Cryptocurrency has been extremely popular for the past two years. This has led to a lot of new entrants to the marketplace that do not fully understand all the intricacies of the cryptocurrency marketplace. This article will point out some basic lifehacks if you are a beginner to cryptocurrency. These lifehacks should make your life in the cryptocurrency market much, much easier.
Lifehack #1: Don’t Buy Bitcoin With Fiat
Our first tip is to avoid buying Bitcoin with fiat currency. This might sound strange because, well, how else are you supposed to buy Bitcoin?
You can actually buy Bitcoin with a lot of different cryptocurrencies. And the advantage of doing this is that you can often get a better exchange rate when purchasing with other cryptocurrencies than with fiat.
Why is this the case?
Exchanges know a lot of newbies will pay a 5% premium to buy Bitcoin with fiat, so they charge that premium. They tend to avoid this with other cryptocurrencies because newbies are far less likely to purchase Litecoin or Ethereum.
Our recommendation is to purchase Litecoin, Ethereum, or a stablecoin (ie. Dai) with fiat. You then use that cryptocurrency to purchase Bitcoin.
You get a better exchange rate doing it this way, basically.
Lifehack #2: Dollar Cost Average
Our next tip concerns an investment strategy. There is a lot of argument about whether to lump sum purchase or dollar cost average.
Our recommendation is to always dollar cost average. We know, it’s not fun to dollar cost average when cryptocurrency hits a new all time high every week.
You will be glad that you dollar cost averaged when the price is dropping 10% per day for a week straight. More importantly, it really does not matter on a long enough timeline – the price of blue chip crypto will be up in the long term.
Lifehack #3: Don’t Sell Blue Chips
This is a lesson that many crypto veterans learned the hard way – don’t sell blue chip cryptocurrencies.
It might seem tempting to sell your blue chip crypto when it hits a new all-time. It’s especially tempting if you had some crazy return like 30x on it.
This happened with Bitcoin when the price hit $30. People sold it for a quick 30x return if they bought at $1.
Bitcoin currently trades around $63,000.
Prior performance does not indicate future success. But this pattern has held up for long enough that it seems unlikely that the price will ever permanently fall below a previous all time high.
Of course, this only applies to blue chip cryptocurrencies. Blue chip cryptocurrencies are high profile projects with a large community. Ethereum and Bitcoin are generally considered the only two blue chip cryptocurrencies.
Lifehack #4: Don’t Use Leverage
Leveraged trading is an especially common tactic with cryptocurrency traders because leverage amplifies trading profits.
The problem with leverage is that it can wipe out your balance if you cannot pay the margin call.
This happens quite a lot with cryptocurrency traders because cryptocurrency is an extremely volatile market. 50% drops in the price of Bitcoin over a few days have occurred a few times during the most recent bull runs.
Those drops in price will cause your position to get liquidated to cover the loan if you are long on your trade. If you are short, then you will just have a miserable time in the crypto marketplace because crypto is in a bull market.
Lifehack #5: Store Crypto on a Hardware Wallet
Storing your crypto on a hardware wallet is a very smart idea. In fact, storing crypto on an exchange means that it is not even your cryptocurrency.
It’s really an IOU from the exchange that will allow you to withdraw that amount of cryptocurrency in the future.
There is a common saying in cryptocurrency that goes, “Not your keys, not your crypto.”
It means whoever controls the private keys to a wallet controls the cryptocurrency in the wallet. If you leave the cryptocurrency on an exchange, then the exchange owns the crypto because they control the private keys.
More importantly, a hardware wallet with proper security measures is much more secure than leaving the crypto on an exchange. There is a 0% of someone hacking into your hardware wallet if you store your seed phrase in a secure location.
Lifehack #6: Keep Your Crypto Holdings Private
Our last lifehack relates to your safety. People have a tendency to talk about crypto holdings with people.
We strongly recommend against doing that. You would probably not tell someone your bank balance, so don’t tell them your crypto balance.
For one, it is a safety concern. It is possible to have millions of dollars on a wallet that can be sent to an untraceable address with a few clicks. This is a little different than having it in a bank account.
Basically, it’s easy for someone to beat you with a wrench until you send the cryptocurrency in your wallet to them. This would not occur with money in your bank account because it’s too traceable.
The second reason you should keep your crypto holdings private is that it can make relationships difficult. People might get jealous if the value increases a lot and secretly root for you if the value goes down.
They will also ask you for advice about cryptocurrency investments, which can put you in a bad situation if the investment goes south for them.
We recommend keeping your crypto dealings private. If you have already told everyone about your cryptocurrency, then you can simply tell them you went broke with it. They will likely leave you alone at that point.
That covers it for some crypto lifehacks. These tricks are just a few to make your life in the cryptocurrency industry a little easier. You obviously do not have to listen to any of these, but you will likely realize that these lifehacks were learned the hard way.