72 Tips for Dealing with Cryptocurrencies

Do your own research!

Be open to new ideas. Just about everyone who first heard about Bitcoin was skeptical at first.

Be curious about the new technology and inform yourself extensively about Bitcoin and crypto currencies.

However, do not accept information from individual sources as facts. (By the way, this source here is not either.)

Especially information in the mass media was often researched quite sloppily in the past.

Find out how value is created. Why does gold have a value?

Get to know the motivation behind the invention of Bitcoin and why it is a countermovement to the financial policies of central banks.

Understand the fundamental differences between the different types of cryptocurrencies.

Buy the first cryptocurrencies

Never invest more than you are willing to lose.

NO ONE can tell you if now is a good time to buy.

First, buy one of the “big” cryptocurrencies, Bitcoin (BTC) or Ethereum (ETH). They are already most likely to have proven that they are safe. In addition, you can buy all other crypto currencies with BTC and ETH.

Invest smaller amounts regularly if you’re worried about catching a bad time. Use the “dollar cost averaging” effect.

Cryptocurrencies are a “high-risk, high-reward” situation. You can lose everything, or win a lot.

If you want the purchase to be as uncomplicated as possible, use a broker such as the BISON app, Coinbase or Bitpanda. With this link you (and we too) get $10 welcome bonus.

Set up 2-factor authorization (2FA) for each account where you store cryptocurrencies.

Keep the 2FA backup code that is displayed to you safely, i.e. offline, in order to retain access even if your mobile phone is lost.

Verify your account, at least with the providers where you exchange euros for cryptocurrencies.

Buy and trade other coins

No one can tell you which coin will be “the next big thing”.

Do your own research! On the Internet, everyone tries to hype the coins they have themselves. This does not always happen in bad faith.

Negative statements about coins should also be viewed with skepticism. Spreading “FUD” (Fear, Uncertainty and Doubt) also seems to be part of the game.

You can only form your own opinion if you understand the project behind the coin.

Invest only if you understand why a coin should be valuable.

Never bet everything on a coin that does not yet have a history of many years.

To buy, use one of the major crypto exchanges that offer many coins and have low trading fees, such as Binance.

Use an exchange like Binance, and not an exchange office like Coinbase, if you buy and sell a lot to save fees.

Use ETH wherever possible to buy other coins. This means lower transaction costs for you and it is faster than with BTC.

Think about the fees when buying and sending cryptocurrencies. With price volatility, it’s easy to neglect it.

When depositing on exchanges, pay close attention to the instructions. Sometimes additional information is required in addition to the deposit address (analogous to the intended use).

Find a long-term investment strategy and stick to it.

Be aware of the various cognitive biases that investors are often subject to. Here is an example.

Be patient! And don’t let yourself be unsettled by information that has a short-term impact but doesn’t change your long-term strategy.

If you check the price or value of your portfolio every 30 minutes (“block foliotitis”), you’re probably overinvested.

Sell a part if so.

Overmonitoring, i.e. checking the portfolio too often, often leads to changing positions too often and regretting it afterwards.

Follow the technical and infrastructural developments of the cryptocurrencies that are in your long-term portfolio. Good places to go are the corresponding subreddits or Telegram/Discord/Slack channels.

Try to keep emotions out of the game.

Avoid FOMO syndrome!

When in doubt, zoom out: Short-term price slumps are the order of the day. Often it helps to look at a longer period of time.

Buy low, sell high. (Uhhhm… OK, if it were that easy, I know).

Nothing rises forever. The next bubble is bound to come, as is the next course correction.

Realize profits. This allows you to sleep more peacefully and reduces your cost base.

Small pigs eat a lot, big pigs are eaten: Try not to catch the peak of a bubble when selling, but be satisfied with moderate profits.

Understand that sometimes you have to realize losses, and don’t fall into the “sunk cost fallacy”.

Look at the price of a coin in Bitcoin and not in euros to assess performance. (If HYPECOIN, which you’re jumping on, gains 10% against the euro, but BTC gains 15% in the same period, that’s actually a loss). Use our tool to compare the performance of second coins.

Any form of forecasting from chart analysis (technical analysis of the price history) is bullshit, especially with cryptocurrencies (this is our opinion).

No conclusions can be drawn for the future from past price data.

Help others understand cryptocurrencies, but never persuade them to invest.

Using and securing cryptocurrencies

Think about what proportion of your coins you want to keep on exchanges and do it consciously. Exchanges have often been hacked in the past, but they have now become safer.

Test different wallets of different cryptocurrencies to get a feel for how they work, strengths and weaknesses.

Use a hardware wallet for larger amounts that you want to keep yourself.

Double check the accuracy of the destination address for all transactions.

Check the transaction fee when sending wallet or hardware wallet.

Always perform the suggested backups from all wallets.

Use a password manager like KeePass to store seeds and passwords.

Pay close attention to what you download (for example, wallet software), which links you click on, and which websites you visit.

Avoid wallets that can be used to create the seed or keys online. However, there are also legitimate ones. If so, do so only in offline mode and only if your computer is “secure.”

Only use apps from the official app stores and don’t ‘root’ your smartphone.

When in doubt, your default smartphone (with pin/pattern/fingerprint lock) is more secure than your desktop computer.

Store physical seeds (for example from Trezor or Ledger) or paper wallets fire and water protected.

Never place unencrypted wallets or backup files on Google Drive, Dropbox or the like.

USB sticks or SSD cards can break and are not suitable as a backup solution.

Log your purchases and sales for tax. Sooner or later (rather later) the tax office will most likely ask.

Hold your coins for more than a year so you don’t have to pay tax on winnings. For more information, see Tax cryptocurrencies.

Even if there are enough ways to work past the tax with cryptocurrencies, leave it at that.

Don’t invest in initial coin offerings (ICOs) unless you know exactly what you’re doing.

Other Best Practices

Never let others manage your coins.

Don’t share your private key or seed with anyone.

Don’t fall for online scams.

If something sounds too good to be true, it probably is.

Don’t tell anyone how many BTC and other coins you have.

Don’t ask anyone how many BTC and other coins they have.

Take measures so that your loved ones have access to your cryptocurrencies in the worst case.

And the most important tip of all:

HODL!

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72 Tips for Dealing with Cryptocurrencies

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