Hello Steem-mates. I thought it may be interesting to share my journey into the world of cryptocurrency, with the view it may be of some assistance to other newbies that are trying to make sense of it all.
My name is Jim and i’m a newbie to cryptocurrency, investing and also Steemit, this being the first Steemit article I have written to date. I’m also a newbie to writing articles and being dyslexic I do try to avoid writing anything more than a few paragraphs. Writing for me is a very laborious and time consuming task.
However, at the moment I'm feeling motivated to write, I have found a new hobby that I'm excited about and through it I've learned many interesting facts about our currency system, central banking, investing and last not least, cryptocurrency. I'm also feeling excited about Steemit, I found this platform whilst investigating coins with long term potential and so I invested. In the process I became interested in Steemit and joined, perhaps this too will become another hobby!
Whilst it is possible I could make 'money' by investing in cryptocurrency, I don't expect to. I guess its like my other hobbies, gold panning and fishing. I don't do it because I need a nugget or need a fish, I do it for the thrill that 'anticipation' gives me. If I do find a nugget or catch a fish, or make $100 in cryptocurrency thats a welcome bonus and I'll get an extra thrill. On the next level there is the lure of finding a huge nugget worth thousands, or catching a record breaking fish or reeling in enough coins to at least pay my debts.
In the past I have invested many thousands of dollars into my hobbies, the result? I have found one small nugget and caught a few fish, but I've enjoyed the thrill of the hunt and the great outdoors in the process.
I enter cryptocurrency with a level head and realistic expectations. I understand I will need to take risks and be a little greedy if I want to be successful, so I need to exercise caution and limit how much I put on the line. I know if I'm too greedy Karma will catch up with me.. It always does. But in the back of my mind there is always that next level I'm dreaming about.
Brief introduction - my awakening
It's been a week or so since my cryptocurrency awakening and its now time to reflect upon and revise what I have learned so far..and to share that with you, in three parts. By the time I get to part three I hope to know more and be competent enough to provide some general advice.
One evening when I was listening to the news I heard that countless numbers of early adopters had become bitcoin millionaires and some even billionaires. What! How could this be? There were reports of tekhead teenagers buying Mansions, Maseratis and truck loads of Moet. So like many others, I too beat myself up for not buying some of those magic bitcoins and dwelled on my misfortune for days.
So there I was, feeling the pain… damm that that evil hindsight
Whilst I missed the boat, perhaps there was still an opportunity on the table, perhaps I could buy some bitcoins, sit on them for a few years and reap the reward. But I had to lower my expectations when I learned that bitcoins were now worth a whopping $2400 USD. Damm it, there was no way I could invest in a bitcoin or bitcoins, I simply couldn’t afford that sort of money. So I was resigned to the fact this was another lost opportunity to add to my growing list of lost opportunities.
But hang on, there was another coin, an altcoin! According to my buddy google, there were hundreds of these altcoins and many of them were just a fraction of a cent. But why so many alternative coins and why so cheap? It didn't make any sense. Upon further investigation I discovered most of these coins weren’t designed to be a direct competitor to bitcoin and used as currency online or in shops, but issued as 'tokens' to raise funds for new startups and their blockchain projects or something like that.
But what was a blockchain and what is the difference between a token and a altcoin? I was confused.
So the mission was clear, I needed to learn about altcoins
Google was nice enough to lead me to some YouTube videos where I could learn about these magic altcoins. So for the next few days and nights (and not a lot of sleep in between) I consumed everything I could find about altcoins. So, there I was armed with a bunch of disjointed information, a few hundred dollars and loads of enthusiasm..what could go wrong?
Step one: Find altcoin's that had potential for future gains
I soon realised just how daunting a task that was, with over 900 coins to research! However once I started it became obvious that a large proportion of those 900+ altcoins/tokens were easily eliminated. To assist the process I put all of the data I found during my research into a spreadsheet. So with some common sense and a day of research I was able to come up with a list of 40 altcoins that I thought had real potential. A little more intensive research and I reduced the list down to 12 altcoins. In the process I realised something interesting, many of these altcoins seemed to be grossly undervalued and many overvalued, but why?
Step two: Download a hard wallet for my alt coins
I read it was important to have a secure wallet to hold your coins, but I couldn't find a wallet that would accept all of the coins I had on my hit list so I skipped that step. I decided to find a ‘user friendly’ and reputable exchange and leave my coins in their online wallets so I could have my portfolio all in the one place. When I wanted to hold a particular coin for the long term I’d move it to a dedicated hard wallet on my MacBook. After investigating many different exchanges I found one that seemed to tick all the boxes so I signed up..and what a process that was, they were really serious about security. Later on I found I'd need to sign up with a few other exchanges as my preferred exchange didn't have wallets for all of the altcoins I was interested in. Leaving my coins in a virtual wallet on an exchange now seems so risky, so I don't recommend this.
Step three: Invest, invest, invest
So I invested my $160 into a few select altcoins and watched the charts on and off all night, expecting to see a virtual fortune appear in my account at any moment. I eventually fell asleep and when I awoke jumped online and peered into my wallets. Eureka! I made some coinage! Through some stroke of genius or good luck (probably the latter) I managed to earn a healthy reward for my initial $160 investment. Riding the high and feeling confident I dabbled a bit more and injected my earnings and some extra cash into expanding my portfolio.
However, the next day and within the space of 6 hours much of my earnings and initial investment had evaporated. For the next couple of days I tried my best to win back what I lost, but as expected it wasn't going to be that easy. I realised that winning back what you have lost is the classic mistake, just ask any slot machine addict. So I changed my approach, less time watching the charts, more sleep. Relax and take the time to learn more. Less coffee and more water. Analyse the patterns and trends. So did that work?
Yes and no, It's a work in progress, lets say I'm on the right track now
So what have I learned in a week
- It wasn't a good idea to jump into the deep end armed with so little knowledge.
- Limit how much I will spend from my savings and don't touch the credit card!
- Its important to put in a lot of research, find coin exchanges that have a solid reputation, offer analytical tools and support the most popular altcoins.
- I don't have to buy a whole bitcoin, I could buy a fraction of a coin.
- Each bitcoin comprises of 100 million bits, called a Satoshi.
- I'ts known that Satoshi Nakamoto (synonym) is the inventor of bitcoin but a fellow named Craig Wright, claims he is the co-inventor.
- There was a big rise in the value of bitcoin and altcoins from April 2017, the reasons for this needs to be fully understood. But it appears a surge in popularity with bitcoin in China, Japan and Korea may be the main reason.
- Due to currency regulations Chinese citizens cannot send more than $50,000 USD per annum out of China. But many circumvent this regulation and use bitcoins to purchase real estate and other assets, overseas.
- Bitcoin segregated witness is coming, I still don't understand what this really mean's but I've learned enough to know that in its wake could be an opportunity to snap up an altcoin bargain.
- The 'value' of most coins/tokens has more to do with the perceptions, expectations and the emotions of investors than anything else.
- It's ok to be greedy, but be less greedy than others, especially when it comes to ICO's
- I need to look for trading patterns and patterns of investor behaviour.
- Keep a very close eye on cryptocurrency trends and regulations in the Asia.
- Cryptocurrencies may be in a bubble right now, I need to always keep that in mind.
- I need to look out for ICO's (initial coin offerings) and do loads of research, find the ones with potential for short and long term gains.
- Bitcoins, altcoins and tokens are all cryptocurrencies.
- I now understand how currency and central banking works and hows it's a Ponzi scheme.
- The world of cryptocurrency trading is unregulated and decentralised, but some countries have banned it, put into place regulations, whilst others have no regulations.
P.S: Since I started writing this article I have managed to increase the value of my portfolio again and I’m feeling more relaxed and confident about what I am doing. My spreadsheet has proven to be very useful as I've noticed some distinct patterns and I'm excited about that. As I write August the 1st looms and it's going to be interesting to see what will happen with the bitcoin SegWit activation thingy, whatever that is.
My feeling is before the SegWit activation some people will buy more bitcoins and others will trade them into ETH and LTC.
In part two I will list the altcoins I’ve currently invested in and how they are performing. I'll also share what else I have learned to date and take a closer look at my favourite altcoins, Ripple XRP and STEEM.
Please feel free to ask questions, make suggestions..
Constructive criticism is welcomed!
Thank's for looking in, cheers!