After the incredible rise of Bitcoin in December 2017 which saw the token reach around $20,000 in worth (per coin), cryptocurrencies have had a place at the forefront of FinTech conversation. With increased talk about these coins, however, has also come negative publicity. For businesses, talk of volatility and risk can be enough to turn them away before they’ve even looked at the benefits. For a deeper insight into just what cryptocurrency is and how it can benefit your business, you can take a look at a full fintech guide to finding out more about the history, how to trade and more. Here we’re taking a look at some key dos and don’ts to get you started.
DO Budget Before You Invest
You need to work out your business’s budget before you invest in any stock, share or commodity. Even the forex market needs to be approached with a strong business budget in mind to ensure that you aren’t putting the company at risk. Take a look at all of your existing debts – how close are they to being paid off? Do you have any at all? Are you likely to stay in a strong financial position in the future?
While you aren’t likely to know everything that waits for you around the corner, having a strong idea of the greatest likelihood and the budget you have to spare to do that can help you better prepare for any cryptocurrency you choose to invest in.
DON’T Invest More Than You Can Afford To Lose
Investing business funds into cryptocurrencies comes with its risks. While it also offers it’s rewarding, it’s important to only invest money that you can afford to lose. By completing a full budget before you even consider stepping foot in the cryptocurrency market, you can better determine what you have to spare and what your business could comfortably lose without putting the company at risk.
Investing in blockchain technology directly can be a safer path to take for businesses, but offers different rewards. This technology can offer your business unique opportunities to store and transfer data without the need for central control, creating better security and transparency for you, your business-to-business transactions and, of course, your customers.
DO Your Research
If you’re planning to invest in cryptocurrencies directly, it’s important to ensure that you’ve done your research – and that you continue to do so even once you’ve started operating within the markets. Your first step before investing in any crypto technology should be to read the whitepaper released by that company. For Bitcoin, read the first project whitepaper to get a clearer idea of what Satoshi Nakamoto planned for the project, or for Ethereum, make sure you fully understand the purpose and capabilities of the Ethereum platform as well as the ETH coins.
With this information, you’ll be able to determine which investment is best for your business and what you’re likely to face, rather than going into the market metaphorically blind.
DON’T Let Emotions Drive Your Decisions
Once you are within the market, you need to remember that cryptocurrency is volatile and that emotionally-charged decisions can often do more harm than good. Providing you’ve done your research and have belief in the projects that you’re investing in, it’s important that you trust your instinct and those beliefs. When negative news spreads about cryptocurrency, this is usually done with the intention of crashing the price and driving people away from the coin. When this happens, don’t panic – play the long game. In most cases, the coins will regain worth and you’ll only lose out if you sell.
Panic selling is becoming more and more common in the cryptocurrency community, and can often make the crashes seem worse than they truly are. Patience is a much-needed trait in crypto and one that could work out in your favor.
DO Think About The Coin You Want To Invest In
Similar to doing your research, you’ll need to be smart with your decisions when it comes to which coin or technologies you’re investing in. After reading all of the whitepapers, you can better determine which coins will suit your business and any internal projects you might have. When looking at any particular coin, ask yourself two questions:
- What value does the project offer?
- Does the project need to be on the blockchain or have tokens?
The above questions can help you determine whether investing is a good idea, or simply playing into a money-making scheme. Cryptocurrencies that offer something truly unique are more likely to stand strong in the industry and could work out in your favor.
DON’T Forget To Back Up Your Wallet
Once you’ve taken that step and invested in a cryptocurrency, make sure you take security measures and back up your wallet. While these coins are designed with the highest security in mind and in most cases, are pretty much un-penetrable, they can’t protect you from your own human error. Forgetting private keys and any other additional information to your wallet, or even hitting delete by accident can lead you to lose all of your funds with little hope of getting them back.
Make sure you aren’t sharing the wallet information with everyone, and enable 2-factor authentication when possible. For Bitcoin, in particular, you can usually back up your wallet to an external hard drive or USB like any other document. Do your research into the wallets available for your chosen coin, and take all measures to ensure the safety and security of your coins.