I’ve been following Bitcoin since 2010 and I have seen and experienced every bull and bear market. I remember when Bitcoins were free; the original airdrop was the Bitcoin Faucet, a website where you could get 1 free Bitcoin every day. I’ve experienced FOMO, FUD, KYC and LOL (but I don’t believe in HODL, as you’ll see below).
I’ve made and lost money in the digital asset economy. I’ve gotten really lucky, and really unlucky. I like to think I’ve come out net-positive on the balance sheet, but I’m definitely older & wiser as a result.
In the summer of 2017, I decided to trade in a bunch of my Magic: The Gathering cards for Bitcoin so I could start taking the digital asset universe seriously and get some skin in the game.
The following points are what I’ve learned from almost a year of serious research & building. I’ve traded on many strategies, built my own algo trading bot from scratch, spent countless hours reading technical documents, economic theory and Twitter (which is actually a great source of info if you follow the right people).
- alts compound gains and compound losses. compounding losses are much scarier. is it worth the risk?
- stability is relative; btc is stable vs alts, usd is stable vs btc. what mix of instability is acceptable?
- if you’re not tracking things, you might as well be drunkenly gambling
- figure out what needs to be tracked, and why. if the tools don’t exist, build them.
- diversity in the stock market is good. diversity in the digital asset space is dangerous. public companies are proven; that’s what the IPO process is for. Very few technologies in the digital asset space have any credibility, adoption or revenue.
- crypto exchanges have the best business model on the planet. just don’t get hacked (and have insurance like Binance in case you do)
- exchange native coins are likely safer than most alts. the ones that pay dividends (KCS, etc) are very attractive. this has proven itself during 2018’s bear market.
- the bigger your bankroll, the more defensive your strategy must be
- use automation to amplify the accuracy of your decisions.
- don’t fuck with your automations when they’re doing what they’re supposed to.
- respect uncertainty, look back to learn lessons, not to fix mistakes.
- dividends are amazing and free internet money…just don’t lose dollars trying to make cents.
- HODL is not a responsible default portfolio strategy
- learning is always net positive
- losses are lessons. The universe is trying to teach you something. Figure out what before the stakes get too high. Losing $X now will probably save you $10x later, but only if you learn the right lessons.
- be careful what you read and who you listen to; focus on people who ask good questions, not people who give strong answers.
- facts are static, but interpretations are fluid.
- learn to build things, even if you’re not technical. If you have two hands, you can build stuff. Build what interests you, or solves a problem you have.
- form your own theories and hypotheses (not opinions). test them, torture them, try to kill them. the ones that survive are your winners.
- when in doubt, simplify and focus.
- when totally confused, de-risk and freeze.
- make sure you have a clear reason to own an asset. “believe in the project” is bullshit, the odds are good that you don’t know enough to assess it well enough to make an informed decision.
- make rules for yourself. rule number 1: follow all the rules unless...
- you want to break a rule. You must have a specific hypothesis about what will happen when you do; rule-breaking is an experiment meant to test the validity of an existing rule, not a get-out-of-jail-free card.
- what’s the cheapest way to test a rule, hypothesis, etc? does this change as you scale up?
- shit happens. money gets lost. emotions run high. just survive.
Invest money, invest time, invest energy. Just buying assets isn’t enough. Build, read, learn, connect, theorize, implement. If you’re in this, you’re in it for the decade scale. Any less, and you’ll be disappointed.
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