Source: Vernacular Blockchain
Since its birth in 2009, the price of bitcoin has gone from nothing to a few cents to a maximum of $ 20,000. The amazing increase has made many early investors make a lot of money, and also attracted thousands of latecomers to "take over."
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Under the influence of slogans such as "To Da Moon" and "One Coin, One Villa", many "takers" completely lost their sanity and forgot the advice that "investment is risky and you need to be careful when entering the market". Driven by the brain, they rushed into the cryptocurrency market. With the advent of the bear market, these investors were severely "learned" by the market.
As an industry that is still in its early stages of development and is far from mature in many aspects, the cryptocurrency market is indeed full of opportunities, but the accompanying investment risks will not be smaller than other investment markets, or even worse than that. If you enter the cryptocurrency market blindly, the final outcome is likely to be "come out and mix up sooner or later."
Today, we will look at the hidden dangers and the traps to avoid before holding cryptocurrencies.
01 Hidden danger 1: Unwilling to research the market on its own
In fact, the cryptocurrency market is very risky. Because the price of cryptocurrencies fluctuates greatly, just as a small number of people have become multimillionaires overnight, a large number of people have lost all their funds instantly.
In the cryptocurrency market, if you only listen to the advice of experts without thinking about it yourself, you are likely to lose a lot of money; but if you listen to the advice of experts and are willing to learn and research by yourself, you will make Better investment decisions.
02 Hidden danger 2: Trading decisions are controlled by emotions
The cryptocurrency market is volatile, and emotions are inevitable, but you need to pay attention that you can't let emotions dominate or influence your investment decisions, especially when you are making major investment decisions.
03 Hidden danger 3: Eager to buy "cheap but not market-proven" altcoins
Many newbies will feel “Bitcoin is too expensive” when they first come into contact with cryptocurrencies, so they will turn to some unknown and very cheap altcoins seen on conventional channels such as WeChat group, circle of friends, Weibo, and media. He started buying without knowing anything, and ended up being "harvest".
Ethereum founder V God once said that 90% of blockchain projects will go to zero. Many projects are very good at marketing, they know how to hype, how to package Token into the kind you want to invest, and seduce you to hook. Therefore, when you decide to invest in a certain kind of token, as a novice in trading, you must first do your homework and study related projects carefully.
04 Hidden Danger 4: FOMO (Fear of Missing) Psychology
The fourth hidden danger you need to be aware of before entering the cryptocurrency market to invest is the FOMO (Fear of Missing) mentality.
Since the prices of Bitcoin, Ethereum and other cryptocurrencies soared in the big bull market in 2017, many investors have been very afraid that they will miss the cryptocurrency dividends. Just as people have emotions, it is difficult to completely avoid FOMO (fear of missing) psychology. But as a result-oriented investor, you can completely overcome this FOMO (fear of missing) mentality and not let it control or influence your investment decisions.
05 hidden danger 5: Stud, All In All your funds
The cryptocurrency market is not a wealth creation machine, investment failures are always the majority. Just because I heard that someone made a million dollars overnight doesn't make you a reason to put all your money in or borrow money to invest. The cryptocurrency market is full of speculation and uncertainty. Like "Millions Made Overnight" is only a survivor bias. In fact, most people are losing money, which is very similar to other investment markets.
Therefore, even if you want to enter the cryptocurrency market, you should only participate with a portion of the funds that you can afford even if you lose all, without affecting your life.
06 Hidden danger 6: Believe in all the information you have access to
With the popularity of the mobile Internet and the rise of the media, anyone can easily access a variety of information through mobile phones. As an investor, your first challenge is to choose which news media is reliable and worth reading. You need to remember that more than half of the news reports you see every day have no practical value, and most of them are hype and attract your attention, which is why the current "Title Party" articles are flooding into disasters .
Therefore, you need to be very careful about the source of these news information, do not receive it in full, and do not trust all the information you have access to. Do a detailed investigation before making any investment decision.
07 Hidden danger 7: Obsessed with a token and invested all
In fact, you can have your own promising portfolio, but as a business-minded investor, you should not be too attached to a particular token. If you are too persistent, you are likely to put all your funds into it. Once the project fails, you can only die.
In addition, if you are too attached to a specific token, you may miss some "potential stocks", although the proportion of such "potential stocks" is very small. For example, Ethereum in 2015 and 2016 was loved by many Bitcoins I missed it.
08 hidden dangers 8: open trading operations without in-depth analysis
As a novice trader, you should invest as much time as possible to learn relevant knowledge, analyze the market situation, without in-depth analysis, do not rush to trade. Analyzing the market may be drowsy and tedious at first, but over time, you can acquire a wealth of trading knowledge, develop outstanding analytical skills, and truly understand the essence of the works written by many investment masters.
Hidden dangers 09 : Niche trading platform
When choosing a cryptocurrency trading platform, security comes first. In history, the famous "Mentougou" incident serves as a lesson. Even the current head trading platform Binance, this year, more than 7,000 Bitcoins have been stolen. Compared with large trading platforms, the security protection measures and technical strength of some niche trading platforms will be weaker and more vulnerable to hackers. Once hacked and assets stolen, small platforms may not be able to pay, and losses are likely to be borne by investors themselves.
Therefore, it is very important to choose a reliable and trustworthy established trading platform.
10 hidden dangers 10: Expect to happen overnight
Expectations come overnight, and this is the tenth hidden danger that needs attention when entering the cryptocurrency market. This kind of psychology can easily make people quick and easy, and grow their "gambling".
In fact, whether it is learning related knowledge of cryptocurrencies, or analyzing market conditions, and earning investment returns, it will not be smooth sailing, nor will it happen overnight, but it will take a lot of time and energy.
Don't think of the cryptocurrency market as your "cash machine", it is not magic and will not make you rich overnight. On the contrary, it is likely to become your "money-burning machine". Due to your lack of knowledge and ability, Lost the principal, it ended in a dead end.
10 hidden dangers / traps mentioned in this article, which have you ever committed? Or do you know any hidden dangers / traps? Welcome to share your views in the comments area.
"Disclaimer: This article is translated from" The Daily Hodl ". The original author is Ejiofor Francis. The translator has modified it. This series of content is only for the introduction of blockchain science popularization, and does not constitute any investment advice or advice. If there are any mistakes, please leave a message to point out. The copyright of the article and the right of final interpretation belong to the vernacular blockchain. A