7 Expensive Lessons Learned Investing 50000Rs in Crypto as a Complete Beginner From a Software Engineer
Beware! It gets addictive as F*ck!!
This one day, I had a call with one of my friends who I consider my part-time therapist and a full-time mentor. He has a business that is doing extremely well despite Covid and goes on trips every weekend…yes, the perfect mentor material.
While catching up, we somehow ended up on the topic of investing the money we earn every month.
He explained that he recently came across an investing strategy that advocates a barbell as its symbol and being a gym addict, I was pretty intrigued to what exactly a barbell got to do with investing strategies.
Basically, this strategy explains that you should always take both ends of the extremes, the safe, and the risky bets but never the moderate ones.
It explains that if you take moderate risks, you are neither so well of that you can retire immediately nor are you so down in the gutter that it keeps you awake at night.
This strategy tells you to put 90% into safe bets and the other 10% into more risky and volatile bets.
Nowadays, the words risky and volatile are basically synonyms for crypto’s and that's how while searching for risky bets, I got introduced to this next-gen currency system that is believed to become the backbone of Web 3.0
I immediately got to work on searching for ways to get started with investing in crypto.
At that point, in all honesty, I wasn’t keeping my hopes up because first I was in India, and second I remember hearing something about a crypto ban.
But to my surprise, I found Wazirx which made getting into crypto very easy for Indian users but after using it for a while, I started to notice that it felt a little too….basic. There were very few crypto coins available for purchase and the toolset was pretty rudimentary too.
In the subsequent pursuit for a better platform, I came across Binance which immediately won me over with its tools for both beginners and advanced users.
I haven’t withdrawn any funds yet so apart from that front, I can vouch for Binance with complete confidence.
There is a bit of a learning curve but once you get the gist of it, it has amazing tools, various ways of earning passive incomes(which I go into below), and great security.
That's how my journey into Web 3.0 started. Now, let me part to you my mistakes and lessons learned…
Lesson #1: Partitioning Is Key
Every time my salary got deposited into my bank after debugging cryptic code that looked fine but never worked as it is intended to and attending an inhumane number of meetings every day, I used to think “Alright! Today is the day my road to financial independence begins and it all shall start with the 50/30/20 Financial Rule.”
“Why the rule”, you ask? Let me explain…
People think working remotely from home, you can cut some major expenses like food(Eating out), transportation costs, and rent.
It is absolutely true, but living at home comes with its own expenses like all the household repairs, buying all the new gadgets…etc.
This is what went on in my house as soon as my first salary landed in my bank account…
Mom goes like: “Arey my son, seeing that you don’t have any expenses right now, our fridge has become very old and is barely doing its job so why not put an order in Amazon for a new one and also, our neighbor's wife told me electric toothbrushes clean much better than regular ones, so put those as well for everyone in the family, and lastly, our mixer got very old da, so why not get that new mixer that turns off automatically too!”.
My father on the other hand just says “Our TV is looking quite small, no? Hmm….”.
Finally, coming to my brother, all he says is “I need chocolates, give me 200 bucks” and just stares at me until I give in.”
This is all without taking my own impulses out of the situation, but my point is expenses always exist and just like the Parkinson’s Law(Work expands to fill available time for it), your expenses expand to eat all your current bank balance.
After learning this invaluable life lesson, I decided to cut my bank balance according to the 50/30/20 Financial Rule.
If you have never heard of it, it goes like this
On the basis of these three expenses, 50–30–20 rule of budgeting of one’s income comes into play where one devotes 20 per cent of its income for savings, 50 per cent for important and necessary expenses while 30 per cent of the income is devoted to those expenses that is important but not necessary.
Before you put all your 20% income into crypto investments, it should be noted that crypto is quite volatile, so a golden rule when investing in risky assets like crypto goes like this, “Never invest money that you can’t afford to lose”.
Many people literally put all their money into risky assets expecting massive returns quickly but all they see is their money disappearing into thin air and then selling all their assets in a panic only to end up with less than what they put in.
To avoid this, always partition your income cash flow into divisions of expenses, savings, and investments(It can be in any ratio) and sub divide your investments further into safe and risky.
Finally, always think you are gonna lose all your risky investments and if that scares you, reduce it and put more of it into safe investments like bonds, but also understand most of the time, risky means more reward.
Furthermore, if I didn’t have this restriction of only putting a set amount, I really believe I would have dumped whatever I had into crypto, this stuff is that addictive.
Lesson #2: Invest In Different Types of Cryptocurrency
I don’t mean investing in multiple crypto coins but in multiple types of crypto coins.
For example in Stable coins, Meme coins, Utility Coins...etc, and also in platform tokens you trust will become something big like DESO from Bitclout or BNB from Binance.
In other words, not every Cryptocurrency is built the same
Each coin has a purpose on why it was invented even if that was a joke(looking at you Dogecoin), and so learn about these purposes and only invest in them if you personally believe it has potential.
I won’t go into detail in this article but if you are interested, let me know in the comments if you want to learn more about the purpose of each of them.
Lesson #3: Don’t Invest In Every Crypto Currency You Hear About
In the first few months of my now 6 months journey, you tell me about a coin and if it is found in Binance I would put 2k–4k into it depending on how much I think it would it which were again based on whatever I’ve heard and think.
Simply put, DON’T DO THIS!!
Some coins are simply scam coins and I was lucky enough that Binance filters through most of them and I didn't end up in any but not everyone gets as lucky as me so understand you are trading your time you spent earning that money into that coin and if you don’t understand or believe in the project, you know what to do.
Lesson #4: There Are More Ways To Earn Crypto Than Just Buying Them
Staking, DeFi Farming, Liquidity Pools and many more
I am primarily a Binance user, so I am not sure about other Crypto Exchanges but most probably, your exchange allows you to do something called as staking your token.
To understand staking, you should understand a consensus protocol called Proof of Staking(POS).
Consensus protocol means a fixed process to confirm transactions and reach consensus to ensure validity in the blockchain
A good resource for that is here:
In summary, POS model gives you a transaction fee for every block you validate.
The probability of getting a block to validate depends on how many tokens you stake and this is usually a huge amount and you lose your stake if you validate a bad block.
For example, DASH coin needs at least 1000 coins to be staked for you to become a validator which is $1.5M.
Since the upfront investment is way too much, Crypto Exchanges organize something called a staking pool where you pool tokens from all over the customers and distribute the rewards based on how much they contributed to the pool.
There are other ways such as providing liquidity to Liquidity Pools, DeFi Staking, Yield Farming, and many more. Some are safe while others come with a bit more risk attached.
For more detailed info, check out
Playing Crypto Games and Earning Through NFT’s
This is a new one for me too but I learned of this method from Axis Infinity and Gods Unchained(Kind of like Yu-Gi-Oh! or Hearthstone on blockchain).
By playing the game as I earn rarer cards, I can put them up on the trading platform like Tokentrove or Immutable X and sell them for a price I set in eth.
I sold a card that I had earned for free, just by playing the game, for a little over 30$. That was the moment P2E(Play to Earn) became real for me
- CautionFun
Lesson #5: Understand the Difference In Blockchain Networks When Transferring Crypto To Wallets Like Metamask
This is the first thing a friend cautioned me to take care about because he lost around 7K for transferring to the correct address but on a different blockchain network but his advice came to me too late.
When dealing with most of the Dapps using Binance and Metamask, the two main networks you would interact with are:
- Ethereum Mainnet(ETH20 and ETH721 Tokens) and
- Binance Smart Chain Network(BEP20 and BEP721 Tokens)
The tokens ending with 20 are your crypto’s and the one’s ending with 721 are your NFT’s
Metamask doesn’t come preconfigured with BSC(Binance Smart Chain Network), but it’s very easy to configure it and you can find the how to’s here.
If you are curious about other popular networks, check out:
It is very important you understand that a Dapp or wallet which is one particular network, for example, Ethereum Mainnet will not accept a BSC network token or asset and should you attempt to transfer despite that, the token or asset may be lost forever.
There are cases where it can be recovered, but also one’s where it cannot be and it’s better to be safe than sorry.
To transfer between networks, you will have to use something called bridges.
When I first started my journey through crypto, I wanted to transfer Eth to my Metamask wallet to buy a few Gods Unchained cards.
But because the me then didn’t have someone writing their painful crypto lessons here, I chose the BSC network in the Binance platform to withdraw my eth asset into Metamask(which was by default in the Ethereum Mainnet network) because of the huge difference in fees.
To give you more details, the withdrawal fees of Eth for BSC network was 18 Rs(<1$) and Ethereum Network was 958 Rs(~14$), so now you know it wasn’t a few bucks I was trying to save.
Those assets were never to be found in my wallet despite all the waiting and address rechecking but it was only after one of my crypto-savvy friend knocked me in the head and explained my mistake did I realize what a stupid one I had committed.
Fortunately, it was only a small amount of 2k Rs worth of Eth but the lesson was big enough to remember the rest of my life.
Lesson #6: Lower Your Transaction Fees by Transferring In The Right Crypto’s
From the previous lesson, you would have realized that I got a painful surprise with the transaction fees of the widely touted next financial revolution, but turns out this is only because I was still inexperienced.
Your next lesson is to learn how to lower the transaction fees to a fraction of what you saw earlier.
But first, let me answer the two questions you got in your head.
Why are we even charged transaction fees? and why is there such a big difference between the two networks?
To answer the first question, I would have to explain one of the core actors in a blockchain ecosystem called validators. Validators are nodes or computers that are required to do only one thing, which is to keep the blockchain safe from fraud and other malicious activities. They do this through different means and it depends on the protocol used by the blockchain.
Since there is no one single entity that manages a blockchain, validators are nodes that are run by people just like you and me but…why would they waste their time and pay for excess electricity usage for no reason?
That would be because for every block they mine, they get rewards from the blockchain and these rewards come from the transaction fees.
To answer your second question, based on the demand, congestion, and throughput of the network, transaction fees vary drastically between networks. Even in a particular network, transaction fees always keep changing day to day.
How To Drastically Lower Your Transaction Fees When Withdrawing?
Do you remember Lesson #2?
Of course, you would. It’s literally a few scrolls away!
Referencing it, you now understand that different coins were made for different reasons. Similarly, some coins were made to be transacted around to other users like XLM, CELO, Litecoin, and a few others.
Using these coins to move between wallets drastically reduces your transaction fees.
Let me give you an example, a new token named $GODS was coming out on Coinlist based on my latest favorite game(You know it! GODS UNCHAINED for the win!!)
They accepted payments in BTC, ETH, and USDC but I didn’t want to give up half of my investment money for transaction fees(I am a poor bloke).
So, I checked the above coins I mentioned and found that Algo only takes 0.001 Algo for transaction fees which is ~1$ when compared to 14–20$ transaction fees moving eth!!
So, this is my step-by-step approach
- Convert my fiat currency to BUSD in Binance
- Convert BUSD to ALGO
- Withdraw from Binance and Deposit AlGO into Coinlist
- Convert the deposited ALGO into BTC
And I was locked and loaded with funds to buy GODS Tokens with most my investment money intact!!
Furthermore, this entire process took me no more than 10 minutes from start to finish.
Lesson #7: Understand Technical Analysis And How To Use The Platform
You don’t need to be a pro but just understanding how to read the charts, what are stop-limit orders, how to cut losses by setting up stop-loss orders, what is dollar-cost averaging, and a few other fundamentals, you would be way better off than just panicking at all the options available and never taking advantage of all the tools available at your disposal.
Also, always do your research before you put your dime into a coin.
Here is a helpful video I found to doing crypto research:
Bonus Lesson: Learn The Inner Workings Of A Blockchain Like Gas, Smart Contract
If you want to understand why some coins are deemed much more valuable than others, you need to understand the inner working of a blockchain.
This lesson is even more important if you are a developer because this helps open up new worlds to you. For example, just like how YGG games capitalized on the opportunity that axis has become too expensive to buy upfront, so they developed a system where you can rent them.
I have also found similar situations in other games and am looking into developing solutions for them. This only happened because I learned the interior of blockchains. If the game I am rooting for skyrockets to popularity, I would be looking at quite a windfall but again there is a big IF there.
These are youtube channels I found helpful
Conclusion
These are all the lessons I learned throughout my journey and I hope you find them helpful, so you don’t make the same mistakes I did and save quite a bit of money.
Happy Trading!
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