Lessons learned from my first crypto investment

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Before I begin my story, I would like to disclaim that I am not a financial professional, nor does this post contain financial advice. I am writing to merely share my first experience of investing in crypto currencies. I welcome any feedback, insight, or critique after you have read my rambling.

I have been longing to invest in crypto currencies ever since the Bitcoin hype of December 2017 when it peaked at about $20K. I even joked with my co-workers about shorting Bitcoin and everyone looked at me as if I was crazy. It took me seven more months to finally take actions and plunged into my first crypto investments. What triggered me was the second biggest cryto slump of 2018 (Example 1). I believe where there is fear in the market, there are opportunities to make money as long as you have the stomach for it. My goal was to buy some alt coins such as STEEM and quickly make 15% - 30%+ by catching of one the repeated dip/rebound waves (Example 2).

Example 1 (Bitcoin drops below $6k)

Example 2 (STEEM 42% wave)

My first step was to figured out how to exchange my US dollars (fiat) into crypto currencies and which platform to make my purchase. The four platforms that I considered based on the Google reviews were:

1. Coinbase (does not allow credit card purchases)
2. GDAX or Coinbase PRO (a cheaper subsidiary of Coinbase which also does not allow credit card purchases)
3. Robinhood (only Bitcoin and Ethereum purchases are available in some states)
4. Coinmama (highest fees but allows credit card purchases)

The lessons I learned from this first step were surprising:

1. I cannot make an immediate purchase of a crypto currency unless I pay a hefty 12%-15% price tag above current market price for using a credit card. Most major credit cards do not allow crypto purchases or if they do, you will be charged a cash advance rate for your purchase.
2. I can find a Bitcoin ATM and make an immediate purchase with cash, but the fees are also very high at 12%-15%.
3. A less expensive route is to deposit USD into one of the sites listed above, but this will take 5 – 7 business days. If you are trying to catch a crypto dip, which was exactly what I was trying to do when Bitcoin dropped below $6K (Example 1), the wave might pass you by before your transaction fully process.
4. If I really like the current market price, I could make an un-reversible purchase and wait 5-7 business days for the coin to be available. The risk is the price could drop after I make my purchase, or if I am lucky, which I was, it could increase as well.
5. In most cases, to enter into the crypto market I need to first purchase one of the four major crypto currencies: Bitcoin, Bitcoin Cash, Ethereum, or Litecoin. Afterwards, I could trade it for an altcoin such as STEEM.
6. The price I paid for my Bitcoin purchase was about 1.7% higher than current market price plus a 1% transaction fee from Coinbase. So if the current market price of one Bitcoin was $6,000, then it would cost me $6,000 + $102 + 60 = $6162.
7. Identity verification was required so I had to disclose my driver’s license information, mobile phone number for 2 form verification, and email address. I thought the whole point of crypto was decentralization and unidentifiable transactions. I guess that was a myth.
8. Limit for first transactions was $2,00 for Coinbase and GDAX.

After I purchased my Bitcoin, I needed to select an exchange to convert my Bitcoin into STEEM. Some of the exchanges I considered were:

1. Binance (most popular and cheapest option)
2. Changelly (higher rates, but only email verification required)
3. Bitfinex (Allows margin trading, but has a $10,000 minimum, 6-8 weeks verification process, inactivity fees)

The lessons I learned from selecting an exchange:

1. Identity verification was required so I had to disclose my information again
2. There is a small fee per transaction to exchange a major coin to an alt coin
3. Hind sight is always 20/20 when analyzing historical crypto data, but in real-time it is difficult to accurately catch small 10% - 15% dip and rise waves (Example 3).
4. The crypto market moves very fast so I place limit orders after I have locked in my purchase and selling prices

Example 3 (STEEM 13% wave)

Some very important and non-negotiable steps are to select a secure wallet and protect my master passwords. I chose both electronic and a physical wallet. I also hand wrote and stored my passwords safely, and updated my anti-virus software.

So there you have it. It is not easy, fast, or cheap to invest in crypto currencies, but it sure is fun when you catch a nice wave. I hope you found my post beneficial. Keep an eye out for my next post when I share some actual experience of catching some profitable waves.

Best wishes to all you investors out there.