto is easy

Making money through trading any type of financial asset, whether stocks and shares, commodities like silver and gold, or cryptocurrency, is not easy.

Anyone who claims otherwise is most likely attempting to dupe you into making crypto mistakes.

5. Losing or forgetting your crypto key

If you use a hardware wallet to store your cryptocurrency offline, forgetting your key is akin to losing the keys to a bank vault. All of your cryptos will be lost if you lose your key.

Final thoughts

Mistakes are part of our learning process and they can be instructive when it comes to crypto investing. With the proper amount of research and the right frame of mind you can avoid or at least lessen the impact of some of the more common crypto blunders.

Jay Speakman
Jay Speakman

I write about blockchain, crypto, NFTs and other disruptive technologies and innovations.

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