If you have been in the cryptocurrency market for any duration of time, it is certain that you have probably made quite a few mistakes. The longer you have been in the market, the wiser you become. That is why it is vitally important to learn from your mistakes. This piece of advice may seem like a no-brainer, but when it comes to bitcoin and cryptocurrency, the hardest thing to control is our emotions. Feeling the emotions of a large upwards movement in price, or just as large of a downward movement is the perfect recipe to have you begin taking actions that you might end up regretting. Almost all of us regret getting into bitcoin too late. No matter who you talk, they always wish that they had gotten in even earlier. It does no good to dwell on this; as there is nothing you can do about it.
However, there is a mistake that nearly everyone has done that depending on how often you have done this, could have cost you hundreds or thousands of dollars. To put it simply, it is paying too many fees for purchases, swaps and transactions, but there is much more to it that you need to know. I am just as guilty at making these mistakes, and after doing the math it is quite shocking how much money I threw down the drain.
The first step of this philosophy is of course to avoid fees when purchasing crypto as much as possible. While Coinbase may be the most convenient or easy-to-use exchange, when you buy crypto there you are paying a premium. Even though it may not seem like it at first. This especially applies if you are making smaller purchases on the exchange. A dollar here, two dollars there, and then five dollars. It all adds up. When I first got into cryptocurrency, I used to buy whenever I had any spare cash, no matter how big or small the amount was. I would do this every day, sometimes multiple times a day. The fees might not seem like much, but in my situation it ended up totaling a few hundred dollars worth. Which back then could have bought 0.06 BTC, or 2 ethereum. Fast forward to today and that bitcoin would be worth around nearly $3,000 and the two ETH would be nearly $6,500.
Unfortunately my trend of wasteful mistakes continues.
During that time I had two main ways of accumulating cryptocurrency. The main way was through normal purchasing, and often it was quite small amounts. The second method was from earnings from my bitcoin blogging, also quite small. I had always heard about experts stressing that you needed to get your funds off of exchanges as soon as possible. The whole, "Not your keys, not your bitcoin" approach, which I strongly believe in. This had made wanting to send my funds off to other places as soon as possible, even if the amounts were quite small. Again, I was doing this multiple times a day, every day. Fees back then where quite cheap. Using Coinbase, and sending Bitcoin would cost nearly $0.20 per transaction, and sending ETH would be about $0.10. At the time I thought it was cheap and had no second thoughts on performing the transactions. But now fast-forwarding to today and the prices of these coins have appreciated greatly. Meaning I was paying nearly $2-3 for each bitcoin transaction, and about the same for ETH transactions. While that may not seem so bad, especially since transactions today can be for around the same price. But if I would have just been more patient and lumped my purchases and transactions together, my portfolio size today would be much larger.
Now think about all of the price predictions for bitcoin in the coming years. Those small transactions that I sent a few years ago, might balloon into quite sizable amounts in a hurry. My point is this. When you are making purchases or sending transactions, don't rush it. Be patient. Find and use an exchange that has low fees. Wait to send transactions until you have a sizable amount to send. Then check the transaction cost for that day; if it is expensive, hold off and wait for the fees to come down. Be smart with your money.
The same approach applies if you are into using Uniswap. Unless you are transacting for large amount, the fees can make the whole process not worth it in the end.
Like I mentioned up above, there are many mistakes that we will make while we are learning about bitcoin and cryptocurrency, and many of those mistakes are unavoidable. It is part of the learning process. But, having patience and being smart about fees are one of those few mistakes that you can control, and it literally could save you thousands of dollars down the line. Be careful.
How about you? Have you ever added up just how much your fees have cost you in dollars today? What are some mistakes you have make with bitcoin and cryptocurrency?
As always, thank you for reading!
The fees are probably something a lot of people do not consider, much as you said here. Just like a lot of people did not necessarily (on the retail investor side) consider commissions from stock trades (when commissions were a thing). But no matter what it is, fiat or crypto or stocks and bonds, the cost of moving money around always must be taken into account.
Even like with a credit card. If you buy a shirt for $10 and pay for it with a credit card and then only pay the minimum payment, by the time you pay off that shirt you will have actually spent $30 for it.
These pennies DO add up. I think this article serves as a reminder to at least consider those pennies as a part of whatever decision they make. Hopefully it will help someone to at least think about it, and the cost of what they are doing.