There are many pitfalls one can easily get caught in when using, storing, investing or trading cryptocurrencies. While some mistakes could cost you a fortune, most of the common ones can easily be avoided. Bitcoin.com has produced a video featuring the top seven deadly mistakes crypto owners should avoid.
Also read: ‘No-Deal Brexit Huge Positive for UK Cryptocurrency’ – How Brexit Could Affect the Industry
Common Mistakes for All Crypto Owners
Bitcoin.com has released its latest installment of the “top lists” video series. The video, entitled “7 Deadly Crypto Sins You’ll Want to Avoid,” highlights seven of the most common mistakes crypto owners could fall for with explanations of how they can be avoided. Some are aimed at all crypto owners and uses while others are more for investors and traders.
One of the top mistakes featured in the video is not backing up your wallet. “If you lose access to your private keys due to loss, theft, or damage, you lose access to your money, and it’s lost forever,” the video describes. A device holding your wallet can be broken, lost, stolen, and the backup is the only way to retrieve your funds. News.Bitcoin.com has written several guides on the subject. For example, we have an explainer on how to restore a bitcoin mobile phone wallet onto a fresh device using a mnemonic seed phrase, a guide on how to restore a hardware wallet using a seed phrase, and a list of ways you might go about storing your wallet recovery phrase.
The video also explains the mishaps that can occur when mixing up different forks and how they can be prevented. For example, when BCH forked from BTC, some users claimed to have lost their BCH by sending their coins to BTC addresses. Funds can also be stuck in segwit addresses.
Some common mistakes concern how to store your coins. While it is easy and convenient to store them in hot wallets, there have been many instances where security breaches have wiped out all the coins kept in them. Similarly, keeping your coins at crypto exchanges is also risky, as they are often targets of hackers and many of them do not have adequate security measures. When they are hacked, you may not get all your funds back. Mt. Gox’s creditors, for example, are still struggling to get their money back to this day.
Other recent exchange hack examples include Binance which was hacked in May and lost about 7,000 BTC; Bitpoint Japan which lost about $32 million worth of cryptocurrency when it was hacked in July; Coincheck which lost about $534 million worth of XEM when it was hacked in January last year; and South Korean exchange Bithumb which was hacked several times over the years.
Common Mistakes When Trading Crypto
The video also features some common mistakes when investing or trading cryptocurrencies. Two very common ones are market timing and investing more than you can afford to lose. When the price is rising, it is very tempting to do both. Similarly, when the market is down, there is a strong tendency among some traders to sell and cut their losses.
“Of course, we often hear the success stories in the media, however, the many losses that have been incurred by participants seeking to time the market have been swept under the carpet,” explained Kyle Cox, a senior investment analyst at Invictus Capital. Here are some examples of how crypto traders are handling bear markets, and one Chinese trader told his story of how he lost 9,000 BTC.
The video below explores the above mistakes in more detail, how to avoid them, and the rest of the top seven deadly sins.
Other videos in this series:
- How to Earn Bitcoin Cash Income
- 10 Useful Browser Plugins to Help Crypto Users
- How to Keep Bitcoin Cash Transactions Private
- Biggest Heists in Bitcoin History and How They Were Pulled Off
- New Video Series Debuts – How Bitcoin Cash Will Change the World
What do you think of the mistakes outlined in the video? Are there others you think should make the list? Let us know in the comments section below.
Disclaimer: This article is for informational purposes only. It is not an offer or solicitation of an offer to buy or sell, or as a recommendation, endorsement, or sponsorship of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.
Images courtesy of Shutterstock.
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