We've reached the part of the loop where it's time to sit down and talk. For those of you who have been in the cryptocurrency market for a few years or entered during downturns; it's likely that your portfolio has made significant gains. It's possible that your portfolio has grown to the point where the numbers just don't feel real anymore. It can be easy to become complacent and let your guard down. After all, you're on your way to a life-changing achievement and your future has become much brighter with much less stress.
But this is the trap and this is when you have to be most careful. Today I want to talk to you about one of the most important tips while investing in crypto. Incredibly essential, but also one of the most basic tips out there. But as I mentioned, I think this is the most important thing to know while investing in cryptocurrency. It can save you from heartbreak, literally save you thousands of dollars if not more. Not to mention the peace of mind it will give you and yourself.
This advice is simply to always be careful how you store crypto. I mean, take self-storage of your coins. You may have heard the famous phrase; "Not your key, not your bitcoin." Have you really sat down and thought about this? Unlike many financial banks, most cryptocurrency exchanges do not offer insurance for funds held on their site. This means that if they go bankrupt or are hacked, they have no obligation to pay out your funds. They also have the option to freeze your account. What good is a million dollars of bitcoin if it's locked up in Coinbase and can't be accessed? This has happened countless times in the past and will continue to happen in the future. There are also numerous examples of founders committing fraud. Keeping all user funds to themselves and withdrawing to an unknown location. People who held funds on Mount Gox are still waiting and hoping to get their bitcoins that they lost during the famous hack. They'll be lucky if they get anything at all.
Let's keep talking about hacks. Every other week there seems to be a new hack. Just this week there was an exchange in Japan that was hacked; with over $70 million in coins being sucked out. Maybe the exchange will pay back its users, but there is no guarantee. Always remember this key point and let me hit it for emphasis.
Exchanges are not banks, they are markets. And they should be treated as such.
It always disturbs me that people work extremely hard to earn their money but will not make the same effort either to research the investment projects in which they put their money or to protect their assets. Yes, there is a bit of knowledge that is required to look after your coins. But it's pretty easy, and everything you need to learn can be taught within half an hour. Not too demanding for the amount that some people invest.
Losing your entire portfolio due to your own lack of due diligence can cause trauma from which you may never recover mentally and financially. I saw it first hand, with an acquaintance of mine losing hundreds of thousands of dollars due to his own actions of not taking his own underwriting. Sending his coins to a third party that was not to be trusted, especially with that amount of money.
Some people will not take action until they have experienced the pain for themselves, and naturally by then it is too late. Perhaps putting the following thought in your head and reflecting on it for a while will motivate you to take the necessary action.
Imagine that you have worked extremely hard for several years and you have invested this money in bitcoin, euphorium or another cryptocurrency. You got lucky and your assets appreciated to a level you never thought possible. You start dreaming of buying your dream house, having much less stress and potentially retiring. And then POOF! You lose everything in an instant. All those dreams immediately evaporate. You may never be able to retire now. The regret of what could have been will haunt you for years.
Prevent this and take your own coin.
If you follow me, you'll understand that I'm a big proponent of using your own cryptocurrency to achieve passive income. My favorite method is to lend my coins to a third party for interest. When you do this, you give up the keys to your coins and this opens you up to the aforementioned risk. There is a chance you could lose everything. So if you insist on lending your coins, this is the advice I offer. Carefully research each service before deciding which one to use. Choosing a reputable source can save you from heartache. Also, never invest more than you are willing to lose. Although I would still be very sad if I lost everything I lent; I figured anything I lent could be lost. Always keep a healthy amount in the fridge. As the market appreciates and your portfolio increases,
When you decide to take sole custody, you need to be just as diligent. Record your keys, keeping them in an extremely safe place. If you use a book, also keep it in a safe place. Taking preventative action can save you from serious heartbreak. Don't wait, do it now.