Crypto currencies are not under any centralized statutory regulation. This is unlike most governments currencies that are monitored by a centralized banking system like the US dollar under the Federal Reserve System. Whereas crypto currency is a new invention, the concept has been fully embraced across the globe. But the question worth asking is, are there rules of trade and security when dealing with crypto currencies? Well, regardless of the answer, here are some of the most valuable tips for trading in crypto currencies.
1. Don't trust any source of informationAlways be on the watch out for any unscrupulous behavior happening in real time. Ther are conmen posting misinformation on websites to lure their victims only to steal from them. Always seek advice from reliable sources or through unbiased and trusted industry participants. Following the offical twitter accounts, website and bitcointalk.org thread post from the developers are most certainly the only place where you should get your information from.
2. Avoid the temptation of putting all eggs in a basketJust like any kind of business, don't put all your eggs in one basket. Never invest the entire life savings or children's college funds into cryptocurrency. The unwritten rule of the thumb is to invest only what you can comfortably afford to lose. Maybe all that glitters isn't gold. This can be achieved by either just holding bitcoin or if you can live with the risk; altcoins.
3. Set achievable targets or goalsThis has been emphasized for a long period of time - cryptocurrency isn't a get-rich-quick scheme or investment. If you're a millionaire, shoot for the moon but if not, invest wisely. Setting realistic plan of return on investment and sticking to it is the most viable thing to do. Remember,the cryptocurrencies market is still young and robust and thus is thus prone to be chaotic. Be ready to adjust your long-term goals should there be a need. There are many scammers around, especially when it comes to altcoins or fake altcoin developers. Trying to get rich by investing in a new/unknown project will not happen.
4. Tread cautiouslyEducate yourself thoroughly and avoid the urge to be in rush. Also, don't panic. Take your precious time and carry out in-depth research by consulting industry experts but more so the most popular companies. Bottom line, don't rely on guesswork or make a rush and snap decision prior to investing in the industry.
5. Buy When there is blood on the streetsBaron Rothschild, an 18th century British nobleman and member of the Rothschild banking family, is credited with saying that "The time to buy is when there's blood in the streets."
This has been proven a very solid strategy for me. However there are risks too so make sure you buy yourself into the right type of altcoins.
6. Stick to the Top 20 projectsWhen It comes to investing, I don’t invest much money into coins which are listed on page 2 of coinmarketcap. And especially when it comes to large funds tick to the larger projects with a good marketcap. For me that is a top 20 ranking on coinmarketcap.com
7. Invest long-termFollowing the crypto currencies market trends and learning how to read and interpret the charts can be very rewarding. It's advisable to track investment in real time and avoiding rush decisions based on perhaps temporary momentary fluctuations. It's highly advisable to invest long term.
8. Choose your ICO wisely
With the risk’s of ICO’s being extremely large:
- A lot of ICO’s are scams;
- Some of the ICO’s fail to deliver;
- Another some take too long to deliver, promising outdated software and coding.
I would therefore advise not to invest in ICO’s, however If you can afford it make sure to look into the following aspects when you invest in an ICO.
- Does the developer have any experience; is there a Github profile with proof of coding?
- Are the team legit persons or does it consist of fake profiles? Always look at their social media and don’t be afraid to ask them questions on their social media. It’s your money after al?
- Is the team actually a team, or just a one man team? Look at the communication and check for patterns in reading style. A one mean team can do great work, but in no way should 1 developer have access over millions of funds.
- Is there an escrow with clear escrow details; refunds, controlled release of funds etc.
- Is there an advisory board; no guarantee but always helpful and good to have project backers
- Does the ICO provide real and most importantly realistic innovation. A project promising the world will never be able to deliver, no matter how many investors are backing it.
- How does the team presents itself legally? Is there an company, legal terms lawyers etc.
What if the owners have debts and there are not contracts stating your money should be refunded in case of a bankruptcy?