Cryptocurrencies once thought to be a flash in the pan, have withstood the stress tests, and are more popular now than ever. The advantage of being able to transfer money without the involvement of banks and other financial institutions, coupled with the built-in security inherent in the blockchain technology makes it an alluring choice for investors. But, like any investment, there are pitfalls for the unwary, or sometimes just the plain old unlucky. One must successfully walk the thin line between courage and caution lest the goose that laid the golden eggs turns into a costly wild goose chase! So, here are three mistakes to avoid that can keep your cryptocurrency trading experience gold.
Don’t forget The Taxman.
Despite its ethereal nature, cryptocurrency is still considered income, and depending on your country of residence, it’s taxable. For example, the USA’s infamous IRS classifies cryptocurrency as property or a digital asset. Any time you sell or exchange cryptocurrencies, it’s taxed, including using cryptocurrency to pay for goods and services. So, be on guard, we recommend using the crypto tax calculator to prevent your finances from riling up that testy old Taxman!
Don’t overdo it.
Be careful to never invest more than you can afford to lose, the risks far outweigh any potential rewards, and it’s just not worth chancing disaster. This is the case with any investment, but the volatile nature of cryptocurrency makes this even more critical, where double-digit drops over the course of just a few short hours are commonplace. Sure, the crypto market has experienced unprecedented growth, but it has also seen more than its share of unmitigated disasters. Don’t throw your life savings away on such a risky venture, be sure to invest just a small portion of your capital, only what you can kiss goodbye without too much anguish if things don’t go your way.
Start with the survivors.
A lot of different cryptocurrencies have come and gone, with some attempts not even lasting a day! Considering all the inherent risks involved, at least give yourself a fighting chance by beginning your cryptocurrency investments with assets that have stood the test of time like Bitcoin, Ethereum, Tether, and Cardano. You can diversify later, once you have accrued some success.
Like all good things, investing in cryptocurrency requires preparation, time, care, and patience. Good luck, and we hope all of your goose’s eggs are golden!
