Getting started with cryptocurrency can be seen as a daunting task, but with Digifox, we aim to make the whole process a breeze. There is so much to learn, and for those who are highly passionate, you’ll tend to find yourself adding more items to the “need to learn” pile as time progresses 😉. As the crypto and DeFi space grow and continue to become more popular, more people are looking to get started. Here are three things you need to know to jumpstart your journey.
There Is So Much More Than Bitcoin
While Bitcoin was certainly the parent of all crypto and DeFi, and still the most famous and valuable, it has a few shortcomings when it comes to the limitations of its coding. Bitcoin is what sparked Ethereum, and from there came all blockchain off-shoots and DeFi innovations. There are dozens of fascinating companies who have come up with useful financial products because of this technology. Many of these companies have come up with their own tokens, operating on blockchains other than Bitcoin, and they don’t all operate the same way.
For example, there are tokens like AMPL, a ‘rebasing’ cryptocurrency. AMPL’s design and code causes a person’s individual amount of the token to change based on its value being above or below $1. Not knowing this could cause confusion or even panic when checking one’s wallet and seeing less than they originally purchased.
The markets of crypto move differently from the more traditional stock market. It’s a totally different kind of technology and new ways of using it are always being discovered. There are numerous rabbit holes to go down, and just because one token is coded to act a certain way, doesn’t mean another will. You don’t necessarily need to know how each crypto you’re investing in behaves, but doing an appropriate amount of research on a token before buying is a good practice. There are a lot of high-risk projects on the market, and just because it’s part of the crypto or DeFi realm, doesn’t mean it’s worth investing in long-term. That all being said, there’s a ton of value throughout the crypto space. Let’s go ahead and spend some time to figure out how we can separate the quality projects from the noise.
Be Wary Of Scams
While the very nature of cryptocurrencies and blockchain technology ensures the security and transparency of transactions, the system also makes it a breeding ground for scammers. The security of your funds is your responsibility. This means keeping your private addresses and passwords secure. Some people recommend writing them down on paper and keeping it safe. Digifox stores this information on your device uniquely, so you’re still in charge of keeping it safe, but there is less room for human error.
There are no fail safes in place, and once transactions are made and updated in the blockchain ledger, they are final. This means if you fall for a scam, there is no way to get your crypto back. You have to be diligent and careful with your own funds. Eliminating “trust” (banks and other third parties who hold your funds and facilitate your transactions) also means eliminating most kinds of help that usually come with the traditional finance industry.
Some common scams include:
- Fake websites nearly identical to the legitimate one (be wary of links, it’s best to type in exact URLs as slight changes are nearly unnoticeable. Double check legitimacy before engaging with a feature which collects any sensitive information).
- Fake apps, also nearly identical to the legitimate one (look out for logos or brand colors that might be slightly off, and check app history as well as reviews).
- Tweets containing too-good-to-be-true offers or suspicious links (this includes tweets coming from legitimate accounts. Scammers have been known to hack the legitimate accounts of the famous or powerful.Never send your crypto to an address with the promise of getting back a multiplied amount).
- Marketing emails or any kind of email containing the same kind of too-good-to-be-true offers mentioned above.
- Private DMs. These could be on Instagram, Twitter, or even Discord, claiming you’ve won a giveaway or offering any sort of links.
Keep in mind, there are a lot of legitimate giveaways or competitions from legitimate companies. Doing your due diligence to research a company and a giveaway should always be done, but especially for newbies to crypto and DeFi. Digifox, for example, does frequent “Invest In Yourself” or “Refer A Friend” challenges which are legit, and we don’t require anyone to send us crypto to our company directly. Be careful with who you trust, and what you trust them with.
Invest Only What You’re Willing To Lose
This is the golden rule of investing, but it’s particularly true for crypto. Cryptocurrencies can be volatile, and while many have become crypto (specifically Bitcoin) millionaires, it’s easy to panic, sell, and lose money if a market drops significantly. Luckily, cryptos are known to move up or down together, so that can be helpful when it comes to your investments and moves in the market. Some coins or tokens have been known to have changes anywhere from 3-30% in 24 hours.
However, some of these percentage moves aren’t that bad when you consider the size of cryptocurrency markets. For example, the total global stock market is worth $100 trillion dollars, whereas crypto is worth about $500 billion, one two-hundredth the size! Simply put, it’s much easier for cryptos to decline 5% than it is for global equities to decline by the same percentage.
Just like with the regular stock market, panic is not your friend. Just because a price dropped, does not necessarily mean it’s time to pull out. For example, Bitcoin hit about 20,000 in late 2017, then dropped thousands of dollars in early 2018. It stayed low for a while, but more recently it has risen back up to 19,000, and many expect it to pass 20,000 before too long. However, just because Bitcoin made a recovery, doesn’t mean all tokens will. Like mentioned earlier, there are many high-risk cryptos out there.
Being aware of the volatility of crypto is important when getting started and determining how much you want to put into the market.
Summing It All Up
Crypto is a fascinating and amazing space, but it’s also very dense and can be tricky for newcomers. There are a number of rabbit holes to go down, so finding ways to categorize the information you need can be incredibly helpful when trying to get started.
Being cautious of scammers, especially ones who might be able to prey on the lack of knowledge of newbies or even the trust of veterans, will keep you from being taken advantage of or becoming discouraged. Finally, don’t be surprised by the volatility of the crypto space. This is what makes it so popular for day traders, but also allows for a slight ease of mind for long-term investors. If you’re interested in getting started with crypto or DeFi, Digifox is a great wallet for those just getting started, as well as experts, to buy tokens, earn interest, and continually add to their bank of knowledge.