3 Questions to Ask Before You Buy Crypto
Are you still unfamiliar with cryptocurrency, and has your curiosity finally caught up with you? The world of crypto is vast and full of terms and practices that might prove a challenge to any beginner in the growing industry that’s crypto investing.
But while that can be the case, it does not mean that it is impossible to dive in – or go on to succeed at it. If you’re willing to do the extensive research needed to invest responsibly and ask yourself some important questions, you are good to go.
This brief guide provides three key questions that you need to answer before you embark on your investment adventure.
Are you willing to risk financial losses?
One of the most important things to know about crypto is that they’re an extremely volatile investment. In a matter of days, an otherwise promising currency can drop dramatically and lose huge percentages of its previous value – or an obscure underdog can rise up and make investors rich in the blink of an eye.
Of course, like with any other investment, there are some patterns to spot and make predictions based on. But you have to really know your stuff to be able to do this, and even then, nothing’s guaranteed. In the end, you just never know what’s going to happen in the crypto market.
Ask if you are ready for the risk before you commit your money. If you are, then one top recommendation is to always do your own research and stay updated on the trends and fluctuations of cryptocurrencies. And of course, it’s advisable to only invest amounts that you can afford to lose.
How good are you at remembering passwords?
For the uninitiated, this question may sound like a bad attempt at a joke – but we promise you we’re dead serious.
Unfortunately, lost passwords are the root of an alarming number of cryptocurrency investors’ financial losses. People who would be millionaires if they were to sell their crypto are simply unable to ever access and cash in on their fortune due to a ridiculously small mistake: They’ve lost whichever piece of paper, Word document, printout, or note they saved the password to their crypto wallet on.
For example, it is estimated that nearly 3.7 million Bitcoin (BTC) could be lost forever because owners lost passwords to their wallets. A “stranded” crypto wallet is for many, simply a lost cause for the one reason that the crypto world doesn’t have an intermediary like, for instance, a bank to resend or reset your password for you.
While this remains the hard truth for most ‘inaccessible wallets’ some lucky users have in recent years seen hackers successfully break into and gained control over their crypto wallets. But they’re far and few between and by no means always successful – so it’s definitely way safer to be able to retain your login details on your own.
How environmentally conscious are you?
With how integrated computers have become in our lives, it’s easy to forget the impact they have on the environment.
But no matter how much we’d like to forget it, the amount of power it takes to have a computer running will inevitably result in higher CO2 emissions – and mining cryptocurrency takes an enormous number of powerful computers and vast amounts of electricity that in some cases is comparable to what some nations use.
Therefore, cryptocurrency buying and selling come out as ‘not that good’ for the environment – the reason some major companies still do not invest in crypto. The feeling among environmentally-conscious investors is that more needs to be done to make crypto mining even more eco-friendly.
Some companies such as Tesla have even backed out of considering taking payments in Bitcoin, despite its owner previously expressing support for the currency. (Tesla bought Bitcoin and has not sold it.)
Despite these concerns, the use of green energy for crypto mining is increasing as miners turn to renewable sources. Notable also is that more energy-efficient forms of mining are available – those cryptocurrencies do not require as much energy to secure their networks.
So, if you are choosing a cryptocurrency to invest in, one important consideration could be the impact on the environment.