A MULTIMILLIONAIRE made their fortune in cryptocurrency – and now they want to help you to as well.
The unnamed expert, who has raked in more than $3million (£2.26m) in just a few years, has revealed 11 rules you should follow to make a tidy profit.
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While the whizz confesses not to own a Lambo or luxurious villa, their cash has helped fund family holidays and a comfortable place to call home.
They also no longer have to work gruelling 60-hour weeks just to make ends meet – and in a few years you might not have to either.
From knowing the regulations to when not to panic, here are 11 top tips to help set you on your way, according to Ren & Heinrich on Medium.
1. Knowledge is king
Before throwing your hard-earned money at something, it’s a good idea to understand where it’s going, and how it might come back – if it does at all.
Ren & Heinrich recommends reading up on whatever is you want to invest in. – starting with blockchain and public and private keys.
After that, delve a little deeper.
For example, if you’re keen to pump some cash into Ethereum, learn about smart contracts, decentralised finance platforms and how initial coin offerings work.
And if you’re set on buying Bitcoin, read developer Satoshi Nakamoto’s white paper before you do anything else.
2. Understand the regulations
Another form of knowledge key to success is knowing the regulations surrounding cryptocurrency in your country.
This includes what kinds are allowed to be bought and held, as well as what documents you need to provide when purchasing and how tax regulation works.
It is also vital to contact your broker or exchange, and your bank, before cashing out in case there are additional procedures required.
3. Never go all-in
When deciding how much to invest, always leave some aside.
And even once you have chosen the amount you want to put in, only spend a portion of it for your first investment.
Crypto prices are very volatile and you may not get your money back.
Once you’re ready to diversify your portfolio, don’t put all your eggs in one basket.
As well as focusing on large-cap cryptos which have real use cases, perhaps give other assets such as stocks and gold a go to reduce risks.
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4. Take initial investment out once in profit
The day you see your initial investment returned, take that money out straight away.
“This way, you get your money back, even if you lose, you are only losing the profit you have made,” Ren & Heinrich writes.
5. Protect, protect, protect
Another area to get clued up on is protecting your assets.
Experts suggest keeping your cryptos in your hardware wallet, and keeping your private keys and seed phrases safe.
This means not leaving your crypto in exchanges, as they might get hacked or go bankrupt, leaving you with nothing.
It also means never saving your private keys and seed phrases on your laptop or smartphone in case these too get hacked.
If you must keep note of them, write them on a piece of paper and store this in a place only you can find.
6. Know when to buy – and when not to
The worst time to buy is when prices reach an all-time high.
Other times to avoid include when the price is in downtrend as the price is likely to get lower and lower.
It is best to wait until the price has stabilised, then place a buy order.
7. Do not panic sell
Similarly to avoiding buying when prices are tumbling, don’t panic sell when the price is dropping – unless you are already in significant profit.
Ren & Heinrich urges investors not to fall for the trick capitalised by ‘whales’ who use panic sellers’ fast exits to get dirt cheap coins.
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8. Steer clear of day trading
Day trading – the frequent purchase and sale of cryptos for short-term profit is generally reserved for experienced traders, bots and whales.
If you don’t know what you’re doing in the high-risk strategy, you will likely lose your money – and fast.
9. Know who to follow
Random social media accounts, and often even big-name influencers, are best ignored.
Many will simply be saying that “X coin is the next unicorn” simply to get clicks and likes – they’re telling their followers what they want to hear.
Nobody can know everything, so get your information from a variety of reliable sources.
10. Focus on the long term
Most crypto experts will agree that it is not a “get rich quick” scheme.
Instead, fresh investors, and the experienced ones, should focus on anything from a year to five years to even more.
Market trends might show dramatic crashes over the space of days, weeks or months, but over several years this usually balances out, and often increases.
Be patient!
11. Control your emotions
Finally, while crypto is exciting and has the potential to see big returns, it’s important not to get too caught up in the whirlwind.
“Do not be jealous of others when they made a lot more money,” the Medium post reads.
“Do not get frustrated if you lose money. Learn from your mistakes. It is a long-term learning process. I also lost money before after I started to buy Cryptos.”
The risks of buying with cryptocurrencies
Investing and making a purchase in cryptocurrencies such as Bitcoin is risky .
Their value is highly volatile and City watchdog the Financial Conduct Authority has warned investors should be prepared to lose all their money.
Investing in cryptocurrencies is not a guaranteed way to make money.
You should also think carefully about making purchases with a cryptocurrency.
For example, Bitcoin has had wild price fluctuations in recent months and the price can change on an almost hourly basis.
The price of a Bitcoin was at $40,258 on January 9, according to Coindesk, but fell to $34,214 just three days later.
That’s a 15% drop.
These price swings are risky for a business as you could sell an item for a Bitcoin at one price and the value may drop soon after, leaving you with less money from a sale.
Similarly, the price of Bitcoin has soared by more than 21% since the start of this week so it can be hard for a shopper to get an accurate idea of the price of an item if its value changes on a daily basis.
Even after following these tips, it is always worth remembering that crypto can be riskier than other investments because they are volatile and speculative.
Their prices of ten rise and fall very quickly, sometimes seemingly for no reason.
Many cryptocurrencies have a short track record, making them difficult to understand and predict.
And this type of investment is also not protected by regulators which means you have nothing to fall back on if things go wrong.
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