Did you know that over 90% of people lose money in the cryptocurrency market? And it's not because cryptocurrencies are a scam - that's just how financial markets work. For someone to make a profit, others must lose.
If you've come across promises of easy profits in crypto somewhere, believe me - it's not as simple as it may seem. I made a lot of mistakes myself and lost my capital more than once. But thanks to gradual learning and experience, I started to understand better how this market works and eventually began to earn regularly on cryptocurrencies.
That’s why in this article, I've prepared a list of 5 things you should know before you start investing in cryptocurrencies. If this helps you avoid even one mistake, you can save a lot of money - and that’s already a pretty good start. Because in the crypto world, just like in everyday life, it's better to learn from others' mistakes than your own.
1. First Education and Then Investment!
Before you buy your first cryptocurrencies with all your savings, do yourself a favor and first learn the basics. Find out what Bitcoin really is, how altcoins differ, how blockchain works, what "proof of stake" means, and why you will need an external cryptocurrency wallet.
Many of my friends already own some cryptocurrencies, and yet... they don't even know the basics! And then? It ends badly! Sending cryptocurrencies through the wrong network, clicking on a "scam" link, not having a copy of private keys - these are just a few of the most common mistakes resulting from a lack of knowledge.
That’s why at the very beginning, I recommend you buy some cryptocurrency for a small amount, try sending it to an external wallet, understand the difference between a public key and a private key, and see how transaction fees work on different networks. With such practical exercises with small amounts, you will avoid costly mistakes when you start to operate seriously.
If you spend some time learning and feel more confident, then consider investing a larger amount. Of course, only what you are willing to lose.
When it comes to expanding your knowledge about cryptocurrencies, you will find plenty of free resources: Binance Academy, YouTube channels, or blogs are just a few examples. So don't start by investing - start by learning.
2. Do not invest when everything is rising.
If your work friends, aunt, and the lady from the vegetable shop suddenly start talking about Bitcoin - it’s probably the worst time to buy. When it's too loud, it's usually the end of the bull market when the so-called "public" enters, and that's when profits are made.
The best opportunities arise when everyone is afraid, the market is entirely in red, and on social media, everyone is talking about the collapse of cryptocurrencies. Investing can be compared to a store promotion - you are more willing to buy when it's cheaper rather than when it's more expensive.
Markets are cyclical. After a bull market, a bear market always follows, and after a bear market, a rebound comes again. This is a natural order of things that has been repeating for years, not only in cryptocurrencies but also in traditional stock exchanges.
Most beginners don't know this or forget. They buy when everyone is celebrating profits and sell in a panic when prices are falling. Meanwhile, experienced investors do the opposite - they accumulate when no one wants to buy and sell when the market has been rising for a long time.
That’s why instead of chasing the trend, even if you just learned about cryptocurrencies, it’s worth understanding what phase of the cycle we are currently in, and if you think it’s too late, wait patiently for drops. During this time, you can continue to educate yourself instead of risking a purchase at ATH (all-time high) of a given asset.
3. Secure your funds - external wallet
Keeping cryptocurrencies on an exchange is convenient but carries risks. History has seen exchanges that have collapsed (e.g. FTX), been hacked, or blocked withdrawals.
That's why if you invest long-term, it's worth keeping your funds in an external wallet (e.g. Ledger, Trezor). You then have full control over your private keys - "Not your keys, not your crypto" - that's a principle worth sticking to.
🔒 But what about Binance Exchange?
Binance as one of the largest exchanges in the world places great importance on security. Here’s what it does to protect user funds:
Most user funds are kept in cold wallets (cold storage), meaning offline, out of reach of hackers.
Binance has implemented a Proof of Reserves mechanism that allows users to check if the exchange actually has reserves at a 1:1 ratio regarding deposited funds, or even more.
Data from recent months shows that funds are often covered by 100-110%, which means that Binance holds more cryptocurrencies than users have actually deposited.
Proof of Reserves has been in operation for over 2 years and is regularly updated, which increases transparency and trust in the platform.
Despite these security measures, it’s worth remembering that no exchange provides a one hundred percent guarantee of security. Therefore, a sensible approach is to keep part of your capital on the exchange (e.g. for trading), and part (especially larger sums) to store yourself in a hardware wallet.
This is the best way to have full control over your investments.
4. Test transaction when withdrawing larger amounts
Imagine that two years ago you bought some $BTC i $BNB these funds are now worth several times more. So you want to finally sell them and transfer them to an exchange (e.g. Binance), to finally realize your profit.
And then by accident... you choose the wrong network or paste the wrong address. The transaction goes through. The money disappears. Cryptocurrencies work without intermediaries, which means that every mistake costs real money.
That’s why always perform a test transaction before sending a larger amount. For example:
first transfer a smaller amount, e.g. 5 dollars,
check if it has arrived at the right address and the funds have been credited
only then send the entire amount.
It's a small detail that can save you thousands of dollars. Believe me, it's better to pay an additional $1 in transaction fees than to lose, for example, $20,000 due to a typo or choosing the wrong network on the blockchain.
This is one of those rules that seems trivial… until you make a mistake. And then it's too late.
5. Choose a reputable exchange to invest in cryptocurrencies!
Before you start buying and selling cryptocurrencies, you need to choose an exchange that you will use. And while it may seem that they all work similarly, the differences between them are huge - and can have a real impact on your security and comfort of investing.
What to pay attention to when choosing the right exchange:
Liquidity - the higher the trading volume, the lower the risk of large price fluctuations with larger transactions.
Security - 2FA authentication, trusted address list, holding the majority of user funds (cold storage).
Reputation and history - has the exchange been hacked? What were the reactions? Does it operate transparently?
Compliance with current regulations - especially important if you live in the European Union.
A good example is Binance - one of the largest exchanges in the world. It offers huge liquidity, keeps most user funds offline, and provides a Proof of Reserves system that confirms that funds are covered at a 1:1 ratio. Moreover, Binance, as one of the first exchanges, is adapting to the requirements of the EU MiCA regulation, which aims to regulate the cryptocurrency market across Europe.
✅ In summary!
Investing in cryptocurrencies is not just about numbers, charts, and profits - it is primarily about awareness, education, and risk management. The more you know, the lower the chances that you will lose money due to a simple mistake or a momentary emotion.
When I started investing in cryptocurrencies, there wasn't access to as much free and valuable knowledge as you have today. Everything had to be learned through trial and error. That’s why this article was created to make your learning journey in the cryptocurrency market easier!
So if you found some value here, I encourage you to click "follow" on my profile in Binance Square.
See you in the next posts! 🚀
