Crypto Investment Mistakes and How to Avoid Them

1. Not doing your research

This is the #1 investing mistake across the whole of investment. It’s not specific to crypto! However, cryptocurrency is much easier than traditional investing to dabble in.

Don’t let that fool you: you need to think like an investor – there are plenty of free tutorials and academies that help you with these basics!

But what about crypto, specifically?

Cryptocurrency is new technology. It has some different business models that don’t exist in traditional finance. But whatever new model it is, there will be fans and haters, and it will probably be similar to something that’s been tried in the past. There just aren’t that many new ideas.

Whatever your concern, someone has probably addressed it in a Twitter post/Reddit post/forum post somewhere. But when you find it, treat that with scepticism too: it might be their competitors lying about them!

What to research?

Three things in cryptocurrency that you should always check are: the business model, the technology, and the history.

The Business Model

Things in Crypto usually exist so someone can make money out of them. Wallets, coins, exchanges, protocols… this isn’t a bad thing: this is capitalism after all.

However, it pays to know who’s planning to make money out of you and how they plan to do it.

How?

First, When were they founded? What assets do they have?

Make sure you understand their business model. How does their plan work? What do experts say about that way of generating returns? Have there been similar companies that collapsed using similar business models? Does their business model depend on solving a technical problem that might not exist for long?

The Technology

Website

Does the technology work? Is it secure?

Click on the links in the footer of the website that no one ever bothers to click on. Do the terms and conditions actually apply to the website? Beyond the glossy front page, mistakes like these are the clues that a company is not worth your time.

Security.

A good website or app will take some time to explain to you how it’s been secured. Ideally, this would be by hiring specialists with a track record. If you’re really thorough, you might check whether that company really hired them, or is just saying they did.

The History

A company’s history is important. It consists of the history of the founders and project team and the history of the company itself.

Has the company or its founders got into any trouble with regulators?

Research is important. Without research, you’ll make all sorts of mistakes.

Is TA (Technical Analysis) an Effective Strategy in Crypto?

Technical analysis is when you analyse trade patterns to predict the future. Automated trading systems are very big on this, and it’s a huge area. But is it valid? Or is everyone just really keen for it to be valid because there’s no plan B? Cryptocurrency is subject to external shocks and volatility that can invalidate techniques from traditional finance.

This kind of research helps you make up your own mind about who’s worth listening to and who isn’t.

Oh, and GET YOUR NUMBERS RIGHT! Maths is your friend, and to ignore it means disaster!

2. Don’t Forget About Tax and Regulation

One of the biggest mistakes people make is to assume that Cryptocurrency is anonymous and that, therefore, it’s not taxable. It is.

Even if it’s not visible to the tax authorities for technical reasons, it’s up to you to report profits and transactions. And these can be very complicated if you’re engaging in DeFi activities.

If this is scary, do something simple. Interest-bearing Crypto accounts such as the one we offer at GCISL make reporting at least a bit easier. Tax regulation differs in every country, and it pays to know about it in advance.

If you’re interested in our interest-bearing Crypto accounts, then why not sign up for free today and take a look at how you could start earning high returns on your investment.

How does GCISL address these problems?

GCISL helps investors avoid mistakes by making Crypto simple and using well-established coins that have stood the test of time. Our platform doesn’t require trading or risk and encourages long-term investment.

We have partnered with security specialists Fireblocks to harden our security and protect wallets and deposits. Our payments are also handled by trusted payment provider “Transak”.

We also have an established company team with a verifiable track record. But we can’t do your tax for you. That’s on you!