For beginners, cryptocurrencies like Bitcoin offer numerous pitfalls. How beginners navigate around the pitfalls and what beginners should avoid.
Transfer Bitcoin custody to third parties
First things first: Not your keys, not your coins. Because holding Bitcoin means demanding monetary sovereignty. But anyone who deposits crypto-credits on Bitcoin exchanges such as Binance or bitcoin.de leaves control of private keys, i.e. the keys to digital assets, to third parties. Similar to banks, Exchanges can also refuse or delay payment of BTC.
If you want to play it safe, you should therefore always keep your Bitcoin on a separate wallet, ideally in cold storage. An overview of the different types of wallets can be found here.
React to volatility
- The Bitcoin market is highly volatile. This is mainly due to the fact that BTC is a completely new type of asset. Nobody knows how high the price can still rise, let alone what will become of the number one crypto currency when it grows up. It is these uncertainties about possible risks of an investment that make the price unpredictable.
- It is therefore not advisable to squint at the price too often and to make buy or sell decisions based on the short-term price development.
- Market observers are therefore increasingly advising a so-called buy-and-hold strategy; this also spares the nerves.
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Being unsettled by the next big thing
Coinmarketcap, the largest quote site for crypto currencies and tokens, lists over 2,000 different coins these days. Among them are delicacies such as the Meme Coin Dogecoin (DOGE) and SpankChain (SPANK), a token created exclusively for payment transactions in the erotic industry. Over 800 projects have a market capitalization of over one million US dollars. The appeal of jumping on one of the fast growing coins and doing the “business of a lifetime” is tempting. Price gains of 50 percent and more are not uncommon in the wild world of crypto currencies. But that such lunar gains do not generate sustainable growth should not go unmentioned at this point.
In the long run, BTC has always been the “safest bet” in an already risky and volatile market environment. So: Keep calm and hodeln Bitcoin.
FUD – Fear, uncertainty and doubt
Bitcoin has been running smoothly for ten years. Apart from two brief interruptions of the client in 2010 and 2013, the protocol has been running smoothly since its genesis. Bitcoinuptime.com puts the uptime of the number one crypto currency at 99.9 percent.
Nevertheless, supposed risks and bad news like Chinese efforts to ban Bitcoin are still spreading like wildfire. To ensure that Fear, Uncertainty, Doubt will not have any influence on trading decisions in the future, the following applies: Keep calm and read BTC-ECHO.
Bitcoin is not a typical investment
To have something Skin the Game, i.e. to participate in the BTC course, is helpful to develop a certain curiosity about crypto currencies. Because with your own participation, interest in crypto currencies seems to come naturally. Questions such as “How does our monetary system work”, “How does the ECB work” and “What makes good money” are rarely asked in everyday life (at least in this part of the world).
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