First 3 Things You Should Know Before Getting Into Crypto

  • Cryptocurrency
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In commercial law, there is a well-known Latin maxim – Caveat Emptor. That is English for ‘buyer beware’. It means a buyer is purchasing a product at his or her own risk and must accept all the consequences of such a transaction especially if there is no contract or explicit assurance.

For first-timers in the cryptocurrency market, the key phrase is caveat emptor.

Cryptocurrency is a relatively new field of finance that is still highly unregulated in most countries of the world. For these reasons, cases of fraud and theft of cryptocurrencies are common, leading some to consider it a Ponzi scheme.

Naturally, one would have a negative impression of the market if one’s first experience was to be defrauded especially when that event almost wipes out an individual’s net worth. But it doesn’t have to be bad. Crypto has proven to be a good alternative investment and is beginning to attract mainstream TradFi investors and large entities like investment banks and other financial institutions.

So how do you ensure that you don’t get the wrong end of the crypto stick? You should know these three things:

You can lose everything

Unlike TradFi [traditional finance] where the central bank and the SEC protect investors’ funds, there is no central body of authority in crypto. As such, opportunists can take advantage of fresh investors through fake initial coin offerings, and fake crypto wallets.

So how do you ensure that you don’t get the wrong end of the crypto stick? You should know these three things:

Scammers are not the only ones that can make you lose everything. You can lose everything by forgetting or misplacing your wallet ID This is a grave error! In short, if you lose your keys, you lose your coins.

Finally, the volatility of the crypto market can wipe out your fortune. Although crypto-volatility is a two-edged sword, you want to be careful going in.

1. Cryptocurrency is divisible.

Seeing the going price of a coin can discourage a prospective investor. For instance, despite being in a bull market, the price of a single bitcoin is still around $20,000 while Ethereum is over $1,000. This doesn’t mean you have to fork out that huge sum for Bitcoin or Ethereum. You can still own fractions of both Cryptocurrencies with say $50.

Bitcoin for example is divisible to the eighth decimal. You can buy some units of Bitcoin for as little as $5, $10, and so on. This is true for most other coins on the market. So don’t let the ticker price put you off, you can buy smaller units.

2. DYOR, always.

It’s easy to follow the bandwagon riding the coattails of mega influencers like Elon Musk, Vitalik Buterin, or Michael Saylor. Why not, some of them are whales and know what they are doing. Some of them even have all their investments in crypto.

But imagine how you would have fared if you had stuck religiously to the opinions of another crypto whale – Do-Kwon.

It is prudent to follow the newsmakers but you’ve got to understand the basics yourself and research widely. There are tons of resources including news reports, analyses, and research reports on cryptocurrency all completed by experienced and disinterested parties who can make conclusions that aren’t based on emotions.

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First 3 Things You Should Know Before Getting Into Crypto

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