Things I Wish I Had Known
Here are a few import things that I wish I had known about when I first jumped into the digital currency game. Some of these mistakes I have made myself, and others I have read about others making during my online journey. Hopefully, none of the readers of this site will repeat any of these mistakes.
1. Make certain you and only you know your private keys.
Every wallet has a private key. If you have not taken the time to download a software wallet or purchase a hardware wallet you may think this does not apply to you. However, the fact is that it applies even more to you than to others. If you only have your coins on an exchange, it is still in a wallet and you can send to and receive from that wallet. The difference is that the exchange has created the wallet for you, and they know your private key while you do not! Why is this important? Put simply, if the exchange gets hacked your keys are gone. If the owners of the exchange decide to shut down, they would have access to all of the coins from all of their users...they can abscond with many millions and head to an island without extradition. In such a scenario, your coins would be lost and you would have no recourse to retrieve them. If you create a software wallet and hour hard drive dies, no worries as long as you have your private keys your coins can be recovered. Create your own wallet (software based, paper, or hardware), write down your private key, and store that private key in either a fire proof safe or a safe deposit box. It's the only way to ensure that you can both secure and recover your keys.
2. Accept that you know nothing about the markets.
It doesn't matter how long you've been playing the stock or bond markets, or what kind of technical analysis you have done. Digital currency markets are wholly unregulated and respond in ways vastly different from stock markets. Don't listen to people that tell you that coin X is going to hit $100,000 by mid 2018 (okay, listen to them, but take everything with an enormous grain of salt).
3. Understand how the different coin values impact one another.
There are many coins, some of which we have highlighted on this website. These have been around for a while, and will probably be the first a beginner will invest in. The digital currency market is extremely volatile, and 50% daily swings are not uncommon. If you watch the market for any length of time, you will undoubtedly note like I have that large value increases in Bitcoin are typically followed by a substantive drop (a "market correction"). When this drop happens and money is pulled out of Bitcoin, it often is not pulled out of the cryptocurrency ecosystem as a whole. Rather, it is subsequently invested in several other alt coins which experience similar large value increases. Likewise, when Bitcoin has a large increase in value, often investors trade their other altcoins for Bitcoin so that they don't "miss out". This sell-off drops the prices of the alt-coins. These patterns are very cyclical, and every altcoin in the market reacts to Bitcoin.
The coins included on this web site are the ones that we consider the best and most stable places to invest long term, although it should be noted that just like stocks it is recommended to diversify your investment among several different coins to minimize your risk and exposure.
No, it's not a typo. At least as it isn't here. HODL was originally posted by a Reddit user who was telling others to not sell their Litecoin, but rather to hold on to it long term. Once the original typo was made, the entire community ran with the ball. You will now see T-shirts emblazoned with "HODL". In fact, Litecoin's creator Charlie Lee has been seen wearing HODL shirts in several televised interviews.
5. Never buy during an uptrend
The reason for this is not unique to the digital currency world, but applies equally to stocks and bonds. If you buy the up trend, it is possible you might catch the top. Our advice is to wait for the run to subside, a market correction to occur, and then the currency to stabilize.
6. Always do your research
This should go without saying, but understand the teams behind the coins you are investing in, and what those teams are trying to bring to market. Just like a stock, don't invest in something if you don't know what you're investing in.
7. Never, Ever, EVER invest more than you can afford to lose
This too should go without saying, but every day I read stories about people buying coins with credit cards and going into debt, or taking out mortgages on their homes to buy coins (and no, these are not exaggerations, unfortunately). Any investment carries with it some risk, and the volatility of the digital currencies magnifies that risk substantially. In essence, you are gambling and little else when you invest in digital currencies. Make certain that you do not expose yourself or your family to unnecessary risk. THIS POINT CAN NOT BE STRESSED ENOUGH.
8. Always be cautious when moving funds between wallets and exchanges
When transferring between a wallet and an exchange, perform a small transaction first to ensure that the addresses are correct. When you are certain and the coin transaction completes, then transfer the rest of what you wanted to move. I've read numerous stories of people transferring Litecoin to Bitcoin addresses and vice versa. Make certain that if you make a mistake that the consequence of that mistake is as minimal as possible. Always two transfers...one very small and then the rest.
9. Don't lose faith when you take a loss
Everyone takes losses if they invest in cryptocurrencies long enough. Most people don't learn how to properly invest or trade intelligently until they have made a few mistakes and taken losses as a result. A financial consequence to a mistake is a powerful motivator to avoid the mistake in the future.
10. HODL, part 2
If you think you bought at a peak, the best thing to do is continue to hold that currency, and buy additional on any dips (decreases in coin value) to lower your average cost basis. Just about all of these coins should increase in value, given enough time. That time, however, may be measured in years. The only way to certify that you will lose money is to sell your coins at a loss. If you continue to hold your coins, there is always the chance of a sharp upward price spike in the future.
Bonus Round: "To The Moon"
Back in 2015, the Dogecoin community crowd-funded a project to create a gold physical coin with the Dogecoin logo on it, and they have contracted to get that coin placed onto the lunar surface in 2019. The phrase "To The Moon" has now come to mean enormous increases in coin valuation, but the origin of the phrase is quite literal. I've no idea why the Dogecoin community decided to do this, but if you continue to read about digital currencies you will see this phrase quite a lot.
Bonus Round 2: Bitcoin Pizza Day
In 2010, the very first transaction was made to exchange digital currency with real world objects of value. Two Papa John's pizzas were purchased by computer developer Laszlo Hanyecz for 10,000 Bitcoin on May 22, 2010. Hanyecz's pizza purchase was a big deal because no mainstream retailers accepted bitcoin as a form of payment at the time. He couldn't buy pizza directly with bitcoin, so he traded his 10,000 bitcoins to another user named Jercos in exchange for the two pizzas.
Today, those bitcoins are valued at approximately $16,500 each, resulting in the most expensive pizzas ever purchased at $165 million.
The original thread has been kept alive if you want to see the original posts.