Cryptocurrency trading tends to be hard for most novices, and even experienced investors make mistakes sometimes. Buying and selling cryptocurrencies may look like an easy task, but if you are not cautious, there is a high chance that you might lose your crypto coins. As cryptocurrencies are digital currencies, it is nearly difficult to obtain them back if you lose them.
Before sending or trading the cryptocurrency, it is better to do proper research and know more about the crypto and its risks. There are several mistakes that people often make while exchanging cryptocurrency. A few errors lead to a great money loss, and you can avoid the common mistakes by understanding them. If you are a beginner and plan to start crypto trading, make sure to click here.
What Are The 5 Common Mistakes Investors Make While Sending Cryptocurrency?
As appealing as it might seem, the cryptocurrency world is risky if you do not have the proper knowledge. Below we will tell you about the 5 general mistakes investors make while trading cryptocurrency. In addition to that, we will also advise you on how to avoid them.
1. Sending to the wrong crypto address
Here is one of the most common mistakes that investors make while trading cryptocurrency. Sometimes, people accidentally tend to send crypto to the wrong wallet address. If you entered the wrong inputs in your transaction, it might lead to losing funds forever. Plus, Sending ETH crypto to a BTC address or vice versa will result in a permanent loss of your cryptocurrency.
Remember, if you have started a cryptocurrency transaction, it is impossible to cancel or reverse it. When you transfer funds to the wrong account, you need to contact the account owner to call for a refund. If you do not know the owner of the address, there is nothing you can do to obtain your crypto.
In order to avoid this mistake, make sure to triple-check the address, other input and examine these details with the recipient’s address.
2. Losing the keys
Recent reports reveal that investors lost nearly 4 million Bitcoins because of common errors, and losing keys is also one of them. The crypto keys are simply the one aspect that can verify your ownership of your crypto assets. If you have lost or forgotten your private keys, you will be locked out of your account and can not get access to your investments. Though you can ask for a fresh password or PIN from the bank or different service providers, the blockchain does not have any customer service.
As of January 2021, around 3.7 million Bitcoin is lost and can not be retrieved forever. You need to store your private keys or your password securely to avoid this kind of error.
3. Storing crypto coins in uncertain wallets
Selecting a safe digital wallet to keep your crypto coins is of utmost importance. Presently, there are plenty of crypto wallets, so it is crucial to opt for trustworthy, secured, and reliable wallets in your location. Several beginners assume that their crypto coins are safe and can be accused anytime if they are placed in an online wallet. However, online wallets are the easiest prey for hackers, so storing all your funds in an online wallet is never a good idea.
Make sure to select a non-custodial wallet or custodial wallet based on your preferences. If you have a non-custodial or self-custody wallet, you are solely responsible for your crypto assets and private keys. Hence, if you forget or miss your private keys, there is no way to open your crypto account. Having a custodial wallet means that third parties are responsible for your private keys. But, hackers can transfer your crypto coins from your account without any private keys because the third party controls the keys.
You can store some of your crypto coins in an offline wallet to keep them secured to avoid losing due to cyber attacks.
4. Not maintaining offline hard copies of crucial data (keys)
The private crypto keys are not one or two-digit numbers to remember easily. They are long-winded and complicated to memorize. Some of you might write the password in Notepad, Google Docs, or a Word doc and store that on your PC. But, what will you do when your PC is damaged?
You must keep offline private keys in printed documents and store them in numerous safe and hidden places. Hence, if you lost one copy, you can get the backup doc from another location. Consider maintaining several hard copies of crucial information related to your crypto coins.
5. Making crypto trading based on emotions
While trading cryptocurrency, you will often come across acronyms such as HODL, FUD, and FOMO. They depict some sort of technique but are emotion-driven simultaneously.
Firstly, HODL indicates sticking to your crypto assets despite the instability in the market. Sometimes, you would not get any profit even if you wait for a long time, so that is when you have to trade those assets. A few investors follow the existing trend to trade cryptocurrency due to fear of missing out (FOMO). But, it is risky as there is a high chance of users falling into fake proposals and scams. FUD means Fear, Uncertainty, and Doubt. The users under the trance of FUD will prohibit themselves from trading in crypto despite the good research stats and profitable market value.
You should never do crypto trading relying on your emotions. Make sure to check the market stats and regular data before sending or buying cryptocurrency.
After thorough research and careful testing, we found the common mistakes people make while sending cryptocurrency. Besides that, we also made a list of those mistakes along with brief information about how to avoid these top 5 common mistakes. It is crucial to be aware of these errors so you can send and trade cryptocurrencies without much difficulty or any loss.
Most beginners and entry-level investors tend to make these errors. Now you are familiar with the common mistakes people make in the crypto world, so make sure not to repeat these blunders. Having this awareness reduces the time you need to spend on researching and also lessens the risk of crypto loss.