My Biggest Crypto Mistakes and Improvements
We are only a few days away until the year 2021 comes to a close and with that brings a new year. That is often the time that many of us make New Year's resolutions or goals for the upcoming year. Since you are reading this article on a cryptocurrency blog, there is a good chance that you will make a goal relating to accumulating more crypto or changing your life financially. I know that I have already thought heavily about what I would like to achieve this year as well and also the future. But, that is a problem we often run into throughout life. Always looking forward to the future and not taking a step back to appreciate everything we have achieved thus far, or how much we have improved. This is especially true for people who invest in cryptocurrency. We often have our targets on the future; thinking about what coin we should buy next, how we will accumulate more or worrying about future price action. Taking a step back to appreciate what you have accomplished is a great way to stay motivated and fresh for this long crypto journey we are in. After all, it is an industry that can be stressful and definitely can take a toll on people.
Looking back can make yourself quite impressed just how far you have progressed in your crypto knowledge. Thinking back to when I first got into crypto, just like anyone else, I knew next to absolute nothing. And this caused me to make mistakes. When I first began a problem I had was having unit bias. Why buy bitcoin, when I could buy this other much cheaper coin and accumulate hundreds of them. As time would go by, bitcoin would naturally spring upwards in price multiple x's in price, while the coin I bought because it was cheaper; trended to zero. I can only imagine how much bitcoin or ethereum I would have if I had put in more research towards the beginning of my crypto journey.
That wouldn't be my only mistake though, I have made many. I used to be rather careless while sending crypto transactions. For most people, copying and pasting the address that you want to send your coins to works well and it did for me as well. But I ran into problems when for some reason the copy and paste feature on my computer wasn't pasting the most recent address that I had copied. Instead it was pasting addresses I had copied moments before that. Being careless and without looking at the pasted addresses carefully, I approved some of those transactions. For some of these transactions I was trying to send BTC to ETH addresses, or vice versa, or even to LTC addresses. Naturally after approving these transactions, these funds were lost forever. Thankfully I did learn a very painful lesson and now I check the addresses extremely carefully when sending coins.
Another silly mistake that I used to make was not being careful about my dollar-cost-averaging. I had just gotten into cryptocurrency and heard from crypto YouTubers that dollar-cost-averaging was the best way to ensure success while investing into bitcoin or cryptocurrency. I decided to take that to heart and began dollar-cost averaging on Coinbase. The problem with this was that my purchase amounts were quite small for the amount that I was buying and I was buying at too often. I was also quite uneducated to just how high fees are on Coinbase and this resulted in a large portion of my "dollar-cost-averaging" being given to Coinbase in fees. Looking back it still gives me pain to think about how much money I wasted in fees. Crypto was still very cheap back then and that money could have helped to acquire a significant amount more crypto. We win some and we lose some, but the important thing is always learning from your mistakes. I know that I definitely have.
It isn't only mistakes made that show how much your knowledge has improved in this space. It could be simple things such as learning which exchange to use to pay the least amount of fees. Or maybe this year you learned why it is important to take self-custody of your cryptocurrency and were able to do so. Perhaps you learned how to earn a passive income via cryptocurrency by either lending or staking your coins. Maybe you were able to mint an NFT, receive your first airdrop or delve into the world of DeFi. Or maybe you just became more familiar with crypto terms and projects. These are all things to be excited about. Just think back to how intimidating cryptocurrency felt when you first became interested in it. There is a large chance that it feels much less intimidating now and that is thanks to the hard work that you have put in. Something that I have been putting a lot of focus on learning more about recently are layer 2's. Mostly bitcoin's Lightning network, and also ethereum's layer 2's such as Arbitrum. I have a feeling that one of the hot things next year will be layer 2's and so I'm trying to soak up as much knowledge as possible now.
An area that I am personally proud that I have improved at is keeping a much stricter portfolio. As I briefly mentioned above, I used to have a problem with unit bias. This led me to invest in some coins that make me cringe just thinking about now. But now I tend to invest more in the blue-chip coins that I have confidence to stick around for a good amount of time. The criteria I keep while buying goes as follows. What are its prospects 5 to 10 years from now? Does it have great price growth potential? Do I have strong excitement or passion about this project? Is there a need for it? Is it a real project with a good team building it? Would I be better off buying this or more of the coins that are already in my portfolio. And finally, is there a way to make a passive income with it. Those are just some of the things that I think about when deciding to buy a coin. The key thing is that in the past I would get caught up in whatever was the hyped coin of the moment and also invest; without doing any research.
The great thing about the cryptocurrency industry is that almost everyone started at a knowledge base of zero. We all know what it feels like to be new and I think that is why so many people in this industry are so kind and willing to help new people learn the basics that they need. Thinking back to when I first began, I feel like I am a completely different person now. But now the year is coming to an end and it will soon be time to go after those huge goals that we are setting for ourselves.
How about you? What are some mistakes that you made since getting into crypto? What were your big accomplishments this year?
As always, thank you for reading!
This goes hand in hand with just about pretty much everything in life, but especially in terms of the investment world. As I always say, just because you don't know what something is, or how to do it, does not mean you can't learn. Unfortunately, when it comes to investing, many people don't take the time to learn.
But there is another key takeaway here. YOU ARE GOING TO SCREW THINGS UP. It's just a part of the process, much as you alluded to here. The gain is in the lesson our mistakes provide us. No pain, no gain, right?
Even if someone DOES take the time to get to know something a little better, it is often times a mistake here and mistake there that causes one to throw in the towel either thinking it is too complicated, or worse, rigged.
Valuable information here for anyone thinking about delving into the world of investing, and of course cryptocurrency.