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20 Tips for New Cryptocurrency Investors

Before you start investing in the cryptocurrency space, there’s a lot of little things you should know. I’ve collected up these little nuggets of information into a quick little post.

Remember: I’m not a financial advisor and this isn’t investment advice. Check out my full disclaimer here.

  1. You can buy less than 1 Bitcoin (BTC). The smallest unit is 0.00000001 BTC (i.e., 1 Satoshi).
  2. It’s not a good idea to borrow money (via credit cards or loans) to buy cryptocurrency.
  3. Don’t invest funds you need to pay living costs (e.g., rent, bills, food).
  4. Only invest what you can afford to lose. When you buy a cryptocurrency, imagine that the money is already lost. If you can’t handle that, you’re probably over-exposing yourself.
  5. Do your own research (DYOR). No one is going to bail you out if you make a bad move.
  6. Similar to #5, don’t trust anyone.
  7. Judge the value of a cryptocurrency by its market capitalisation (unit price x circulating supply) and volume, not the unit value.
  8. Most (90%+) cryptocurrencies will NOT survive in the long-term.
  9. If I was holding just one cryptocurrency for the rest of my life, I’d make sure it was BTC.
  10. Consider limiting your investment to just 4 or 5 cryptocurrencies (inside the top 100) when you’re just getting started.
  11. Want to buy a cryptocurrency not available through Coinbase? Check out this post.
  12. Unless you have previous experience, don’t waste your time trying to day-trade. Do yourself a favour and just think about the long-term potential of the projects you’re throwing your money at.
  13. Similar to #12, don’t start panicking when cryptocurrencies lose 50% or more of their value. If anything, these are valuable buying opportunities for projects you stand behind – not reasons to sell.
  14. Avoid investing in cloud mining services (like Genesis Mining). Look into these services, or mining yourself, at a later date.
  15. Enable 2-factor authentication (Google Authenticator) on exchanges (e.g., Coinbase) that you use.
  16. Store your cryptocurrency in your own wallet. Do NOT leave substantial amounts on exchanges. Hardware wallets (like the Ledger Nano S) are strongly recommended by the community.
  17. Track your cryptocurrency purchases and sales. Lots of (free and paid) tools are available.
  18. Don’t be afraid to take some profits when you’ve experienced large gains. It might help you sleep easier.
  19. Consider the tax implications when you take profits (it might be worthwhile to just hodl). If you’re from the UK, check out this great post.
  20. Be aware of the cognitive heuristics and biases you’re susceptible too.

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Have a question for me? Or a tip you want to pass along to others? Let me know in the comments section below.

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