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5 Mistakes To Avoid When Buying Cryptocurrency

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Apr. 27 2022, Published 8:05 a.m. ET

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There are a lot of benefits regarding cryptocurrency, so it is understandable why so many people have embraced digital coins like Bitcoin and Ethereum. However, some factors need to be considered to ensure that people get the most from their cryptocurrency endeavors. If you’re considering purchasing crypto, be sure to avoid the following five mistakes.

1. Assuming Investing In Cryptocurrency Is Easy Money

Although there are plenty of investment opportunities available with cryptocurrency, it shouldn’t be assumed that investing in digital currency is an easy way to make money. As with any type of investment, research is key.

There can be many reasons why the price of digital currency fluctuates, and investments will often need more than luck to make a return. As such, it can be beneficial to research the cryptocurrency you want to invest in before parting with your money.

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2. Believing All Cryptocurrency Is The Same

Cryptocurrency is a blanket term used for many types of digital currency, but this doesn’t mean each digital currency works in the same way. As such, those interested in purchasing cryptocurrency for the first time must carry out research to find the right fit for them. The following is an overview of some of the common digital currencies.

Bitcoin

First created in 2009, Bitcoin is the most traded digital currency in the world. Digital currency has found favor with consumers and investors and is often seen as the digital currency that started it all.

Ethereum

Although Ethereum is a digital currency, its blockchain technology can be used to create new applications, often geared towards cryptocurrency users. Digital currency has also found popularity with financial organizations thanks to its peer-to-peer capabilities.

Litecoin

Many types of digital currency are compared to Bitcoin, and Litecoin is one of the most like the original iteration. However, Litecoin aims for more transactions to be carried out within a faster timeframe.

Ripple

Ripple was first released in 2012 and acts as a cryptocurrency and a digital payment network. The currency is native to products used by Ripple Labs, which include asset exchange and remittance systems.

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3. Purchasing Cryptocurrency That Cannot Be Used

There are several benefits available when shopping with cryptocurrency, including low transaction fees and faster processing, but as all digital currency is different in some way, it is important to check the cryptocurrency you plan to use is accepted by vendors, be it online or in the real world.

Because of this, it is important to consider what kind of purchases you plan to make with cryptocurrency and make the necessary checks to ensure it can be used to purchase goods or services at a later date.

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4. Using The First Cryptocurrency Exchange You Find

Despite most of the currency exchange being official, some will look to profit from inexperienced investors. With this in mind, the cryptocurrency exchange you use must be trustworthy and reliable.

Not carrying out research could mean that you are paying more than you need to regarding cryptocurrency and could even mean your digital currency is at risk. Fortunately, finding a professional and reputable cryptocurrency exchange is often easier than many think.

Coindeck was created in 2020 as a way of making cryptocurrency easier to access. As a result, those who use the Coindeck platform can be confident of a user-friendly interface that has them making the most of digital currency in next to no time.

5. Using The Wrong Cryptocurrency Wallet

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Many people will have heard stories about people having digital currency, only to find they can’t access it because they cannot find the private keys. In most instances, if you are unable to locate the wallet keys, then you could potentially lose your digital currency, but there are options available.

There are two types of wallets, non-custodial and custodial. When using a non-custodial wallet, the person is responsible for managing their own private keys and will need to take measures to ensure that cryptocurrency is safeguarded. Those worrying about losing access to their wallets can also take further measures by using offline devices to safeguard their key.

Those who use a custodial wallet will essentially be using a third-party site, so won’t have to worry about keys or finding the right storage solution.

There is no right fit for everyone, as everyone has a preference when dealing with cryptocurrency. Those who have become confident in purchasing cryptocurrency may be fully confident that they can manage their wallet effectively.

However, those just starting may want to consider using an exchange, as there is less that can go wrong. If you do plan on using an exchange, then again research is key.

This article was written by Sophia Anderson and originally appeared on Your Coffee Break.

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