First Year Down The Rabbit Hole.
First Year Down The Rabbit Hole.
I wrote this article in 2018 and it was first published on January 1, 2019. NOT FINANCIAL ADVICE.
© 2019. Christopher Joy. All Rights Reserved.
The most common metaphor used to explain the phenomenon that you experience when you discover Bitcoin for the first time is taken from Alice in Wonderland when Alice discovers an entirely new world through a rabbit hole. There is no better way to describe the curiosity you feel as you venture through this new space realizing you have almost no frame of reference for this place.
Everything is new or at least has the potential to change. You never see things the same after you take that first trip down the Rabbit hole, and that’s a good thing. I want to practice my writing craft and talk about my journey through this space the last year and share what I have learned.
On January 13, 2018, my concept of money changed forever. This is the day I bought my first Bitcoin. Not a lot, just enough to dip the toe in this new wild and crazy money pool I had heard about. I decided to find out if it was just for drug dealers and gangsters. Or if maybe this could be the kind of breakthrough I had been looking for. An invention that would finally put an end to the corrupt financial system. I believe Bitcoin has the potential to do it.
What is Bitcoin? Here’s my official Bitcoin definition in 11 words: a revolutionary technology that eliminates corruption through immutable decentralized peer-to-peer transactions. Think of an online ledger system like Google Docs, that is maintained and secured on a worldwide network of computers working together to create a safe economy with no central authority.
This allows for fast secure blocks of data to be encrypted and added to a blockchain, providing a trustless system for transactions including money, property, identification, and any other vital piece of data you need to store securely. Money is only the first powerful application of Bitcoin. In the same way, email was the first powerful application of the internet. But I believe we will see bitcoin and blockchain technology everywhere in the world in just a few years. The possibilities are endless!
So a year ago, I decided that Bitcoin and blockchain were something I needed to learn about. I had been wanting to start investing my money in something, and I knew crypto was finally my thing. It was new, it was rogue, it was perfect! Now I just needed to figure out how to get the money to start buying some more.
The first thing I did was I stopped buying shit I didn’t need, and quit spending money I didn’t have. I tried to buy crypto whenever it was cheap, a little here and there goes a long way. It does not take much to get going, it just takes determination. I sold my car in January 2018 and was able to get $1500 to buy a little more Bitcoin and that was what finally got me started trading crypto. Things took off fast, and I tried to learn how to trade these digital coins at the same time I was learning about what crypto really was.
Beginning of May 2018, things were going off in crypto and it was my first time as a trader experiencing this rush. My portfolio damn near doubled in the span of a few days. I was getting crazy sales every day, every hour sometimes. I began to imagine what it would be like to quit my day job and spend my time writing books and trading crypto on the beach!
I was naïve, to say the least, but it was a learning experience. What I didn’t realize was that all the profit I just made on the market swings was about to disappear as quickly as it came. I wasn’t able to hold onto much profit in the first cycle, but I have been learning a lot every day, and knowledge in this space is priceless.
It’s not about the money for me, it’s about freedom. I am eager and willing to invest some petty fiat now into cryptocurrency-based projects that will change the world in the future. I believe blockchain technology will be everywhere soon, and we will see the majority of the major institutions redesigned in our society. We just won't need these crooks to run the banks anymore, when there can be smart contracts built and maintained by minors who have far more monetary incentive to protect customer interests than they do to even consider corruption.
The same will be true in so many other areas of our lives. Easily corrupt centralized authorities will be replaced by blockchain technologies. For example: personal identification will be protected on the blockchain reducing identity theft. The same will be true for property ownership, and other types of value. I just read this morning about fine bags being on the blockchain soon, so you will know that Prada is legit!
Food is going to become trackable as well from the cow on the farm to the steak on the grill, you will be able to verify every step was up to your standards. The opportunities are truly unlimited. I try to imagine a centrally governed institution that would not benefit from this new technology, and I come up with nothing. Every human institution that is prone to corruption that implements blockchain technology can reduce if not eliminate corruption.
When I look at crypto projects that I want to support, I am looking particularly at teams that have found real solutions to real problems. I believe the coins that will be most successful will be the ones that have utility in the future. The coins that serve to solve major problems in society will be the most successful because they will have the most value.
For example, I have decided to hodl (hold-long-term) a nice lil bag of #BCH based on the potential it has to become the digital money Satoshi Nakamoto envisioned when he created Bitcoin in 2008. I agree with Roger Ver, the CEO of BCH or Bitcoin Cash that BTC, or Bitcoin Core as it is referred to in this context, has become something else, something far greater than just digital money in my opinion, more like digital gold. But that has left a need for a digital currency and Bitcoin Cash might be a great fit.
The original Bitcoin project began as a way to create a digital money system and restore justice to the financial system. It’s hard to consider from an American perspective, but when you realize how many people do not have access to good banking, you begin to understand why projects like Bitcoin Cash are so important. Western Union will be gone overnight when the laws allow people to use this technology to send money around the world instantly for a fraction of the current rate.
I am a humanitarian first and an investor second, but I need to consider both when I choose a cryptocurrency to invest in, fortunately, they complement each other in this space so that is not hard. I mean to say, in crypto honesty is rewarded more than corruption. So when you find truly solid projects that are committed to solving a major problem in our world, and they have a coin or token they created to fuel their project? This is the cryptocurrency you want to invest in!
When I began trading crypto I assumed I could just learn to do some basic TA, or technical analysis, learn to predict market trends, and then just buy low and sell high. This might make you some quick cash, maybe even make you rich if you get good at it, but the risk is extremely high. For the year, I have been experimenting with different trading methods, but I have considered the money spent as kind of a tuition to pay for the experience. As long as you keep your buys small, you can get a feel for how the market works without losing too much along the way.
Here are a few tips I have learned so far: First, do your homework and find crypto projects that you believe in. You are investing in their company in a sense, so get to know the team behind the project. Dig into their background, and look at their other projects. Read through their white paper, or at least the first few pages, and try to get a sense of what their mission is, what problem are they trying to solve. Are their goals realistic? Or do they plan to change the world with blockchain barbecue sauce? (I wish I was kidding.)
You want to find a team with a solid plan and a well-outlined timeline of what to expect along the way if you support them with key point mile-markers to make sure they are following through. There are a lot of hype coins out there with no plan or purpose, just lots of tweets about nonsense. Avoid these coins unless you are a day trader and you know how to manage risk well.
Second, are you a crypto investor or a crypto trader? As an investor, you will be mainly just buying crypto when the market is low and building your position for a long term gain. As a trader, you watch the market to buy low but you sell as soon as the market jumps to your desired profit. The success of this method is going to depend a lot on your ability to predict the market. This can be a lot of fun but is high risk. It is easy to get big wins but just as easy to get big losses.
When I started, I was using both methods and I had to learn some hard lessons. I went all in and started buying every coin I thought had the potential to grow. I got stuck with lots of coins that just continued to drop in price until the exchange stopped supporting them. I thought I could just buy any crazy coin and wait it out until the big price jump happened, but this was not the case.
Today, I only buy coins that I am confident won’t disappear because I can see what they have built. And if the market tanks for a long while, I am willing to get stuck with it because I know I just might. It is kind of funny, I got into Bitcoin when it was at its all-time high, maybe the worst time to start buying. But it was a good time to learn because now I know what a real project that is worth investing real money into looks like, versus what a hype coin looks like that will suck you dry.
Third, who to sign up with? Crypto is a whole new world and you will soon realize you need to sign up with a lot of new companies. I jumped head first into the rabbit hole and I have signed up with a lot of the various companies and services out there, at least what I felt I needed to in order to get started as a trader. I can give you the few I believe are valuable to join and necessary if you want to play.
So the first website you will need is Coinbase.com. For half of America, this will be as far as they ever go and ever need to go. Coinbase is safe, secure, and smooth. You can buy Bitcoin, Ethereum, Bitcoin Cash, Litecoin, Ethereum Classic, and now a handful of smaller alt coins that are all super exciting! These are all great choices if you just want to buy some crypto and save it for the future. If you want to swap these around and try a little trading between these pairs, you can do so on Coinbase Pro seamlessly.
As of today, I am doing all of my trading at Coinbase Pro primarily because they have grown to be a powerhouse in volume and if you do it right, you can trade for free. Every other exchange is charging fees on all trades and they eat up profits quickly. I can safely buy and hold or trade casually with coins that are backed by real projects.
But if you want to get into altcoins and have access to coins that can see massive gains in weeks and even days, you will need to sign with another exchange. So depending on how much you want to trade, slowly start adding new exchanges and experimenting with their features in this order: kraken.com, bittrex.com, poloniex.com, and binance.com. There are multiple other exchanges but these are the ones I have used extensively. They all have their strengths and weaknesses. The best is to start with small amounts of money and try out a few exchanges to see what works best for you.
That leads me to the next type of service you will need, portfolio management. If you plan on trading, I highly recommend checking out Coinigy.com. Take advantage of their free one-month trial and try to learn how to use the charts, and get used to tracking the market. I found I really enjoyed the charting and technical analysis part of trading crypto and probably part of what has kept me interested!
I also loved the ease of placing buy and sell orders through Coinigy. Using their drag-and-drop method makes for less meticulous data entry, which in turn leads to far less errors. I love the service, but found I was not trading enough to justify the monthly fee they charge, only $22 which is fair, but still more than I want to pay for a month of waiting on crypto. So here again if you plan to be a day-trader, you will love Coinigy and it will be worth every penny, but if you plan to hodl and just trade on massive market swings, then check out a portfolio tracker like Blockfolio, or my personal choice, Delta. You find Delta at getdelta.io.
Delta is the portfolio management without the trading features. I bought a year for $70 so it is less than $6 a month. You can still load all the APIs and connect exchanges and track everything in one nice and neat place, which is priceless. Even as a novice trader, I have had to manage over 30 coins spread out over four exchanges, so you can see why I really appreciate this program.
If you opt for this route, I would recommend one more account at tradingview.com. This is where you do your charting, and learn to predict market trends. There is a social community on this site I would recommend participating in as well. You can follow traders you align with, and start to understand how to read the charts by following their TA.
Don’t get swept away by the hype, but try to get a feel for what people are doing out there, and you will learn a lot. They also have a free subscription to try out for a month, but then it's $10 a month if you don’t want to see ads. I deal with the ads and use the free version currently. If I find that I am trading a lot again, which I doubt as my strategies are taking shape of their own, I would pay for Coinigy and that includes access to the ad-free TradingView charting software.
Try Coinigy for free and TradingView to get used to using charts and tracking coins. There are tons of videos on YouTube and articles on Medium for help doing so, but no one method is perfect. Don’t bank on TA until you get good at it, even then understand your risk to trade safely. Remember to start slow. Crypto moves extremely fast as it is, so you need to take your time and experiment safely.
Security. As you start all these new accounts, you will learn about security, and how to use it. Set up Google’s 2-Step Authenticator to use with all your logins. This is a must! I suggest backing up your passwords, seed phrases, and other pertinent data on a removable USB drive, or somewhere offline, safe, and accessible. If you lose this information, you could lose your cryptocurrency. However, as you will soon understand, cryptocurrency is far more secure than it appears, and with good practice, you can maintain efficient security without too much trouble.
Do not forget to plan for taxes! Even if you buy and hold and never sell anything, I would still recommend Bitcoin.tax or something like it. I think I paid $50 for the year, and this will take care of everything for me. I can log in at any time, update the APIs and transfer over new transactions, and see my estimated tax bill at any time.
In May, since I was booming, I racked up almost $300 in tax fees from day-trading! Ouch! This made me realize I needed to really consider taxes when trading crypto, or else you will just end up giving all that hard-earned profit to the damned tax man! Of course, crypto donations are also fully deductible so keep that in mind too. One thing is for sure, you don’t want to piss off the IRS as they are on the hunt for tax evaders.
Well, I can go on forever as there is just so much to learn and talk about in crypto, but I need to wrap this up. Before I do, let me add one more tip for your crypto journey. Get informed. Start reading daily crypto news from a few good sources. I recommend cointelegraph.com and coindesk.com, they are both highly respected in the space and seem to cover some different stories.
Set a bookmark at coinmarketcap.com as well and go there frequently to see how prices are moving. This is the source that everyone in crypto sees as the standard, at least for now. You can learn a lot also on tradingview.com following other traders and following their news posts and chart ideas. Finally, you can use Twitter to follow all the crypto projects you are interested in.
Crypto is huge on Twitter, and maybe one of the most difficult to filter good information from total bullshit. I may have to write an entire post just on this topic alone because it deserves careful attention. Just never send any crypto anywhere on Twitter, no one is giving away Ethereum. Make sure the big names have the blue star by their name. And know that most of what you read is probably not true. You do need to follow the key figures in Bitcoin as well as any coins you invest in or exchanges you work with because oddly enough twitter is their favorite form of communication.
I will finish this up with my last tip, which is to read as much as you can on crypto. I have been devouring every book I can find on the topic of Bitcoin, blockchain, and everything cryptocurrency. I am a big fan of doing research with books rather than just skimming online. I do that too, but it is weak in comparison to the knowledge you get when you delve into a book the author has worked hard to pack full of good information.
Most good blogs and podcasts result in great books that refine everything down to pure gold. You can spend 40 or more hours listening to a podcast, or listen to everything refined into 8 hours of awesome audiobooks, and get more valuable information. There is too much to learn to waste 40 hours on a podcast.
So check out some books on crypto and start to explore this fascinating new world of Bitcoin! A few books I recommend to get started are: Digital Gold to learn the origin of Bitcoin, and The Internet of Money: Volume 1 and Volume 2 to learn how it works, or the latest work by Saifedean Ammous called The Bitcoin Standard.
Even if you don’t plan to invest in crypto, you are still going to want to learn about the innovation of blockchain technology because just like the internet changed everything, the same will be far more true of blockchain. The potential is unlimited, the future is bright, and you aren’t going to want to miss this.
Remember, I am a rookie crypto trader sharing what I have learned the last year, I hope it was valuable. Please don’t take this as investment advice. I am not an advisor, I am making mistakes left and right, and most importantly, I am not in it for the money.
I see an opportunity like never before to restore honesty, justice, and equality to key points of centrally governed corruption in our society. From banking and finances to government and politics, from education to entertainment, bitcoin has the potential to change everything.
If you read this, plz like👍and follow🤝 if u resonate with anything I said please share your thoughts in the comments… I would love to know what you think. 🧠 and every repost is an absolute gift🎁
Thank u for your love and support💚
Chris Joy @chri5j0y
© 2024. Christopher Joy. All Rights Reserved.