2 Months of Crypto

I started investing in cryptocurrencies just before Christmas 2020. I had previously had a Coinbase account for some years, just out of curiosity, but that’s all. At the time of writing, it is late February 2021. It has been about two months. It feels like a year. I have learned a lot, but still know very little.

It occurred to me to try to summarize what I’ve learned so far, both for the benefit of anyone who’s just starting, and perhaps to gain a little bit of perspective on all this craziness.

This will not be complete, and may not be correct. First acronym of many: DYOR = Do Your Own Research.

Lots of other people have written good “how to” guides. It’s all on medium. I have included a bit of this, but I mostly want to concentrate on the mental aspects.

1. Crypto never sleeps. It’s not like trading normal shares where you can clock off at 4pm on Friday and head for your yacht / park bench and stop thinking until Monday morning. So you need to set limits about how often you check things. Or else electricity from your devices will start to seep into your thumbs and make you sick and buzzy. I’m actually not joking. Also, people need sleep. It’s one of the few things the human body has never adapted to manage without, because in our history it never needed to. Not sleeping enough is seriously bad for us. So get exercise. Get a dog, call it crypto if you like, but take it out. Breathe and stretch. If you have a family, try to remember that they exist, and may be accustomed to having your attention.

2. We probably don’t have time to become an expert before either this bull run ends or we run out of patience, so our number one skill here is recognizing who is already an expert and worth listening to, and who isn’t. When you find someone who is, see who they follow, who they retweet.

3. We can’t possibly buy all the coins that people recommend. There’s hundreds of the bastards. We’d end up putting one dollar in each and paying $50 dollars gas fees for the privilege. We gotta be able to say no. “Enjoy your hundred-bagger, good ser, but I shall not be participating, I have my own.” This is difficult. FOMO (fear of missing out) is powerful.

4. Most crypto people are found on CT (Crypto Twitter). Twitter, as you may be aware, is not famous for its atmosphere of calm reflection. There are many kinds of tweets:

• Pure enthusiasm: Name of coin, image of rocket, “to the moon” LFG (= let’s fucking go, I assume)
• Pleading: “Come on coin x, please go to the moon!”
• Unsubstantiated prediction: coin x price y, by Friday, sometimes with the promise of doing something anatomically inadvisable if it doesn’t.
• Oneupmanship: you think coin x is good, well I’ve found coin y, which is a newer, better version of the same thing. (N.B. Sometimes this is true)
• Graph: this pattern means it’s going up a lot, soon, probably. (N.B. Sometimes this is true)
• Someone who knows stuff patiently explaining what a coin does and why this is good. (and for free, can you believe that?). I like these ones.

5. Conviction is important. The whole crypto market will drop drastically, sometimes in minutes, and you are advised not to panic and sell it all. How to obtain conviction? A mantra, perhaps?

“My coins are good
I have no FUD*
I really do enjoy the blood**”

(*FUD = fear, uncertainty, doubt. **Blood = the red colour of negative numbers.)

Personally, my only source of conviction is to make sure I understand what my coins actually do. For this reason, many of mine have “real world” use cases. Spiritual masters will tell us that the ephemeral is in many ways more real than the physical, but I personally just don’t understand finance. I know that half the world spends half its time swapping and lending and moving money around, but I’ve never really understood why, so I can’t really grasp why it might choose to start doing it with crypto, or not. So I won’t put more than about 5% into the next big thing in DeFi (Decentralised Finance). I will miss loads of 100x increases, but that’s fine. Don’t copy me. Find something you believe in. Or someone you believe in enough to believe in what they believe in.

6. Crypto people are not especially normal. Many are very supportive and generous with information. Don’t expect them to also share your beliefs about politics, or gender issues, or even the fundamentals of reality. Take what you can use and let the rest go by, as Ken Kesey said.

So, where do I start?

If you’ve just arrived in crypto and are keen to make life-changing amounts of money, first buy a hardware wallet, or two, and learn how to use it/them. The leading brands are Ledger and Trezor, and they are basically glorified USB sticks with buttons. The idea being that control of your crypto addresses comes from being in your room clicking those buttons, such that hackers can’t steal everything just by getting into your computer or phone. Write your wallet password and seed words (= ultimate password in the form of 10, 12 or 24 words) on paper in several very safe places. Never in a device. If you lose your wallet or drop in in the toilet or whatever, no problem, provided you have password and seed words. You can buy a new one and reestablish access.

Next you need to decide if you are going to buy Bitcoin, Ethereum, both, or all kinds of coins. Opinions vary strongly. Many commentators strongly favour just buying Bitcoin and forgetting all other coins, which they refer to dismissively as “Shitcoins” (It rhymes). These commentators are known as Bitcoin Maximalists, and … and I mostly, personally, find them a wee bit arrogant and juvenile. I’m sorry. Maybe they are reacting to years of Bitcoin-related abuse from fans of dollars and gold. I don’t know. Annoyingly, though, if you wish to prove them wrong and be successful buying altcoins, even more successful than just hodling Bitcoin, you will need to be quite careful and perhaps lucky, and put in the hours. Many people have got themselves ruined (“rekt”) messing about with alts. Especially by using leverage. (don’t do it, kids!)

If you are of a nervous disposition, it is not a bad strategy to just buy Bitcoin: you will inevitably increase your money with Bitcoin if you continue to HODL. (HODL is believed to mean Hold On for Dear Life, as was necessary during severe Bitcoin dips, but may have just been a popular misspelling of hold).

Personally, so far, I have hedged my bets by putting about 40% into Bitcoin and 60% into alts. (I try to hold Ethereum, I know I should, but I always succumb to temptation and convert it into more ERC20 tokens, It’s just too easy to do.) So far, in these two months, my Bitcoin is up about 2.5x and my alts about 3x. So far, I have been very, very lucky.

Some other stuff. Less fun, but I wish I’d known it.

Crypto can be organized mentally in many ways. First there is Bitcoin. Then there is Ethereum. And then all the others.

I find it simplest to look at the different networks first. I know of these ones, doubtless there are many more:

Bitcoin: The Bitcoin network allows the buying, selling, sending and receiving of Bitcoin. And nothing else that I know of. More bitcoin is gradually produced by big buildings full of computers which validate all the transactions and get tiny bits of Bitcoin as a reward. Normal people shouldn’t try to do this.

Bitcoin itself is a very good form of money because it is divisible, transportable, imperishable, and has a very stable rate of increase of supply. Unlike, for example, Dollars, where the governement can print more of them whenever it likes which makes them much less valuable, and incidentally makes wars possible. Bitcoin is divided into Sats, which are named after its inventor, the mysterious Satoshi. When people speak of “Stacking Sats” they mean accumulating Bitcoin. A good thing to do, in my opinion.

Ethereum: The Ethereum network is more of a jungle. Thousands of other coins live there in addition to Ether(eum), because the network coding allows for all sorts of extra programming. Coins that live in the Ethereum jungle are called ERC20 tokens. They do lots of different things. One very big thing, with many elements, is called DeFi, Decentralised Finance, and the idea is to be able to do everything banks do, and maybe more, but without banks. I’ve found the Youtube videos by Finematics very helpful on this. When you swap things on the Ethereum network you have to pay “gas fees”, quantities of Ethereum (in this case called Ether) measured in Gweis, which are like mini-cents to Ether’s dollar, Currently this can be anything between 40 and 200 US dollars’ worth. Per transaction, Which is a lot. People complain.

Ethereum can be mined, like Bitcoin, for now. Normal people can do this, but will need quite a posh computer and good internet. Or special rigs. DYOR.

To buy ERC 20 tokens with your ethereum, install a browser extension called Metamask, connect it to your hardware wallet, and then use Uniswap or Sushiswap or 1inch or doubtless a million others by now. It’s easy. If you need help there will be an article on Medium to explain it all.

Polkadot is a rival to Ethereum. It is often called an ecosystem, rather than a network, but it’s the same thing. Similarly, may other things can happen on it, some of which are only just getting started and offer great opportunities. It’s native token is $DOT. Sadly my poor brain has not yet felt up to checking it out properly, but one should.

Cardano is often mentioned together with Polkadot as another rival to Ethereum. It is the Marmite of Crypto. Its fans love it, everyone else seems to hate it. I’m not really sure why. Its native token is $ADA.

Binance Chain is a network created by the biggest crypto exchange, Binance. It’s native token is $BNB, and it seems to be bursting into life recently. It has the advantage that people arriving in crypto may well convert their Fiat currency (“normal” money) into crypto at Binance, which can then encourage them into its own projects. Many other tokens on the Binance network seem to be named after food. I don’t know why.

Solana I know nothing about yet. Someone called Sam is involved with it and he’s very respected, so it’s probably wonderful.

Hathor is just getting going as yet another rival to Ethereum, but will offer transactions which are both free and instant. This should be popular. Native token $HTR.

What else?

Tools. CoinGecko lists almost every coin in existence and will show you graphs and where you can buy it. Etherscan tracks everything on the Ethereum network. Even you.

People. On twitter I pay attention to

@CryptoGrills
@YVR_Trader
@fonship
@redphonecrypto
@DreadBong0
@Bullrun_Gravano
@AdamHODL

And a bunch of others, but mostly those. Go thou and do likewise.

Coins. I currently hold, in size order, $BTC, $RUNE, $HTR, $NOIA, $SHR, $YLD, $DAOFI, $FTT, $MFG, $FNT, $XCUR, $DDS and $ARCH. And $ETH for gas. Not financial advice. The first six won’t change this year, the others might. DYOR.

A few last things, which I have to keep telling myself.

Remember what you want. Why do you want to make lots of money? What will you do when you have enough? How much will be enough? If all you want is a cottage in the country and some chickens and a car that works, maybe you don’t need to continue past a million dollars after all. Maybe you want a shield against coming global catastrophe, but then again, maybe it doesn’t help to think like that, because for that you can always imagine needing more. Private island? Space station? Underwater eco-bubble? Not cheap!

I catch myself all the time with those “When we have enough money, I’ll…” thoughts. But do some of those nice things now, cos you’d feel stupid if you died hunched over a screen three years from now, still waiting.

The other day my sons happily announced to their mother that they weren’t going to have proper jobs, they were going to do crypto like Papa. This was not well received. I realized that if I wouldn’t wish it for them, I shouldn’t wish it for myself, at least not for ever. Not that there’s anything wrong with it, just that for me, being quite obsessive to start with, it’s too easy to forget that life is broader than screens and numbers and money. Sure I’m going to try to take advantage of this big opportunity this year. But then, I want to escape!

If you’re a crypto expert, one of those like I mention above who’s been doing this for five years or more, and is now selflessly sharing the fruits of your expertise for people like me, please, I’m not having a dig at you. If you’ve been doing this for ages and you’re still mentally healthy, I absolutely salute you. And I’m very, very grateful. But I couldn’t do it. Waking up and checking coin values in the first ten seconds is not a good sign, for me.

They say the hardest thing in crypto is knowing when to sell. Personally I like to sell a part. Then if it was the wrong decision I don’t punish myself so much, because it was only partly wrong. Find what works for you. And again, breathe. Crypto is waiting by the door, wagging his tail. He’s been trying to get your attention for hours.

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I hope this has been useful and/or entertaining. If you’re crazy enough for crypto, you might just like my book of short stories, which is available here.