Boring is better: what to tell newbies when they ask you about “crypto”
Boring is better: what to tell newbies when they ask you about “crypto”
I get this question a lot: How do I invest in “crypto”? What should I buy? Is now a good time to buy? Here’s a guide for you.
As a follower of my Twitter account, you know that I try to break down complex stuff in a simple way. Yesterday I posted this:
I tweeted this because I think that this is important for every newbie coming in now or in the future.
Let’s take a closer at the tweet above:
1. Focus on Bitcoin
Your friends and family won’t want to hear this. They will keep asking you about the “next big thing after Bitcoin”. They will tell you that they are too late for Bitcoin. They will tell you that their coworker made sooo much money with XYZ Coin. They will ask you if it’s a good idea to buy Bitcoin Cash because it’s cheaper than Bitcoin and they get “more” for the money.
You will tell them they should focus on Bitcoin and ignore the rest.
2. Buy 25, 50 or 100 Euro a month
Your friends and family will ask you how much money they should invest. They will ask you if it’s a good idea to go all-in on XYZ Coin. They will tell you that a friend of theirs sold all his ETFs, invested it all in XYZ Coin and is now bragging about how well it all worked.
You will tell them that A) they should only invest money they don’t need, B) they should first have enough emergency savings to not have to sell anything even if things go south, and C) that they should set up a savings plan with an amount they can keep running (most platforms allow savings plans from 25 Euro/USD upwards a month). They should pick a trusted, regulated platform in Europe or the US.
3. Don’t time the market
Your friends and family will ask you if they should sell because Bitcoin dropped. They will ask you if they should buy XYZ Coin because it went up like crazy. They will ask you if they should cancel their savings plan because they heard that Bitcoin is going to zero.
You will tell them that they should just stick to the plan.
4. Wait
No matter what happens, you will tell them to wait. Tell them to educate themselves on personal cyber security basics like 2FA, password managers and hardware wallets.
Instead of wasting time looking for the next big investment opportunity, they should invest time in making their life online safer.
I know I know, this is nothing new. It might seem too obvious, too simple. And the really fat gains are to be made with exotic altcoins, right?
Let me tell you a story about how I got into “crypto”. I used to work as a tech journalist writing about consumer tech. In 2014 I had some money saved up, wanted to buy Tesla stock but didn’t because I couldn’t figure out how to do it and gave up (yes, that’s what I did). I ended up buying a couple of gold coins because they are quite popular in Austria and I liked the thought of having something physical. I knew about Bitcoin back then from stories around Silk Road and its portrayal by the media as shady, weird darknet money. I would have NEVER EVER thought of buying it back then.
I can remember that a friend of mine showed me his new gaming PC and casually mentioned that he’s mining Bitcoin when he’s not using it. My reaction was something along the lines of: “Why? This doesn’t make any sense.”
Flash forward to early 2017. I just quit my job at an advertising agency and went back to uni to finish my degree. I can’t remember how, but I started to get interested in Ethereum. I felt that I’m too late for Bitcoin, but Ethereum is this new flashy thing that is just getting started. I didn’t buy ETH but bought a mining contract at a cloud mining company (don’t ask). As the mining difficulty went up, I realised that this thing will be way less lucrative as I thought. I think it was a zero-sum game, but I would have been way better off if I would have just bought ETH. Whatever.
Then I did all the things people did in 2017: I bought loads of altcoins. IOTA, NEO (the “Chinese Ethereum”) and others. I had a shared Google doc with a friend of mine and we “researched” the most promising ICOs. We both invested 100 Euro each in about 10 of them. The best ones according to our Google doc turned out to be full-blown scams and we lost the money because no serious exchange listed them or delisted them eventually. The altcoins I had still went up a lot in 2017 and I really believed that this is just the start. I didn’t sell anything and hodld all the way back down to my initial investment.
Long story short: I sold nearly everything I had in early 2018 and put it in Bitcoin. I also set up a savings plan as described above and I am buying Bitcoin on a monthly basis since then.
I guess a lot of you can relate to my story. And honestly, I don’t regret a thing. I don’t regret buying gold instead of Tesla stocks in 2014. I don’t regret buying shitty altcoins (I don’t like the word, but yeah, “shitcoins”) in 2017 and burning my fingers with ICOs, Cryptokitties etc.
It all helped me to understand what is going on here. It also helped me to grasp why Bitcoin is different and why it’s important to not waste time chasing the “next big thing”. I wouldn’t say that I’m a Bitcoin Maximalist, as I’m still curious and interested in what is happening with DeFi, NFTs and other things. I’m REALLY sceptical but curious. However, I feel that it’s way too early to really know where to put your money. At this point, it feels more like gambling than investing to pick a project.
I’m in this for the long term. I don’t plan to sell Bitcoin. I want to see where this goes in 5, 10, 20 years. And even if I end up with less money: I don’t care. I’m happy to be able to work in this industry, to have met incredible people along the way and to look optimistically at what lies ahead.
Related side note:
Two weeks ago Pete Rizzo published an excellent article called “Against Cryptocurrency: The Ethical Argument for Bitcoin Maximalism”. In it he makes a simple case: Bitcoin is better than the rest because the majority can never overrule the minority. If you don’t want to go with the upcoming Taproot upgrade, your not-updated Bitcoin will be as valuable as the updated ones. This is the complete opposite of how to let’s say Ethereum works. Pretty cool.
Disclaimer: This text is not financial advice. This is my personal opinion and investing in Bitcoin is risky. Please be careful.
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