Almost everyday for the past couple months or so I’ve received DM’s/emails/messages from folks asking for crypto advice or a how to guide on getting started.
The folks reaching out tend to fall under three buckets:
- I read that bitcoin is going to be the next big thing and I want to get started!
- Elon keeps tweeting about dogecoin! I have no idea what it does or is, but should I buy it? It’s cheaper than a McChicken and that dog is so damn cute.
- I’m getting major FOMO and I don’t want to miss out on this “crypto thing”
If you fall into any of these categories, you probably went through the effort of googling bitcoin, dogecoin, or any of the other cryptos. While Google is a very handy tool, there’s so much technical jargon and confusing concepts that go waaay over people’s heads. By the end of reading everything you see online, you’re probably feeling overwhelmed from all the information.
And after a few failed attempts and lots of wasted time, you’ll realize you have more immediate and important life priorities: posting selfies on instagram, making avocado toast, or even learning the latest tik tok dance. Lol I know I’m deviating here, but honestly a lot of us simply don’t have the time to try and understand the confusing sea of crypto.
Which is exactly why I’m creating this blog post. I hope that this can be a starting point for most of y’all who want to get started investing in crypto.
Where should I buy my crypto?
There are several different brokerage firms you can use to buy/sell crypto. Here are the options I’m aware of: Coinbase, Robinhood, Kraken, and Gemini
Personally, I use Coinbase. I like Coinbase because the interface is easy to use, it does a great job of explaining the technology behind each crypto, its secure, and the customer support is great!
Coinbase’s brokerage arm counts more than 5 of the Fortune 500, including Tesla. According to this article on Yahoo News, Tesla’s $1.5 billion dollar purchase in bitcoin was facilitated by Coinbase.
I don’t know about yall, but knowing that successful and promising company like Tesla used Coinbase to facilitate their bitcoin transaction gives me more confidence and trust in their platform.
If you’re interested in getting started with Coinbase, here is my referral code. You can get $10 in free bitcoin.
How much should I invest?
This question will depend on your investment goals and what amount you are comfortable putting in. Before I give my answer to this question, I want to preface this by saying I’m not a financial advisor. I offer education, not prescriptive advice. My opinion on this topic is my own and ideas I’ve seen from other crypto investors.
A method I use and is one that is commonly used with other investors is Dollar cost averaging.
Dollar-cost averaging is a simple technique that entails investing a fixed amount of money in the same fund or stock at regular intervals over a long period of time.
If you have a 401k, you are already using this technique (GO YOU!!) In dollar cost averaging, you are investing the same amount in regular intervals. For example, you invest $50 dollars of crypto once per month. Whether it is up or down, you are putting the same amount of money into it. Over time, the average cost per share you spend will probably compare quite favorably with the price you would have paid if you had tried to time it.
Dollar-cost averaging is particularly attractive to new investors just starting out. It’s a way to slowly but surely build wealth even if you’re starting out with a small stake.
How do I time the crypto market?
No one knows for sure. However, rather than timing the market, I recommend dollar cost averaging (explained above).
I’m risk averse and not sure if I should invest. What should I do?
Before investing in anything, I strongly encourage doing some research on the volatility of bitcoin or other crypto.
The risks of trading cryptocurrencies are mainly related to its volatility. It is driven by the unexpected changes in market sentiment, which can lead to a sharp and sudden momentum in price. Take for example, the news that stated Tesla had a few billion of it’s treasury in bitcoin. This headline sparked a surge in bitcoin’s price, as more folks saw it as a trusted asset.
Then there was the time that Janet Yellen announced bitcoin being “a highly speculative asset”. This statement dropped the price of bitcoin a bit and led to some investors selling off.
TLDR, It is common for the value of cryptocurrencies to quickly drop by hundreds, if not thousands of dollars.
To conclude, here are 5 questions to ask yourself before investing in bitcoin/cryptocurrencies.
Overall, with any investment there will always be inherent risks and rewards. Bitcoin/crypto raises a lot of questions are here are 5 I would consider asking yourself before investing:
- Can you afford to lose all the money you put in?
- Are you ready to accept a high degree of volatility with bitcoin/other crypto?
- Do you know what you’re buying?
- When would you consider selling your crypto? Or do you want to let it ride indefinitely?
- If you sell and make a profit, are you aware of the tax implications?
Just some things to think about before investing! Anyways let me know what you think of this article and if your thoughts on bitcoin/other crypto have changed after reading this!