7 Things You Must Know Before Starting Crypto Investment
The development of the industrial revolution 4.0 has made various digital and technological innovations grow rapidly. Although cryptographic techniques have been discovered long ago and became known during the second world war by various countries that are members of war alliances, cryptography has only been popular since the appearance of the Bitcoin coin. The cryptocurrency began to exist in 2008 when Bitcoin appeared in a transaction on the internet. The transaction was carried out by a group of developers by the name of Satoshi Nakamoto with a Bitcoin user.
Then, have you ever transacted using crypto? It would be nice if we knew in advance these 7 things before deciding to invest in crypto assets!
Definition of Cryptocurrency
Cryptocurrency is a digital currency with a decentralized system that uses cryptographic methods. Unlike conventional currencies, cryptocurrencies are not physical and cannot be counterfeited because they are digital. You can use cryptocurrency as a means of payment in online transactions because it is peer-to-peer and global.
Not only as a transaction tool, cryptocurrency is also widely used as an investment instrument. The highly volatile value of cryptocurrencies is the main reason why this currency is the most frequently used asset for investment and trading.
7 Things You Should Know Before Starting Crypto Investing
Understand the buying and selling mechanism
Make sure you have found the right platform to start surfing in crypto asset investing. In Indonesia, you cannot buy crypto assets using fiat currency directly. You must first exchange fiat currency into a crypto exchange. After exchanging fiat currency to cryptocurrency, you can surf by swapping some crypto assets.
Do Your Own Research
Before starting to invest in crypto assets, it’s a good idea for you to set aside time to learn about these assets. Is the asset an asset with long-term potential? Are you more interested in being a holder or trader of an asset? Avoid FOMO buying or selling (fear of missing out) or getting involved in buying and selling assets for beginners in the crypto world. A cryptocurrency is a form of investment that is quite risky because the price tends to fluctuate.
Litedex has discussed Do Your Own Research (DYOR) along with the tips. You can visit and read the article The Importance of DYOR for Beginners Before Buying Tokens.
Monitoring the roadmap and activity of crypto project developers
One of the great things about open-source technology is that it is transparent. The general public can access the development of the roadmap and the latest activities from DEV to analyze the direction of project development. A good project is one that lets the public know how the project is progressing by providing access to GitHub. You have to be careful if you come across a project that hasn’t updated the roadmap for a long time but will release various products in the future.
Timing is the key
It is true that most human decisions are based on the emotional side of humans themselves. However, you should avoid investing using emotions. Most crypto novice investors are not aware that they have been carried away by FOMO flows in the movement of a token. Look for tokens that have a stable reputation if you are just starting out. It is also important not to be easily influenced by uncertainty or doubt (FUD) which doubts the ability of a crypto project.
Invest using cold money
Cold money is meant to invest with money that is ready to be lost. Never invest money that is used for basic needs. Invest more money with no more than a potential loss. There is no guarantee that the crypto assets that you buy will increase in a short time, it is not even impossible that the assets you invest will only make a profit years later.
Have a handler’s mindset in long-term investment
If done right, crypto investing can indeed bring you short-lived wealth. This has resulted in many projects that promised short-term benefits but did not turn out as expected. Many token projects are rug pull and scam projects. Care should be taken when deciding on crypto investment assets. However, that does not mean that there are no long-term investments that are worth considering. Bitcoin, for example, took a decade for Bitcoin to hit the $50,000 mark on ATH. If Bitcoin as the forerunner of coins and blockchain alone took so long, what about other coins or tokens? Therefore, it is important to have the mindset of a hodler (a long-term investor who holds his assets for DEV development) in making crypto investments.
Also read: What is ATH on Crypto and Examples
Knowledge of taxes and regulations regarding crypto investments
Knowing the taxes and regulations on crypto investing is no less important than some of the things above. Several countries have made regulations regarding the taxation of crypto investments such as the US, China, Korea, Japan, UK, and Chile. An understanding of regulations in crypto asset investment instruments can determine the rules for returns in crypto investments. Therefore, it is important to understand the regulations in terms of taxation and legality for cryptocurrencies before you invest in a country. Make sure you are not violating certain laws while optimizing the ROI (Return of Investment) of your investment.
Well, those are 7 tips you should know before starting to invest in a crypto asset! How, are you interested in starting to invest in cryptocurrencies? Let me know in the comments, yes! Continue to follow our articles so that you understand more about crypto. Don’t forget to visit the Litedex website, Instagram, Twitter, YouTube, and TikTok to keep getting updated information from us.
