What Are The Top 5 Challenges When First Starting Out With Crypto?
When you first start investing in cryptocurrencies there is a LOT to learn. After all, it’s a whole new asset class underpinned by a brand-new technology! If you have ever felt completely bamboozled, don’t worry, you definitely aren’t alone. In fact, the majority of us feel this way in the beginning.
We want to make sure we provide you with the help and support you need to gain confidence with cryptocurrencies. You may remember when you first registered an account with us (and if you haven’t, you should! 😉), we asked you a question:
What is your biggest challenge accessing or utilising cryptocurrencies or the blockchain?
Well, the results are in and it turns out it all boils down to two main things. Trust and understanding.
TL;DR (too long; didn't read)
If you’re curious about how everyone feels but don’t want to read more about each section, simply check out the infographic below.
However, if you want to know more info about the common challenges faced by newcomers, and tips on overcoming them, make sure you keep on scrolling down once you’ve looked at the pretty pictures!
Figuring it all out: I'm just getting started and trying to understand how it works!
61% of newly registered BitPrime customers stated that the biggest challenge they have is trying to understand how cryptocurrencies work. And fair enough too, seeing that the underlying tech is, well, technical.
At the most basic level, you can think of most cryptocurrencies as working similarly to your more traditional stocks/shares. When I say this, I’m referring to the purely speculative aspect of crypto and not the intended utility of the currency. The reason for this simplification? The vast majority of crypto buyers are investing in the hope of gain.
But, if you want to dig deeper into the nitty gritty, we have a range of articles that can teach you heaps more! From how bitcoin is mined, how blockchain technology works, to the differences between crypto and fiat (“normal” money).
Return on investment: I'm not sure how to maximise my investment and/or predict the markets
Predicting how the markets will perform is one of the hardest things to do. As Nassim Taleb points out in his book, The Black Swan, even the “experts” get it wrong most of the time! Supply versus demand is one of the main factors determining the price of cryptocurrencies. Perhaps almost as important is media coverage, which can drive FOMO (fear of missing out), FUD (fear, uncertainty, doubt), and panic selling and buying.
Now, while predicting exact price movements with 100% accuracy is near impossible, we can make educated guesses through technical analysis. Through this analysis, one can arrive at a predicted price range and take it from there. There’s a plethora of different analysis tools and methods out there which quickly become overwhelming. It’s a good idea to pick one parameter, read all you can to learn what it does and how to use it, then practice using the tool on a site like Coinigy or TradingView.
A great place to start is our beginner’s guide to understanding candlestick charts. Candlesticks are one of the easiest price analysis tools to learn. They describe price movements by visually displaying the open and close price, and the high and low price at whichever time interval you select. Once you understand this you can quickly identify crypto market trends and, hopefully, work out if it’s a good time for you to buy or sell. Check out the article linked above for a more in-depth explanation.
We also have an article covering different strategies for investing in crypto (part 2 of the article) which introduces you to some common investment strategies such as dollar cost averaging, and balanced portfolios.
Securely buying & selling: I'm trying to find a secure, trusted way to buy & sell crypto in New Zealand
BitPrime operates as a “cryptocurrency retailer”. What this means is that we have stock, crypto in this case, ready for you to purchase directly from us. We remove the need for you to exchange your NZD for USD, use another exchange to buy BTC or ETH from, then finally swap for the currency you actually wish to buy or vice versa for selling. We do all of this exchanging behind the scenes so all you need to do is buy directly, peer to peer (P2P), from our reserves. On top of this, we do not hold your digital assets. We send your coins straight to your wallet, unlike a custodial exchange which hold your coins on their platform. This leads us into the next section, security and privacy.
Security & privacy: I'm still working out/developing the most secure/private way for me to store crypto
It is more important now than ever before to ensure you store your cryptocurrencies securely. Far too many security breaches have happened over the past few years concerning various crypto exchanges worldwide. Take the Cryptopia hack in February, for example, where over $23 million was taken.
Breaches like this highlight the importance of having control of your wallet’s private keys yourself! This is why BitPrime focuses on teaching our customers to set up wallets and learn how to use them securely.
Ultimately, cold storage (offline) is the most secure method for storing cryptocurrencies. We have a series of articles covering the different types of wallets, as well as recommendations for which wallet to use. If you have further questions about this, feel free to contact us via chat or email.
Use-cases: I don't know where (or how) I can use my crypto or the blockchain
The number of retailers accepting crypto as payment is growing, particularly in the travel industry. TravelByBit has been instrumental in organising merchants across Australia and New Zealand to accept certain cryptocurrencies in return for their goods and services.
If you’re in Auckland or Tauranga and need a plumber or gasfitter, then MrPipes is the way to go should you wish to pay with BTC.
For the adventurous, Pioneer Rafting offer eco-rafting free of charge to river conservation donors and accept cash, BTC, and LTC. The trips are down the Clutha Mata-Au River, which flows from Lake Wanaka.
These are just a small selection of retailers accepting crypto. For a more detailed guide including international merchants, CCN has a great list.
Other: none of the above
Finally, 7% of customers who registered with BitPrime selected Other as their response. Many commented that they are already familiar with how cryptocurrencies work which is wonderful! Below, please find a selection of quotes summing up the most common “Other” responses received, with links to relevant articles addressing their concerns.
I'm having so much trouble getting my head around the different wallets you need and how to use them properly!
I really want to start buying/selling but not really sure where to begin or what coins to buy first.
My main issue is finding the best methods for purchasing bitcoin with NZ currency and also the safest and easiest way to transfer to a wallet so I can use crypto.
I am very much new to cryptocurrencies and need support. There are many cryptocurrencies, how to choose the right one to invest in?
Are You Ready to Start Buying Crypto?
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Disclaimer: The above references an opinion and is for informational purposes only. Do not take this as personalised financial or investment advice. The opinions expressed by the author do not represent the opinion of BitPrime.
Last updated: 25/02/2019