What you NEED to know before you start investing in crypto: Part 1
I'm not an expert at cryptocurrency, but I'm interested from an investment perspective, technological perspective and a social perspective.
Cryptocurrency is a typical area where, the more I read, the more I realize how much I do not understand.
There are whitepapers that go far above my head. There are market forces I do not understand. There are politics and course reactions I can not explain.
Cryptocurrency is a big hole to fall into. But, it's funny, educational and exciting to be there.
I'll probably not get up for a while.
There is a significant difference between how cryptocurrency is experienced before and after you purchase.
Before you invest you should read. And then I do not mean the mainstream daily press. Good articles are rare. The focus is mainly on price, early enthusiasts who are now millionaires and billionaires, or why Bitcoin is the bubble of a lifetime.
This post is the result of much reading, philosophization and eventually investment in some cryptocurrencies.
Since I started thinking about the post to today, the course at Bitcoin has gone five-way before it fell back. The price is not really so important. I see many cryptocurrencies as relatively binary. Either it is not worth anything or it is worth much more than today.
The first thing you will notice after buying is the psychology of the cryptocurrency.
Cryptocurrency is an investment (possibly speculation) on steroids. The stock exchanges are open 24/7 which is stressful if you have an uncomfortably large position.
After entering the market, I noticed that my weaknesses in investing are being strengthened.
"Everything is going up" at the same time as it is impossible to appreciate any of the cryptocurrencies using traditional methods.
It begins with FOMO (fear of missing out). The fear of missing out on the rise. When it comes to life, it's difficult to hold back.
Cryptocurrency has a sense of easy money without work. A chance for life. As a result, you eventually throw yourself in fear of not missing out on more of the ride.
Moving on, you feel like a king. Then follow greed. Now you just want to buy more. Because you see that it's easy money.
If it goes down, FUD (fear, doubt and uncertainty) enters.
The purchase decision was not necessarily rational and you are beginning to doubt. And, if there's one thing that's enough of in cryptocurrencies it's FUD. Psychology Today wrote well about how fear was used to manipulate the price of the IOTA cryptocurrency.
FUD causes you to either sell on the same irrational basis as you bought or that you are looking for arguments that support your view (confirmation bias).
Each cryptocurrency has a very small sect that glorifies the technology and possibilities. You quickly end up in forums with exclusively positive discussions and with that you will "confirm" that it is a good investment you have made.
You must stand for the purchase. Like everything else, you need to know what you are investing in. You should also be able to cope with heavy volatility.
Most important of all is that you do not waste more money than you can afford to lose. No, you might not get rich, but the stories about people borrowing money to buy bitcoin when the price was $ 19,000, and subsequent $ 12,000 panic sales just makes me sad.
Do not trick yourself into thinking that cryptocurrency is anything but sky-high risk.
If you find an interesting crypto you should start by reading the whitepaper, the blog, the discussion forums and feel free to check the code on Github.
If you do not have the prerequisites for entering the technologies, you can still buy the cryptocurrency, as a speculator. Then it's extra important that you can afford to lose money to avoid panic sales.
Alternatively you can stay away from everything cryptocurrency related. It's okay not to have an opinion about it.
Follow me for more crypto-related posts and feel free to comment, upvote and resteem if you like my content.