I apologise for the slightly clickbaity headline, I learnt from a soon-to-be former colleague writing about cars, but I digress. The point is, there are a few things that people do in crypto that really, truly, honestly get my goat. In fact, I have a favour to ask, if you think these aren’t mistakes, please do feel free to write in the comments why, and if you have anything to add, I’d also appreciate if you could let me and readers know in the comments.
1. Using ‘stop loss’ for Crypto is like trying to empty a bathtub full of water with a teanspoon
This is personal: I hate the ‘stop loss’ feature on exchange platforms. By definition, hate is irrational, but if I had to apply logy and rationality to the reason why I hate it, I’d tell you that it’s because I don’t want to ‘stop’ my ‘losses’ because that would imply that that particular asset won’t go up again, and if I picked an asset that won’t go up again after going down, it means I made the wrong investment.
I personally don’t trade cryptos – like, at all – I don’t even sell, but applying the SL method to crypto is crazy, because crypto is volatile and it means that the risk of triggering a stop loss and lose money is too high, whereas you could simply wait and sell, manually, once it goes back up again. Which it will. Always.
2. Focusing on the price, while ignoring utility and potential
Broadly speaking, the same rules of thumb for the stock market should also apply to crypto: only invest in stocks of companies you’d actually buy from and like, focus on utility and growth potential. Sometimes, some people tend to ‘overthink price’ and ‘underthink potential’. Bitcoin, for example, looks expensive, and it may as well be, but when you consider what it is, and is potential, and its core charateristics, I’d say it is actually undervalued.
All things being equal, a coin that makes transaction fast, easy and cheap shows more potential than an equivalent coin that makes transaction slower and expensive. Obviously, that is not the only thing you should keep in mind, but it is important, and sometimes I feel like we underestimate that.
3. Underestimating cybersecurity
Generally speaking, I think it never hurts to be careful and/or borderline paranoid about your online security. If you keep your money in an exchange or a wallet in your phone, for example, it’s better to change the password every 5 days, even though it sounds excessive, than every 90 days. I personally prefer 2FA (as in, on an app), than a text message OTP but if and when I can I make sure to keep both on.
I used to work for a crypto company, and for about four years, I experienced first-hand the impact of underestimating the importance of safely storing passwords and codes. I helped thousands of customers and I’m afraid to say that 9 times out of 10, when they lost funds, it was because they’d been too naive with their passwords. I made that mistake once, a long time ago. I don’t plan to do it again.
Is there anything you want to add? Let me know!
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