The price of bitcoins, like many other emerging technology, is now quite volatile. Because of changes in the value of currencies like Ripple, Ethereum, and bitcoin, investors can win or lose a substantial sum of money in a short period of time.

There are other risks for crypto investors outside market volatility, but many may be avoided with a little common sense. Good internet security, background research, and a good dose of skepticism can assist ensure that your bitcoin investment is as safe as possible, and that you don’t become a victim of the current cryptocurrency boom’s fraudsters.

1. Don’t put all your eggs in one crypto basket

Diversification should always be the goal, whether you’re investing in equities and shares, gold, or Ethereum. Investors betting on the next big thing in crypto should keep in mind that not all currencies will succeed, so it’s a good idea to have your fingers in a few pies. Also, be sure your bitcoin assets aren’t the only place you keep your money. Digital currencies can be a realistic aspect of a financial strategy if they are part of a diverse portfolio of other assets.

2. Keep your computer and your data safe

Your bitcoin investments, as many cryptocurrency investors are well aware, might be exposed to hackers. If you’re storing or trading in cryptocurrencies, keep your anti-virus software up to date and make sure you’re not giving out your personal information online. Otherwise, it’s all too easy for your valuable investment to be taken.

If you’re storing cryptocurrencies, make sure you have multiple wallets and, if possible, keep the wallets offline. A simple physical item like a USB drive can be useful in this situation.

3. Do your research before investing in ICOs

Initial Coin Offerings, or ICOs, have grown in popularity as a mechanism for cryptocurrencies to raise capital from the general public. They have, however, become a convenient tool to prey on the weak, and the financial regulator recently issued a warning to customers about “these very high risk, speculative investments.” It advises that there is limited consumer protection, as well as a high risk of fraud and extreme volatility. The FCA regulates some ICOs, although this is done on a case-by-case basis and depends on how they are constructed.

Make sure you know how leveraged your investments are and whether you could lose more money than you put in.

According to the FCA, you should thoroughly study any ICO before putting your money into it. “You should only invest in an ICO project if you are a seasoned investor who is confident in the ICO project’s quality,” advises a spokeswoman. Consider investing or trading with a regulated service instead.

4. Become immune to FOMO

FOMO (fear of missing out) is one of the most dangerous aspects of the cryptocurrency bubble. However, just because your neighbor or a friend has made money with a cryptocurrency does not guarantee you will. Often, when everyone is talking about a particular investment, it is too late to invest. FOMO isn’t a replacement for thorough study, a realistic estimate of risk, and a thorough comprehension of what you’re investing in.

5. Understand leverage

Leverage could magnify both your losses and gains if you invest in cryptocurrencies through a contract for difference (CFD) or spread bet (FSB). Make sure you understand your investments’ leverage and whether you could end up losing more money than you put in. Make sure you’re trading with an FCA-regulated firm that offers CFDs.

Digital money decoded

Cryptocurrencies are no longer the exclusive domain of tech experts; they now provide real-world investment opportunities to regular people.

Customers of City Index have enjoyed rapid, dependable trading and actionable ideas, as well as access to a plethora of research, for over 30 years. As experts in trading, spread betting, and risk management, cryptocurrency is now a significant element of their portfolio.