A year is a time when a lot of changes can happen. This is especially for cryptocurrencies that are always unstable. So, if we look back to 2022, we see that the cryptocurrency market has experienced several ups and downs. At the same time, interest in digital money projects posted on the site chainbroker.io/projects has not waned. Many serious errors were also discovered. However, we can turn them into valuable lessons to avoid repeating them in 2023 and the future.
1. Lack of differentiation
Most investors, having been influenced by the hype of such coins as Bitcoin and Ethereum, decide to invest in only one of them. However, as the practice has shown, this is not enough to avoid risks and minimize costs.
Important lesson. Spread your investments between more than 2 cryptocurrencies. And it is better if they are completely different from each other.
2. Trust in get-rich-quick schemes
Most companies offered loans with interest rates that exceeded those of traditional banks. But they collapsed eventually, declaring bankruptcy.
Important lesson. Be more skeptical. If you come across schemes that look too good to be true, 100 times before you get involved. Remember that getting rich quickly can be a way to nowhere. So, avoid loans at all costs.
3. Falling into the hands of fraudsters
2022 was also marked by several fraudulent manipulations, pyramid schemes, and phishing attacks, which led to investors losing significant amounts of money. The promise to quickly receive large sums of money and invest in new unknown cryptocurrencies is the reason for this.
Important lesson. Carefully analyze cryptocurrencies and investment opportunities before investing. Don’t trust blindly false promises and unverified platforms.
4. Ignoring cybersecurity
Along with the growth of cryptocurrencies, crypto criminals became more active in 2022. Those who ignored cybersecurity faced such problems as the hacking of crypto exchange accounts and crypto wallets.
Important lesson. If you are an investor, first, take care of cybersecurity. This means:
- setting new, stronger passwords;
- adding two-factor authentication;
- transferring all your assets to hardware wallets that operate offline.
5. Thinking that cryptocurrency exists by itself
Many beginner investors believe that all you need to get cryptocurrency is mining. In fact, this is not the case. To buy Bitcoin or another cryptocurrency, you still need a fiat currency, such as the US dollar or the euro.
Important lesson. Cryptocurrencies function in tandem with fiat currency.
6. Not taking into account tax consequences
Although cryptocurrencies are not regulated at the state level, governments have already begun to actively pay attention to them. Thus, we observed the taxation of income from cryptocurrency transactions in 2022. However, most investors did not pay attention to this and continued to buy, sell, and store cryptocurrencies without paying taxes, even without realizing that this could have serious consequences.
Important lesson. If you’re an investor, carefully study how all transactions recorded are and what the consequences of using cryptocurrencies are in your country.
7. Blind trust in influencers and celebrities
There was a situation in 2022 when investors depended on the opinions of bloggers and other influencers on social media, becoming hostage to their interests.
Important lesson. Do your own thorough analysis before taking advice from influencers. And only then make an informed decision.
8. Poor research of the cryptocurrency sphere
Most people invest in cryptocurrencies without having thoroughly researched this area beforehand. As a result, they either invest in cryptocurrencies that have no prospects or fall for fraudsters. Another option that was observed in 2022 is to follow the hype. This can turn into a big problem. After all, if a certain cryptocurrency has a big hype, it does not mean that it will stay at the top. You might even see it crash.
Important lesson. Before investing your money in a particular cryptocurrency, study its technology and how it is used. Also, consider all risks and regularly check the news to keep up with predictions and the current situation on the cryptocurrency market.
9. Do not take into account the negative impact of cryptocurrency on the environment
Those investors who chose cryptocurrencies were enticed by their growth but ignored one significant fact. It turns out that crypto-mining leads to high energy consumption, which is a cause of active greenhouse gas emissions into the atmosphere. This has very confused environmentalists.
Important lesson. Before investing money, look for a cryptocurrency whose mining is less harmful to the environment.
What was positive in 2022 and what to expect in 2023?
2022 was full of both mistakes and great events. In particular, banks, investment companies, and other financial institutions were embracing them increasingly. This was a powerful impetus for digital money into mainstream financial systems for integration.
Another significant point worth noting about this progress is the increase in decentralized finance (DeFi), applications that allow for more open, transparent, and accessible use of cryptocurrencies.
NFT tokens, which help artists sell their artwork, music, games, and others for a lot of money, also rose to the top of popularity in 2022. Some of them cost millions of dollars. Just think about this incredible amount. Impressive, isn’t it?
What can we expect in 2023? Experts predict further growth of the cryptocurrency market, its greater stability, and the multiplication of investments in the market. At the same time, investors need to be prepared for increased regulatory control by governments and the emergence of new tax laws related to cryptocurrencies.
Several finish thoughts
So, to navigate the crypto market successfully in 2023, you need to look back, carefully review the mistakes made in 2022, and learn the main lessons from them which we have discussed in this article.
Only in this way, you can make all your decisions more reasonably before investing in a particular cryptocurrency and at the same time protect yourself from fraud, which is unfortunately not uncommon nowadays. It is the lessons learned from mistakes that help you to achieve success in the cryptocurrency market.