10 Things People Should Know Before Investing In Crypto

Photo by Namecoin on Flickr

I do not claim myself to be an expert in cryptocurrency investing. I have been in this space for 5 years. I have witnessed, and was a part of Bitcoin the first time it went to an all time high of $1,000+ for a few weeks and then slowly crashed itself all the way down to $200. There were a few years of drought from 2014 to 2016, where Bitcoin found its floor in $300-$400 for several months and slowly climbed itself up to $600. We didn’t see $1,000+ again until this year (2017). It is hard to imagine that Bitcoin is now at $7,000+ (at the time of this writing) in just one year! The listicle below are just some of the things I’ve always kept in mind when investing in cryptocurrencies, and I thought I should share it with you all.

And, I’m just one of the top writers in “Investing” :P so what do I know right?

1) Invest 10–20% of your income after tax in crypto (since most of you, don’t know what “invest what you can afford to lose” means). Some people have brought up that 10–20% is usually what is left from their paychecks after they have paid their bills. If that’s the case, then I don’t think you can afford to invest at all. Mark Cuban said:

“If you are feeling adventurous, invest 10% into Bitcoin or Ethereum.”

2) Keep your day job despite reaching your financial goal in crypto, so you are not emotionally dependent on your crypto profits as a source of income. This way you won’t make emotional decisions about selling your crypto because you’re hurting for cash. Slowly take out small profits to pay your debts. DO NOT QUIT YOUR DAY JOB!

3) Read, and read, every day, do not underestimate the power of reading. Learn something new about blockchain and cryptocurrencies every day. Staying up to date is crucial in this space. How fast do you think this space moves? Think about generating $100 billion market cap in less than 5 months. Yes, this happened this year (11/10/2017).

Feb ’17 $20 Bn
May ’17 $40 Bn
May ’17 $80 Bn
Oct 10, 2017 $160 Bn
Nov 10, 2017 $200 Billion

4) Surround yourself with crypto people, do not recruit your friends into investing in crypto. Do not tell your family about your involvement in crypto unless you are truly comfortable doing so. Why? Because crypto is too volatile and there are many uncertainties. It is not a safe investment, the last thing you need, is your Uncle Bobby bitching at you because his Dogecoins are crashing and he doesn’t have enough money to buy his six-pack. How about the constant calls and texts asking you which coins to buy from your friends and family and asking you to walk them through step-by-step because they don’t want to read? When they lose money, you will be blamed for it, because you suckered them into this space. If you really want to share to people what you’ve discovered, then just be neutral about it. Refuse to give them recommendations about which coins to buy. Encourage them to read and research about the coins they’re buying, then add your input if you are comfortable doing so. If you really want to pitch them Doges, then tell them the pros and cons of hodling Doges.

5) Always do your own research. Manipulation, hype, pump and dump, fraud, scam, hacking, and stealing, are common here in this space, and can sometimes lead people to financial loss. Here’s an example: On November 7, 2017, it was announced that any funds deposited after July 20th, 2017 are currently stuck or frozen in the Parity wallet. Meaning no one is able to withdraw from it. Not even the ICOs who used the Parity wallet multi-sig. There is an estimate of $280M USD stuck in the wallet, equivalent to 980,000 ETH, almost 1M supply of ETH. This is just an estimate, there is possibly more that we don’t know about. Polkadot’s $90M ICO fund is also stuck, which is also a project of Parity wallet’s creator.

6) Avoid pyramid schemes, cloud mining, MLM, “earn interests” schemes, and ponzi schemes such as Bitconnect. Please keep Googling.

7) IT’S NOT CASH, UNTIL YOU SELL YOUR CRYPTO FOR FIAT. Maybe one day we won’t have to convert it to fiat. Maybe one day we can pay all our bills in crypto (you can use crypto for certain payments but it’s not widely accepted yet).

Photo by Blockfolio

8) Think long-term profits, not short-term gains. If you are here to trade that’s fine. Trade no more than 30% of your crypto net worth, and 70% in long term. I’ve made more money hodling long term than trading daily/weekly. Why? because the early stage of blockchain and crypto is obviously not priced in yet, we just jumped from $100 billion to $200 billion market cap in less than 5 months, if you held then you’d probably have made more. Unless you really know what you’re doing, then trade away in this volatile market.

Just know this, there are professional traders looking to do some damage in this market at the expense of newbies.

9) Diversify your portfolio if you are unsure of what you’re doing, then narrow down your portfolio if you know what you’re doing. Don’t get rekt!

10) Be responsible with your newfound wealth, don’t be reckless, you may experience a state of euphoria when your portfolio reached triple gains. And it’s tempting to go on a shopping spree. It’s not cash until that money is in your bank, if your portfolio reaches $10,000 in crypto, don’t go out spending your cash just because your crypto in your cold storage are worth $10k. Anything can happen, it can crash the minute you start your shopping spree, lose your private keys, or get hacked.

And one last thing…

“Be scared when everyone’s feeling greedy, be greedy when everyone is scared”. -Warren Buffet