Ashley Wilson is a content creator, writing about business and all things software and tech. She has been known to reference movies in casual conversation and enjoys baking homemade treats for her husband and their two felines, Lady and Gaga. You can get in touch with Ashley via Twitter.
Following the emergence of cryptocurrency, many people predicted that it would not last very long, but contrary to their expectations, the so-called crypto bubble is yet to burst.
Every day, the crypto market is expanding thanks to the inpouring of new miners, traders, investors, and other players into space.
Admittedly, mining or trading cryptocurrency can be a volatile endeavour, but it can also be profitable and rewarding if you know what you’re doing.
As exciting as it is to be starting your crypto journey, you need to keep in mind that making the wrong move or an error can have terrible consequences for your portfolio.
To minimize risk and losses, here are 5 costly tech mistakes that crypto newbies make and how to prevent falling into the same trap.
1. Not Being in Control of Your Private Keys
A private key is like a special, super-secret alphanumeric password that allows you to spend your cryptocurrency or do whatever you please with it. It belongs to you alone, and only you can use it to gain access to your coins. You’re in a world of trouble if the key falls into someone else’s hands.
Many beginners make the mistake of storing their keys online with exchange services, instead of investing in secure offline wallets where they can store their digital assets forever.
Reports show that lost keys make up a substantial portion of hundreds of millions of dollars worth of cryptocurrency which has been lost forever.
If you lose your private keys, there’s no other way to prove that your coins belong to you. There are no options to request a new one or somehow recover it. It’s one technical mistake that could literally cost you everything you’ve worked for.
Always hold onto your keys and store them securely. This way, you have both ownership and control of your coins, and you can take possession of them whenever you want.
There are plenty of amazing offline wallet options like Ledger and Trezor to take advantage of, so do a little research and find the one that’s best for you.
2. Relying on Digital Records Alone
How many times have you lost an important file or document because your hard drive, phone, computer, or flash drive crashed, or because you forgot to store it properly?
Keeping all your important crypto information like wallet addresses, passwords, and keys stored on an electronic device is a pretty nifty and convenient solution, but nothing beats a hard copy.
Even if you don’t have million-dollar crypto assets to protect, what you have is valuable to you, so you need to keep them safe in case of any eventuality.
Consider making hard copies of important information alongside your digital records. Write them all down on paper, print them, and keep them somewhere safe.
This way, you don’t risk losing your cryptocurrency if your digital records are compromised physically or electronically.
3. Sending Currency to the Wrong Crypto Wallet
Often, crypto beginners feel like they are racing against the clock. When pressure or excitement mounts, they get impatient and susceptible to making serious mistakes such as sending coins to the wrong wallet.
This is usually disastrous because it’s nearly impossible to get your currency back.
What you need to do is slow things down. Take your time.
Copy and paste the address to cut down your chances of making an error.
Make sure you double-check the address that you’ve entered to be sure it matches the one you’re sending to.
Don’t make the error of sending one type of currency to a wallet meant for another type. For example, transferring Ethereum (ETH) when dealing with a Bitcoin (BTC) wallet.
Taking a few extra minutes to cross-check and do your due diligence before completing every transaction can save you from losing your precious crypto.
4. Neglecting to Use Two-Factor Authentication
The cryptocurrency world is littered with risk factors from scams to hackers who are trying their hardest to get hold of your assets.
It is important to prepare for these unfavorable and frightening possibilities so you don’t lose your accounts and wallets to them.Unfortunately, most crypto newbies don’t pay attention to basic cybersecurity measures like using two-factor authentication on all their exchange services accounts.
Two-factor authentication does a much better job at securing your credentials and assets than using only a password. It makes it harder for cybercriminals to gain access or control over your data.
After enabling two-factor authentication on your accounts, be sure to store your restoration code or information offline, somewhere you can easily access it.
If you fail to do so and you forget your security information or restoration code, you probably won’t find a customer success specialist that will help fix the problem and recover your account.
5. Not Calculating the Profitability of Mining Properly
Another huge mistake that crypto beginners make is just jumping right into mining without doing proper research to determine how profitable the venture could be, without using a cryptocurrency mining calculator.
It is very expensive to mine your own crypto. You need a lot of space to store your rigs, and massive megawatts of electricity, which we all know doesn’t come cheap.
While the lure of making an enormous profit from mining can be hard to resist, you need to make sure you understand the product and what you’re getting into before dumping your resources into it.
Don’t expect to make big bucks right away. Cryptocurrency is a lucrative market, but it’s not magic, so you will need loads of patience.
There’s a lot of money to be made in cryptocurrency, but it belongs to those who can avoid making ruinous mistakes.
Whether you’re trading or mining, it is important to treat your endeavor with the utmost care and diligence.
As a crypto newcomer, you will go much farther and enjoy success if you note these tech-mistakes and steer clear of them.