What Should You Know Before Investing in Cryptocurrency?

Before investing in cryptocurrency, know this: prices can change very fast, you can lose money quickly, and security mistakes can be permanent.

If you still want to invest, go in with a plan, and focus on safety first.

1) Know What You Are Buying

Crypto is not one thing.

• Bitcoin: often treated like a long term asset by some investors.

• Ethereum: used for apps and tools on blockchain networks.

• Smaller coins: can move wildly, and some fail entirely.

If you cannot explain what the coin does in one sentence, pause.

2) Understand How Volatile It Is

Crypto can rise or fall a lot in a single day.

Ask yourself:

• If this drops 30% this month, will I panic sell?

• If it drops 70% over time, can I still hold or walk away?

3) Have a Clear Reason and Timeframe

Be honest about your goal:

• Are you investing long term?

• Are you trying to trade short term?

Short-term trading is harder than it looks. Many people lose money doing it.

4) Do Not Ignore Fees

Fees can quietly reduce your returns.
Common fees include:

• Trading fees (buying and selling)

• Spreads (the difference between buy and sell price)

• Network fees (sometimes charged when sending crypto)

Small trades can get hit the hardest by fees. Trading with KOHO, we have a flat trading fee that doesn’t depend on how big or small your trade is.

5) Security Is Not Optional

Crypto security is mostly your responsibility.

Basic rules:

• Use strong passwords and turn on two-factor authentication (2FA).

• Only use trusted, well-known crypto platforms with a strong security track record.

• Never share your seed phrase or private keys.

• Watch for fake support accounts and fake websites.

• Double check addresses before sending crypto.

If someone asks for your seed phrase, it is a scam.

6) Diversification Matters

Putting all your money into one coin is risky. Some people limit crypto to a small part of their overall savings and investments.

The right amount depends on your situation.

7) Learn the Tax Basics Where You Live

In Canada, selling crypto, trading one coin for another, or using crypto to buy something can create a taxable event. Keep records of buys and sells.

8) Be Careful With “Extra Risk” Products

These often increase losses:

• Leverage: borrowing to trade can wipe you out fast.

• Meme coins: can pump and crash quickly.

• Unverified projects: higher chance of scams or failure.

• “Guaranteed returns” offers: usually a scam.

A Quick Checklist Before You Buy

• I can explain what I am buying.

• I know I could lose most or all of it.

• I have emergency savings first.

• I understand the fees.

• I have 2FA on and I will protect my seed phrase.

• I am not buying because of hype.