Since the huge price increases of Bitcoin, Ethereum, Dash and other altcoins, I get more and more questions of eager dummies who want to ride the cryptocurrency wave. Cause, like I said before, who doesn’t want to become the next crypto millionaire?.
Likewise, Harrie* (fictional name), who asked me, “Michiel, where can I buy Bitcoin at the best price?” He actually meant: “Michiel, how can I make a quick money?”
Of course I first referred Harrie to New Kids on the Blockchain with the advice to first read the article What is the best way to buy Bitcoins or alt coins?
‘Unfortunately’, my parents raised me right, so my conscience got me. Even though Harrie would read that unprecedented article, I knew that I could not expect anyone to get started immediately the right way. After all, I did also read a lot before putting my first steps into the world of blockchain, Bitcoin and Ethereum.
Advice for dummies
Huge softy I am, I decided to write some stuff about my rules. Cause in recent months, I have drawn up a number of rules for myself. The advise I can give is the following:
Please mind: I’m not a doctorandus in cryptocurrency investments, so I can only relate to my own rules and experience.
(Again) Please inform yourself before you invest any money in cryptocurrency
You don’t put your money straight away in stock shares, right? Please: Read about a project with the attached blockchain technology (and related coins of tokens).
For example, I choose to invest my money primarily in projects where the block chain is not only used as an alternative to the monetary system (for example like Dash, Zcash and Bitcoin).
A project / idea in which a decentralized database is used in a different way, is much more interesting. For example, smart contracts (Ethereum and Antshares), the Distributed supercomputer (Golem) or Sustainable Energy (SolarCoin).
Only invest money you can miss
This blog maybe started for my father but that does not mean I can not use his wisdom 🙂
Store your purchased Bitcoin and altcoins in a save wallet
Don’t store your investments in the wallets of an exchange, for me an exchange wallet is only a place for my ‘trade coins’. Why? Read the article What is a wallet and which should I use?
It’s a volatile market: keep it cool!
The rate of cryptocurrency can rise or decrease in a split second. Keep your head cool, because otherwise you make decisions based on emotions and that will go wrong.
For example, Jaap and I once bought Dash for 15 euros each, after which the coin rose to 90 euros and then dropped to around 65 euros. We discussed the fall, talked each other into clammy hands and decided to sell our purchased Dash in a flurry of mind-wasting.
If, yes if, we kept our heads cool, we knew that for Dash (or every other cryptocoin) such a drop is ‘normal’ and that Dash would probably rise back again (link). That’s why…
Create rules and write them down
To prevent you from buying (or selling) based on emotion, it is very convenient for you to put rules on paper. For example, for some purchases, I have made an appointment with myself: when a coin doubles in value, I immediately sell half of them (so I got my investment back). It does not matter if an analyst expects to increase the value of a coin; I adhere to my rule of play.
Other game rules you can think of:
- At X percent profit I sell.
- Every purchase I make is a long-term investment. So I’l take a look at the earliest next year.
- My deposit will be a maximum of X euros per month.
- Is the price of a coin rising? Then I will not get in right away, but I’ll wait for X hours to make a purchase.
- If I can buy a dinner for two in restaurant X, I quit.
Pareto: You win some, you lose some
“Everything okay? Of course! Wat about you?” If you ask any person (in Holland ;-)) how life is, he will probably reply in a positive way. After all, it’s not fun to tell someone life sucks. Of course this also applies to owners of the altcoin. At Reddit, Bitcointalk or Slack, most of the time you will only read promising stories about investments, but the practice teaches that you will also lose money; even if you keep advices like ‘keep your head cool’ and ‘every purchase I do is a long-term investment’ in your mind.
As an example, once I got ‘tricked’ by “big news” from the development team of ShadowCash. There was a lot of speculation, which increased the price from 1.50 euro to 5 euro. Unfortunately, the news turned out to be not as promising as everyone thought, so the market turned from bull to bear. Bye bye money.
With this in mind, I keep the Pareto principle in mind: as long as 80 percent of my investment is profitable (and 20 percent so loss-making), nothing on the hand (niets aan de hand » no worries).
Last but not least, New Kids on the Blockchain is just my experiences
Don’t only use my articles for your information. After all, I do not know everything.