How to start investing in cryptocurrencies safely? This is crucial for newcomers who have just entered the crypto trading investment market. You must do your homework as much as possible and not act rashly without knowing much, which may cause serious consequences and losses.
I have been investing in cryptocurrencies since 2013, and it has been 11 years so far. During this period, I have experienced various risks and losses, stepped on various pitfalls, and am a real old leeks. Today, based on my personal experience and experience, I will write a simple and easy-to-understand crypto investment literacy guide to share with new friends who are new to the circle. I hope everyone can start their crypto investment career safely and happily, try to avoid some obvious pitfalls that predecessors have stepped on, reduce risks, and win profits and success.
1. Choose a trustworthy cryptocurrency exchange
Trading in a safe and reliable exchange is the basis of all investments. As a new thing, the cryptocurrency market is not yet mature in supervision. Over the years, I have witnessed one after another large and small exchanges go bankrupt and run away. Some are policy reasons, and some are man-made. In short, if the exchange is not reliable, then all your investments may eventually come to nothing.
The most trustworthy exchange now is of course Binance. Now Binance is already the top exchange among the top exchanges, and its security and strength are beyond doubt. Everyone has seen the case of CZ being prosecuted in the United States that just ended. We have seen that under the strict scrutiny of the US judiciary, there is no record of Binance misappropriating customer funds. We have to admire that Binance has been able to stick to the bottom line for so many years, and even some domestic state-owned enterprises cannot do this. Later, Binance easily paid a huge fine of 4.3 billion US dollars, and the company's operations were not affected at all. Binance's platform currency BNB rose instead of falling, fully demonstrating Binance's strong economic strength! Now anyone can check the reserve proof report at any time through the Binance official website: https://www.binance.com/zh-CN/proof-of-reserves to confirm that their funds are safe and held in Binance's wallet at a 1:1 basis. This means that Binance has funds covering all user assets 1:1 and some reserves. When a user deposits one bitcoin, Binance's reserves increase by at least one bitcoin to ensure that customer funds are fully supported.It is worth noting that this does not include the tokens held by Binance, which are kept on a completely independent ledger.
This proves that Binance holds all user assets (and some reserves) at a 1:1 ratio, that there is zero debt in Binance's capital structure, and that Binance ensures that there is an emergency fund (SAFU fund) to deal with extreme situations.
How can such a strong exchange that sticks to the bottom line not be worthy of our trust? Therefore, new friends who are new to the circle should choose Binance Exchange as their first choice, which can save a lot of trouble.
2. Choose cryptocurrency varieties with lower risks for investment
For beginners who have just started trading, I suggest that everyone start with more mature and stable cryptocurrency varieties, such as Bitcoin, Ethereum, and BNB, which are all good targets. It is not recommended for newcomers to gamble on new coins and monster coins, and it is not recommended to frequently chase hot coins, because newcomers lack experience and do not understand the characteristics of the currency, and new coins, monster coins, and hot coins often fluctuate violently and are difficult to grasp. If you are not careful, you may be trapped and buried.
3. Play spot first, then try contract
It is recommended to focus on spot trading in the first few years, and do not easily enter contract trading, because after the contract is leveraged, the risk is multiplied. When encountering extreme market conditions, it is difficult for novices to avoid liquidation. Once the liquidation is completed, everything is over, and the principal is zero, which is difficult for novices to bear.
Of course, I am not saying that contracts cannot be played. When you have enough experience and knowledge, you can certainly try to operate contracts slowly, but you must pay attention to controlling the risk within the scope you can bear. If operated properly, contracts can also become a good tool for traders, amplifying principal and income, hedging to reduce risks, etc. In my personal experience, unless you are a gifted genius, it is best for ordinary people to start with the lowest contract multiple.
4. Store cryptocurrencies safely in a secure wallet
In the crypto market, not only do you have to invest in centralized exchanges, but there are also many transactions and operations on the chain, so we must choose a safe and reliable wallet to store crypto assets. There are many wallets at present. Which wallet should we choose? Of course, safety comes first! This is the top priority. The developers and maintainers of the wallet must be trustworthy large companies. For example, Binance Wallet is a good choice.
Of course, for newcomers, it is safer to store assets in Binance Exchange than in a wallet on the chain. After you are familiar with everything, you can also consider using a hardware wallet to store assets.
When using a wallet, you must back up your mnemonics and private keys, and keep them strictly confidential to avoid being snooped.
Well, that's all for today. There are still many lessons and tips. I will tell you slowly in the future. Welcome to follow and like to encourage me. If you have any questions, please leave a message in the comments. I will answer all your questions.
