What this article series (now part 2 of 3) is trying to explain to you is how to slowly but surely collect more cryptocurrency with less effort and with little worry. Part 1 and Part 3
Study cryptocurrencies, don’t rely blindly on marketing
What are your motivations to trade cryptocurrencies? What do you believe in? Does knowing your answers to these questions help you collect cryptocurrencies better and faster? It can save a lot of money if you realize your motivation well.
This (second) part of this article series is about your drives and beliefs and how they can work for — and against you. The first part is about a strategy to smoothly obtain cryptos: swinging through the Fibonacci halfpipe. The third part is about adjusting if things don’t go quite as expected. But now first why you want cryptocurrencies.
How do you begin your orientation to cryptocurrencies?
Usually I know what I’m buying. Think about a cryptocurrency that does something new, which other coins don’t do yet,or a group of people creating a crypto to solve a specific problem. Another reason to enter a certain crypto community is that you consider the content interesting.
But most amateur investors only want to “make money” thinking in Euros or Dollars.
Fortunately, it happens that the vast majority of cryptocurrencies are thirteen out of a dozen bogus projects, where you will quickly and easily lose your hard-earned euros, if you are not on top of things from day to day. You also have to be eager to victimize other people in order to get rid of your crappy coins in due time.
Oops, why being so cynical all of a sudden? Would it work to convince you or is it more of an effective wake-up call? Let start with the more neutral advice: Block marketing gibberish and study the real thing, this’s what helps you forward.
Are you in it for the “money”?!
Then stop right here. You are not a professional investor and amateurs always lose to professionals.
Do you think volatility is a problem, does the price fly up and down too fiercely for you?
In short: No faith -> creates weak hands -> you buy and sell at the wrong times -> you lose your hard-earned Euros, which are constantly diluted by the central banks.
You don’t really believe in cryptocurrencies. Not in their freedom, not in their innovative power, not in their efficiency. You don’t believe any of its strengths. Just admit it: you think you can make a good living from it. That’s all.
But what do you actually earn? Do you want more euros? Do you think euros are better than bitcoin or ether? You see: you don’t really believe in cryptocurrencies. Because as soon as they are “worth” something in your eyes, you sell them again just as easily.
For people who have seen regular currencies such as euro and dollar take a nosedive over the past eleven years against many cryptocurrencies, this is a flabergasting belief.
“Yes but, I can’t pay anything with bitcoin yet, everything is in euros!”
I’m not saying you should pay in bitcoin and ether. Bitcoin and Ethereum have very different qualities. Learn about the misconceptions surrounding bitcoin at BTCwiki.nl (Dutch) and https://btc.blockchainbird.org (English).
Note the difference in upper and lower case bitcoin / Bitcoin. Lower case denotes the coin, upper case denotes the whole infrastructure underneath it; the ecosystem that brings the innovation. Didn’t know this? And still want to buy? Rather flush your euros down the toilet, at least you then know where they’ll end up :)
If you believed in cryptocurrencies, you would change to euros at the very last moment, only when really necessary, and then spend your euros as quickly as possible on something that has or retains its value: for example: food, drink, a house, a car, a vacation, etc.
Bitcoin isn’t volatile, instead the euro and dollar are volatile and completely in the power of a small group of thieving rulers.
Am I a conspiracy theorist and a wacko? Fine, I can stand it.
I’m not going to say “have fun getting poorer and poorer” because I find that just as presumptuous to say, so I’ll just leave it with this summary to get into your ears:
If you don’t believe in cryptocurrencies, no problem, but don’t start playing with fire. Just wait and see, until they are everywhere under all digital services in a few decades. You might not even see and notice it, it will soon just be everywhere under the hood.
A historical example if you have trouble imagining how that will happen: https://en.wikipedia.org/wiki/Linux. Ever heard of Linux, almost thirty years old? You don’t really need to, but you might have, and no one will hold it against you if you haven’t heard of it. But Linux is almost everywhere, in all electronic devices, it is an open source operating system, without owner, free to use, easy to manipulate.
So it will soon be with cryptocurrencies, because they are government-critical, not centrally controlled, not censored*, work globally, and are inclusive. Everyone can participate. You can freely decide to use them or stop using them, and privacy is guaranteed to a reasonable level.
* A small side step. Censorship is possible though. One can censor/prohibit the use of crypto. My expectation is that governments will also collectively do so as a global cartel, because they see that their means of regulation (also read: means of oppression), “FIAT money”, like euro and dollar, will slowly but surely lose ground. Central Bank Digital Currency (CBDCs) will be used to expel cash and to connect ownership, the spending and the reception of money to your digital identity or QR-code. Dystopia is waiting for you, just around the corner.
Through the media, which are directly and indirectly controlled by the system of power, people will be indoctrinated and frightened (see corona) and crypto holders will be elevated to the new pariah. So get ready for the worst.
Oops, I got carried away there… and will soon exchange my yellow vest for an orange bitcoin vest again.
How does Fibonacci-based accumulation of cryptocurrency work?
This section is a partial repeat of part 1 with some new aspects thrown in.
In short: Fixed intervals, Fibonacci number sequence, estimated start and end point and number of steps to choose. Start purchases to the left and always end purchases to the left as well. Ready.
Benefits:
1. It’s your own estimations of how things will go in the future
2. you always come away with more bitcoin, or you’ve managed to keep your euros.
3. You set it up and only have to look at it once in a while. Looking feels like opening a gift. You either still have your euros, or you’ve collected bitcoin or a mix of both (as long as the price swing has come halfway down the imaginary slope).
In other words: Always a celebration!
You may be thinking “Nice, but how? What are the steps? Where am I at risk?”
Reminder:
We want to collect more cryptocurrency slowly but surely with less effort and with little looking back.
Fair enough that you want to know how to do that. I’ve always been happy to share how it has worked for me. Put on your seat belt, because here we go!
Ow wait, first check the disclaimer again -> this is not investment advice!
Suppose:
The price of bitcoin is now 25,000 € per BTC (also referred to as 25K €/BTC). And suppose you think it’s going to drop again within the next 3 months, but you don’t want to wait for it every day. You want to buy from 15K / BTC downwards and think it could even reach 12K / BTC as the lowest point.
And also suppose: You have 875 euros in total at your disposal and, not unimportantly, you have already parted with this money in your mind. -> Virtually burned, it’s gone! It is still on the exchange, but as you know: that money is not yours and you can wave goodbye to it if the following things happen:
- The exchange goes bankrupt
- The cryptocurrency you are buying takes a dive
- The exchange is broken into and your money is taken away
Or a combination of these things. And it all doesn’t matter to you at all anymore. You’ve lost those 875 euros. Done, gone. You shout from the rooftops “I’ll live with it!!!”.
So, now can think and act free of emotions!
Suppose for example: You choose 4 intervals within that 875 Euros that you want to smash on some cryptocurrency of your choice.
So how does it proceed?
You execute your own plan. You log into your exchange, and with your “license” to set limit orders, look very carefully at whether you are BUYING or SELLING, every time, because mistakes are always made against that. Also, pay attention to the correct pairs (EUR/BTC, or USD/ETH for example). You won’t be the first one so focused on the number series that completely switches the wrong coins or SELLs crypto while you thought you were busy with the BUY orders. Start with the low amounts first on orders. Example: 1000 euro inzetten op niet tijdsgebonden limiet orders
The example continues with bitcoin (BTC).
- 125 € on 15K/BTC (I always choose just above the round numbers, for example 15,001, so that you are just ahead of others who just type 15,000).
- 125 € on 14K/BTC
- 250 € on 13K/BTC
- 375 € on 12K/BTC
Set ‘Not time-limited’/’infinitely valid’, as our goal is ‘not to worry’.
Important: Notice the fixed intervals: 1000 euro jumps. The number of jumps and the jump-width are up to you, as long as the jump-width is constant, otherwise the Fibonacci sequence does not work, so here four pricelevels and three jumps of 1000 euro each.
And now what?
Are the orders ready? Have you checked them out. Fine, log out, go do something else and feel free to come back only weeks later.
And then the big moment arrives: you get to see what your limit orders have done
Nothing can have happened. Because the crypto of choice has remained stable against the euro. Well, fine, if you’re still think the same way about price expectations, log out and go on living nicely.
But certain shifts may have occurred as well… slide to the edge of your seat….
Did you trade crypto on the exchange? Great. Now you are in danger!
Did you reach your goals and did the limit orders fall through? Super, congratulations. But then save your crypto that is exposed there doing nothing except taking risk! Bring them to you, under your control.
You can also distribute the management of crypto funds
If you don’t trust yourself enough yet, you can first practice transferring small bits to your own wallets and leaving the rest on the exchange very temporarily.
Always transfer a small amount first to your new bitcoin address from your new wallet. When it arrives you know it worked. And then you can start putting the bigger chunks on your own keys.
Don’t pay too much fee.
Practice with test money if necessary.
Sometimes money is insured on a crypto exchange (just like with a bank), but find out carefully before relying on it.
Finally some real advice from me
Start working with your own wallets, practice with test money, or send small amounts, play with low fees set yourself (it is often called “custom fee”), and learn that the fear images are mostly unjustified that the software often predicts to you, that it would take days before the key ring (or “wallet”) of the receiving address has control over the crypto.
Expensive transactions (high fees) are only interesting if you would need to transfer large sums of crypto within certain time constraints. The fees are independent of the amount transferred. Transferring 100 euros of bitcoin can cost 2 euros, 10,000 euros then also 2 euros. and 100,000,000 euros also: 2 euros fee, sent across the ocean from A to B within an hour for sure.
Do you feel the innovation coming a bit? Do you know how much time and money it took to transport a ship of gold from the US to Germany, a few years ago? Months and millions.
Choose lightning network for payments
For modest bitcoin payments with really low fees, you should actually practice using the Lightning Network (LN) as well. There are several apps for that.
Trusting your exchange, using Bitvavo as an example
… but this applies to every exchange!
Someone wrote to me:
“From a review of Bitvavo I learned this: ‘Because Bitvavo offers secure wallets, as a user you basically don’t have to create and manage a wallet yourself, and that offers a lot of convenience. Be aware that Bitvavo not only manages your wallet, but also your private key. Despite the fact that they, in their own words, do everything to protect both your wallets and private keys as best as possible, you are dependent on them. If you prefer full control over your wallet and its security, then of course you can always send your digital currency from Bitvavo to your own wallet. However, any digital currency you trade through Bitvavo, you technically do not control.’
Is the last sentence a problem if it’s sending to a private wallet?”
[14:11, 23/02/2020] Henk van Cann: Don’t Trust Bitvavo*
[14:12, 23/02/2020] Henk van Cann: Referring to “all digital currencies you trade through Bitvavo, you technically do not control.” The text you got should have been: ‘In conclusion, all digital currencies you trade through Bitvavo, you do not technically control. Not your keys not your coins’
[14:13, 23/02/2020] Henk van Cann: Money on an exchange you have to have 100% at work. As soon as the work is done: transfer it to your own wallet, away from the exchange.
[14:13, 23/02/2020] Henk van Cann: If the work is ‘buy bitcoin’, so once that’s done -> get out of there as soon as possible with that “produce”.
The route is then: euro in the bank -> euro bitvavo as exchange -> bitcoin bitvavo -> to your own bitcoin wallet.
*See Bitvavo as an example. I have nothing against Bitvavo, don’t even know them. But every exchange should be distrusted with respect to the security of your crypto assets.
Examples (hardware) wallets
[14:21, 23/02/2020] Henk van Cann: ledger-backup-pack
[14:21, 23/02/2020] Henk van Cann: Or if you want to be cheaper: ledger-nano-s
There are other brands available: Trezor, Coldcard, Keepkey. Google will find them for you.
Password managers
14:24, 23/02/2020] Henk van Cann: You have to start using a password manager anyway if you’re going to do this (LastPass, 1Password) because you have to start setting up backups. After all, you can lose a device like this or it can break at some point. But those 25 words (24 seed + 1 extra long password) can give you back control over your crypto for a long time.
14:25, 23/02/2020] Henk van Cann: 25 words are stored in 3 places, on 2 different media at least 1 different geo-location.
[14:26, 23/02/2020] Henk van Cann: 3–2–1 rule, want to know more? https://medium.com/@pamelawjd
14:26, 23/02/2020] Henk van Cann: Good luck
14:26, 23/02/2020] Corine: I now use ‘Password Safe’ app
[14:26, 23/02/2020] Henk van Cann: and what if your phone is gone?
[14:27, 23/02/2020] Corine: 🤫 Good point😱
[14:28, 23/02/2020] Henk van Cann: Basically, that thing is capable of setting it up properly, but you have to do it yourself: passwordmanagerpro.
[14:29, 23/02/2020] Henk van Cann: you need to have your password vault (encrypted) on a cloud storage and connect to that.
Now that we’ve stressed the importance of proper motivation and further study, and gave some practical tips for crypto asset management, it’s time to get back to quietly collecting crypto currency.
In doing so, even with the Fibonacci sequence, anything can happen that you don’t want. We take a look at how to adjust for this in the third and final part of this article series.
Part 1 — Ride the Fibonacci halfpipe and accumulate crypto
Part 2 — Study and don’t rely blindly on marketing
Part 3 — Recovering from misplaced but completed limit orders
