There’s no doubt that the crypto hype has been attracting ambitious new traders. But without some general knowledge, a solid strategy and a reputable crypto exchange in your back pocket, it’s easy to fall into the pattern of some common and panic-driven mistakes.

So here’s how to avoid them.

What kind of trader are you?

Determining how you trade (or want to trade) will allow you to understand your risks and how you’ll handle spikes and dips in the market.

Are you a daily trader —
trading often depending on the trends?

Or are you an investor — 
buying coins (especially when the market dips) and holding them long-term?

You can also be a mesh of both.

The safest strategy is to invest in coins for the long-term — minimally adjusting them according to trends and holding them for substantial growth in the future.

However, if you’re looking for quick short-term profits, trading often will allow you to get there much faster but of course with much greater risks.

But for you new daily traders out there, keep in mind that the most common mistake is over-trading.

So start slow, observe and study the market to keep your risks to a minimum.

Where are you trading?

There’s a handful of crypto exchanges to choose from, but which ones are the most reputable and reliable?

If you’re still new to trading, you’re going to need an exchange that supports fiat money (like dollars, pounds, euros) at first, to exchange them into cryptocurrencies. These exchanges allow you to sync with your bank account so that you can start building up your coins.

Coinbase ––

By far one of the most popular exchanges, it’s backed by investors and used by millions around the globe — a great and reliable entry point.

Other optimal exchanges include Coinmama and CEX.io.

And if you’re in it for the long-run?

You may rely less and less on fiat money and end up needing a crypto exchange that can offer a lot more coin varieties and features.

Consider Binance —

An exchange based in Malta, currently standing as the world’s leading and fastest cryptocurrency exchange offering really low transaction fees (0.05% per trade). An extremely popular choice with a mega user-friendly mobile app to make trading even easier.

Other great and advanced exchanges include Kraken, Bittrex, and Changelly.

Why not give yourself the most optimal set up?

You can also get a more in-depth view on different crypto exchanges here.

Understand your coin(s)

Prepare yourself for the waves of rumors and unsettling “tips” from Twitter, Telegram groups and the internet to convince you to sell and buy like a brainless puppet. Realize early that most of these are fake accounts, paid promoters or those who are trying to purposely manipulate the market and influence you through FOMO (the fear of missing out).

FOMO is the tide in the crypto world — it’s the push, pull and the PANIC that influences new traders to buy and sell.

Ditch the puppeteering gig and understand for yourself where your coin is in its development stage (some stages will shift more) and you will start to notice its average swing margins and trend lines.

The market will always fluctuate, but you’ll stay on top if you can spot the bigger dips.

Have a profit exit strategy

As a trader, there will be times when your holdings will surge.

Then what?

Will you collect your profits at the first spike or will you push your luck and keep on holding?

Many new traders fail to establish an exit strategy for their profits.

A good rule of thumb is to sell in stages instead of selling all your coins at once.

This way, you still collect some immediate profits but also leave some room for the rest to potentially grow.

Diversify

Investing entirely into one coin isn’t bad, but it’s risky— and we’re all about trying to minimize risks.

Every coin (no matter how popular) will eventually (and temporarily) go down hard at one point or another, even if the market as a whole is doing well.

On this side of the economy, nothing is guaranteed.

Study up on other coins, start diversifying your investments and taking risk management seriously.

By doing this, your portfolio will be set well enough to handle the rise and falls of the market and will even increase your chances of gaining profits from different coins as they’re all in different growth stages.

Being aware of the initial common pitfalls in trading can help you stay cautious, ahead of the curve (as much as one can be) and minimize unnecessary risks.

Tackle These Common Pitfalls to Become a Better Crypto Trader was originally published in HackerNoon.com on Medium, where people are continuing the conversation by highlighting and responding to this story.

With the onset of blockchain’s incredible tech, we’re realizing a huge shift in which the internet can operate for us — in a completely decentralized manner where anyone can safely inspect the immutable provenance stored in the ledger itself.

Although there is much praise to be said about the blockchain, there is still a huge drawback that needs to be addressed and taken seriously — the authenticity of physical items when linked to the blockchain.

Provenance on the blockchain is a great step forward, but it’s not enough

There are gaps in the provenance paper trail that hurt both sides of the market — increasing the possibility of the item being forged.

So far, blockchain applications are focused on securing the provenance and ownership in a decentralized title registry which records events and changes that affect an item’s value. This decentralization prevents and deters “bad actors” from manipulating data, since the rest of the network would soon take notice and reject it.

Provenance tracking has become a great innovation, but it’s still missing a key element:

Even the impeccable provenance of an item on the blockchain doesn’t guarantee that the physical item itself is the original, as it does not establish any secure connection to the item itself in the physical world.

There needs to be a secure way to link physical items to the blockchain

Without a secure way to link the physical work of art or collectible to the provenance on the blockchain, it’s easy to replace it with a fake at any time.

For example, whenever an item’s ownership changes or if the item is exhibited, transported, or stored — these are all instances where original items can be replaced or mishandled.

There are too many fraudulent opportunities and loopholes at each stage within the processes of the art & collectibles market — a frightening and underrated issue that can’t be ignored.

Without a secure and consistent tracking system linked directly to the blockchain, the item can be unrecognizably forged and replaced without being noticed. Then, that fake could be “verified” by connecting it to a legitimate blockchain entry.

The push for tokenizing physical works of art is proving itself to be a huge challenge without an effective solution to link physical items to the blockchain.

There is a need for an easy-to-use authenticity verification that can be used by anyone associated in the process of the art and collectibles market.

Are the current solutions bringing an answer to the problem?

Codex Protocol is a “decentralized registry for unique assets like art, fine wines, watches and more.” Its Codex Record stores all the item’s information, evidence of ownership and metadata. When the item is first loaded onto Codex, all the information needs to be verified by “Validators” (auction houses specialists, dealers, gallerists and appraisers), who Codex relies on to verify its provenance, judge its authenticity and resolve disagreements. The “validators” are incentivized through rewards, with an amount being now decided by Codex (Codex states that over time, a reputation scoring system will be implemented).

With no physical link established to the item, Codex is currently only relying on its provenance registry and “validators” in the same fashion as how is it done today — leaving room for potential bad actors to falsely add or manipulate the provenance data.

Versiart is also focusing on provenance on the blockchain — creating secure digital certificates for art and collectibles and building a new global standard for art certification and verification. All records in Verisart are immutably stored in the blockchain and timestamped, allowing for detailed information and files to be attached to the record with privacy and easy access.

Verisart also relies on provenance without a secure way to permanently attach a digital certificate to the physical item. A great example of how this is dangerous is Terence Eden’s story titled “How I became Leonardo da Vinci on the Blockchain.” Terence rightly pointed out “what if I sell a fake and keep the original in my Underground Vault?” and went on to add Mona Lisa to the Verisart blockchain and designate himself as its creator and owner.

IBM’s CryptoAnchor technology is introducing tamper-proof digital fingerprints that can be embedded into the items and linked to the blockchain. They are in the form of “unclonable” tiny computers or optical markers that are embedded right into the item. The product is still under research and the verification process is not yet clear. The first models could be available sometime in the next 18 months up to 5 years with IBM’s main focus on fast-moving-computer-goods (FMCG) as a starting point.

Tags and markers. There are many other solutions based on embedding something onto or into the item like simple RFID/NFC stickers, QR codes stickers, or more advanced holograms, DNA markers, microtags and special inks.

The problem with these is that they need to be attached invasively (something rather avoided in expensive items) and can be easily cloned or removed (RFID, NFC, QR). Advanced solutions require special hardware or experts (making it hard or expensive for anyone to verify). It also represents a problem when the user can’t easily detect with his naked eye whether or not it was tampered with. A “trusted expert” is required to be present to ensure these tags are “verified.” Therefore it’s not a secure choice that is affordable, simple and fast enough to be widely adopted.

Veracity Protocol is the “new kid on the block” which is the first to introduce artificial intelligence to address and solve the problem. For over 3 years, Veracity Protocol developed a unique technology that uses computer vision and machine learning to fingerprint any physical item’s unique material structure and integrate them into the blockchain.

With no need for special devices, just a smartphone is used to process the item’s registration (“fingerprinting”) and verification. The high-resolution pictures of the surface normally not visible to the naked human eye are immutably saved to the blockchain. The same as with human fingerprints, the verification process compares the surface picture with the one in the blockchain and determines if it’s from the same item. The hypothesis is that it’s impossible to forge an item at such a detailed micro-structural level.

Items are entered into the blockchain by a verified authenticity expert or the author/manufacturer itself. This allows artists to prove their authorship and link the item to its digital entry at the moment of creation, with no future need for authenticity experts.

With this breakthrough, Veracity Protocol sets itself to be the authenticity protocol and infrastructure for physical assets, allowing anyone to build solutions on top of their technology or integrate with other blockchains.

Art Market Guru interviews the founder of Veracity Protocol for a more in depth perspective of the project (disclaimer — I’m working on the project with them).

The future is bright — if the problem of authenticity is solved

For the successful transition into the new decentralized economy, the secure tokenization of physical works of art & collectibles is crucial.

The tech development will eventually democratize the access to the market and allow space for innovation — like secure fractional ownership in which the traded shares of items are linked to the physical item itself.

But to get there, a secure way to link physical items to the blockchain and these many loopholes in authenticity must be addressed and solved.

Only then we are able to talk seriously about secure tokenization of physical works of art and collectibles.

Blockchain Isn’t Enough to Solve the Authenticity of Physical Artworks was originally published in HackerNoon.com on Medium, where people are continuing the conversation by highlighting and responding to this story.