One of the best things about having a community is we can learn from each other, including from each other's mistakes. I've been investing in crypto for over five years, and I've had my fair share of cringe moments and humbling lessons that, tbh I don't want anyone else to have to experience.
So today, I'm sharing five things I would never do (or err, sometimes re-do) as a crypto investor.
(We use a few crypto-y terms in this blog post. If you want to up your crypto-lingo, grab our free crypto glossary – also available in Spanish)
Don't Skip Research
I'm pretty psychotic about researching investments. One time I spent three full days learning and debating a buy, buuuut I've also aped into tokens or projects that I didn't understand at all. Sure, sometimes I got lucky, and things worked out, but other times it didn't, and it's not a good feeling knowing it could have been prevented. We provide an exhaustive list of how to research investments inside Crypto Class, but my favorite form of research is community conversations. Having a safe place to go to ask questions about a project or token is priceless, which is one of the reasons the 0xx community exists.
It's important to remember that investments always carry some risk. Even the most comprehensive and intense research can't make a token or NFT price increase. It doesn't work that way. But excellent research will decrease the likelihood of downside.
Careful of Shiny Objects
There is so much frenetic energy around crypto and NFTs. Sometimes, you hear about something new and immediately want to jump on it. But this goes back to number one. Beware of shiny objects. Beware of anything that sounds too good to be true. Beware of any offers that activate your human emotions of greed or fear (" You have to act now or you'll miss out!" "You could make 500x!"). These are likely scams, or even if they aren't outright scams, they might not be projects or offers with competency behind them, so buyer beware.
Don't Trust Giveaways
I don't think I've ever won anything in crypto (unless you count receiving airdrops, which I don't). But, almost every day, I receive messages telling me I'm the winner of some NFT or token. Exciting right!?! No.
🚩 Red Flag 🚩
This is the most common type of scam; someone sends you a message saying you won something, to connect your wallet to their site, and then your prize will appear in your wallet.
Never connect your wallet to something you don't understand or trust.
This is most important in Discord. When you're new to Discord make sure you adjust your privacy and safety settings, and who can send you friend requests inside your profile preferences. This will dramatically reduce spammy scams finding their way to your inbox.
Also, this is a great time to remind you that 0xx will never ask for your private key or for you to send money to some random wallet.
Don't Use a Hot Wallet
I know this will be controversial, but I do not use hot wallets. Yes, it makes things a bit more inconvenient, but I err on the side of safety in this space.
Hot wallets are more targeted for scams and hacks and more easily drained of assets, which is why I don't use them. If you're unsure what a hot wallet is, we cover this in-depth in Session 2 of Crypto Class.
Bridge or Transfer Without Testing
In crypto, when you want to move assets from one wallet to another or from one blockchain to another, you might have to use a bridge or do a transfer transaction (think of it as moving money between your bank accounts or moving money from one bank to another).
The first few times you do this in crypto, it's a bit nerve-wracking, which is why I would NEVER send a transfer or bridge transaction through without sending a test transaction through first.
Let's say you want to transfer $1,000. First, I would send $5 to ensure I'm doing it correctly. If it goes through as desired, I will send the other $995. If not, I'd troubleshoot and re-test. The downside is that you pay for two transactions, BUT it is worth it when you're just starting out and learning your way around the blockchain.
It's important to say that I know plenty of people in this space that do these things, like have hot wallets, have bridged without testing, etc…These are my personal operational standards and advice.
You should expect that you will make mistakes in this space. No one is perfect at everything when they try something new – so when these lessons happen, do not be hard on yourself. You are not alone. You are not bad or wrong; you're just learning. And, I hope the tips shared today make your lessons smoother and help you reduce mistakes in this space.