3 Things You Should Know if You’re New to Bitcoin

The most recent bull run has attracted many new people into the crypto space. If you just recently joined then congrats for being a part of the biggest financial revolution in history! 

That said, new entrants tend to dive into things too fast because of FOMO (fear of missing out). This can lead to some costly mistakes if you don’t conduct due diligence. Crypto is one of the only free markets that exits today but it’s also a wild jungle full of predators waiting to eat the low hanging fruit. 

Before you dive into the shark infested waters head first, you may want to take the following recommendations into consideration. 

#1: Security is a Must 

Before you even consider dropping serious cash into bitcoin or other cryptocurrencies you should make sure that you fully understand the risks and how to keep your private keys secure. User error and theft are the two greatest causes of financial loss in the crypto space. 

The average internet user has very sloppy and lazy security habits. If you’re going to survive this game you need to cultivate a greater sense of awareness around your internet habits. One of the simplest ways to secure your crypto is to purchase a hardware wallet, such as a Trezor or Ledger nano. These will isolate your private keys in a contained environment and make them unhackable. 

Here’s a list of other things you can do to keep your bitcoin secure. 

#2: Stay Away from Ponzi Schemes

There are many different crypto websites offering high yield returns. Most of these ask for an upfront investment and then promise ridiculously high guaranteed returns. One thing you should know is that there is no such thing as a “guarantee” in the markets, so this should set off alarm bells for you.

These sites are only using bitcoin as a means to facilitate their Ponzi schemes. A Ponzi scheme will pay old investors with money that comes in from new investors. Eventually when new money stops coming in they implode, which is why they are illegal. Also most cloud mining sites are just Ponzi schemes in disguise. 

It’s also good to stay away from all forms of MLM (multi-level marketing). These often just use a product or service as a legal loophole to avoid getting classified as a pyramid scheme. If you can’t make a living by selling the product or service directly without needing to recruit others into doing the same, then it’s a pyramid scheme.

Pyramid schemes fail because they are based on the false premise that the human population is infinite. Eventually all pyramid schemes hit market saturation and collapse, with the base of the pyramid being unable to find more recruits. The base consists of at least 50% of all participants, which means more than half will lose their investment. Remember this next time you start harassing your friends and family to join some MLM you got brainwashed into. 

Some people mistakenly call Bitcoin itself a Ponzi scheme but their arguments lack merit. Here is an article explaining why Bitcoin isn’t a Ponzi Scheme. 

#3: Don’t Invest more than you can Afford to Lose

Perhaps you joined crypto because you heard stories of people getting rich off it. You may look at seasoned crypto traders making massive gains and decide to dive in head first. 

What you don’t see is all the blood, sweat and tears these traders had to go through in order to get to a point of proficiency. Trading crypto can be a very rewarding career and produce returns unlike anything you’ve seen in traditional markets. 

If you’re interested in trading you should start off small. Those who go too big, too soon will end up wiping out their accounts. Expect to make several dozen mistakes when you start off trading, so ask yourself what price tag would you like these mistakes to be? 

Study, train and practice with small amounts until you develop confidence and a strategy that works. There are no shortcuts for experience. Until you’ve spent time in the trenches you don’t know yourself as a trader.

Trading is actually 90% psychological and 10% skill. All you need is one effective 1 trick pony to make consistent returns BUT do you have the discipline to only execute when the conditions are ripe? Managing emotions and having discipline is not something that can be taught by watching YouTube videos. You need to forge your self discipline on the battlefield while trading in the live markets. Overtrading is the #1 thing that will kill your returns. Being a good trader means trading less and making more. 

Rocky

I have a passion for Bitcoin and the crypto markets. I work full-time as a cryptocurrency trader, investor and analyst. I also run a crypto trading school at skillincubator.com
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