Crypto Noob Noob Moves
Cryptocurrency market cap is now over 200 Billion dollars — and showing no signs of slowing. Every day, more and more new investors, or crypto-noobs, are getting involved — buying up Bitcoin, investing in ICOs, etc.
Many people are getting involved because they both believe in the technology and want to make a return on their investment. However, being new makes people vulnerable to common noob-moves. Here are a few of my favorites:
Believing You’re a “Valued Investor”
No you’re not.
This is probably one of the most frustrating noob moves. People assume that, because they invested in some random ICO, that they’re entitled to (a) complete development transparency, and (b) timely community updates to keep the price “pumped.” When that doesn’t happen the price drops and investors stress and lash out on Twitter, Reddit, Facebook, etc.
And it’s understandable why this happens. Many holders of coins buy the news (i.e. at ATH) and slowly see their investment decline 25–75%. Noobs are not seasoned investors, nor have they been involved in crypto for more than several months to a year. They’ve invested a few hundred dollars (maybe a couple thousand) into an ICO expecting Ethereum/Dash -like 2017 returns.
They were sold on a plethora of crypto-platitudes. Something like: “decentralized delegated proof-of-waffles with cryptographic governance in the modern technology-of-things quantum economy.”
Sounds delicious, and it could actually be worth something one day. But the reality is, the team owes you nothing — and legally enforcing any ICO promises would be near impossible at this point. You gambled on a complete unknown. And even if you did due diligence and researched the team, project, competition, liquidity, etc. — investing is always a risk.
Lesson is to always assume that the team could give two flying Dodgecoins about you, your feelings, or being transparent.
Coins Under ‘X’ Dollars
A big reason why noobs shy away from Bitcoin is they believe it’s too expensive. Even if they know that it’s divisible, there’s a massive mental barrier to not owning at-least a full coin. But if you’re a noob, you should know that cheaper coins aren’t cheaper. They may be well-overvalued, as I believe a coin like NEM is (due to it’s incredibly low trading volume relative to its market cap).
But what sounds better? (1) “I own .6855 BTC,” (2) “I own 15.3 DASH,” or (3) “I own 23,935 XEM.” Even though they each amount to about USD$5,000 — a noob may mistakenly seek that “cheap” coin, believing it will give them the greater return once it reaches Bitcoin levels.
You just have to look at the total market capitalization (supply x price) to understand a coins true value. Just think of the ‘total supply’ similar to outstanding shares of a stock. If there are too many, the stock price may be cheaper — but still hold a greater ‘value’ (like Apple shares at $175 vs Google Shares at $1,044 — even though Apple’s worth/value is $100 Billion greater in comparison).
CAVEAT: There still is, however, a massive benefit in day trading high-supply ‘cheap’ coins. Why? Price volatility due to the human psyche. It’s much more difficult for someone to buy something worth $6,000 for $7,000 compared to buying up a stash of cheapcoin worth $0.006 at $0.007. But it works both ways… as easily as these coins pump, is as quick as they dump.
Falling In Love ❤
Love is a beautiful thing, but it has no place in investing.
Always remember that your hard-earned money is at stake, so be smart about it. Do you think Warren Buffet wears “HODL Kraft-Heinz to the MOON” t-shirts? But the crypto-world is full of noobs who refuse to sell because they are so emotionally invested. They will still hodl even in the face of clear and convincing evidence that their investment is going long-term red.
The absolute worst thing you can do is stick to the same sub-Reddits, watch the same YouTubers, and not pay attention to (and troll) opinions that are anti-yourCoinOfChoice.
Don’t be a maximalist (Bitcoin or otherwise), be a pragmatist. Consider and compare intelligent arguments against your investment, because you might be missing something big.
Don’t repeat the platitudes of the maximalist. For example, during the Segwit2x debacle, I heard a lot of arguments like “Bitcoin isn’t meant to be money, it’s a store of value.” Bitcoin is great, but ‘store of value’ and ‘portability’ (ability to easily and cheaply spend/trade the asset) aren’t mutually exclusive. You can have both, and that’s how CORE eventually envisions BTC with the Lightning Network. Even CORE should agree, if something is just a store of value but can’t easily be used or spent, it’s just a tulip on the blockchain. There were smarter reasons/arguments why scaling 2x wasn’t prudent.
Just remember — 4 out of 5 doctors once recommended a pack of menthols. Don’t just follow the crowd’s wisdom, form your own conclusions.
NOOB-NOOB Coin to the MOON!