3 years learning from Bitcoin and friends as an investment

It taken 3 years for me to start understanding the world of financial investments. I hope my feedback helps you learn faster and cheaper than me. Be aware that this is not expert advice because currently investing money is not my full time job, nor my profession, nor my main business. Yet there might be something to share after 3 years. right? Let's see…

From the many things that come to my mind when writing this, my first advice is to not loose hope on Bitcoin and friends (a.k.a cryptocurrency or just crypto). Because perhaps you already heard somewhere that many people lost a lot of money by “investing” on cryptocurrency. The truth is that just spending money is not an investment, you should learn soon that an investment is something more complicated. For example, if you buy 10 corn seeds and you plant them in ground and add some water, what are the chances you'll get 10 corn plants? what are the chances that you'll harvest all of them? There are lots of variables involved on cultivating plants. Chances are you'll get zero to 100% success.

Don't think you are that lucky

If you consider yourself a lucky person, then you had better evaluate your variables again and more carefully. Luck is just one variable among many and you can't control it, why trust something that unreliable? That is why considering zero as a result must be in your plans. It doesn't means necessarily that you have to be pessimistic, I'm just trying to state that being ready for all results will help you plan better.

What's the plan? To make money, of course! Perhaps you'll get some earnings at the beginning, perhaps you keep trying and get some earnings after loosing money and that reliefs you. The core of gambling is to trust on unreliable variables, luck is just an example. Sometimes people follows other people doing the same, thinking that if somebody is making money in a certain way you can also do the same, after all, it seems easy. If you instead plan and set limits so you are using a reasonable amount of money, it is, to invest money that will not need in the future, and if your are committed to start small and fail cheap, then you are starting well.

Trading is gambling

That is true if all you do is guessing what the price of Bitcoin will be at some point so you buy or sell at your 'guts' will, that only happens in the movies. If you really want to make money from trading, you first need to learn well how this all works. This is not happening overnight, it takes time to get to learn and understand about markets, trends, dumping, pumping, fakes and real opportunities. Even more important, it takes discipline and self control, otherwise you'll loose all your investment and perhaps start a vicious cycle. Sounds like hard work? Of course! This business is of high risk. The good news are that bigger earnings come from high risk.

The Blockchain

Let's stop talking about financial stuff for a moment. The blockchain is something that amazes me. The blockchain is a sophisticated concept designed for trust-less transactions between two peers, so that humans like you and me can trust digital transactions. This is such a complicated concept: blocks of deeply encrypted data are distributed among thousands of computers in the internet. Nobody owns the blockchain but everyone. This is an evolution of torrent-like technology, where everyone with a torrent client is also a mirror. All this relies on peer-to-peer technology, the same that allows VOIP (i.e: skype and hangouts).

Apart from being something crazy geeky, the blockchain is an innovation that is evolving fast. It is the new way to exchange values. For example, Slock.it is a platform that removes middle man from the lending real world, with the power of Ethereum and IoT. A great opportunity for people that lends real world stuff like bikes, cars, apartments, etc.

It looks like crypto is on the edge of technology, don't you think?

Currency or asset?

There is some debate remaining on what Bitcoin and friends actually are. Currency was created to exchange things using a common denominator. Before currency you might get a jar full of wine in exchange for a jar full of olive oil. You might buy a cow in exchange of a couple sheep. Things seemed to be simple, but what if the cow owner is willing to buy corn rather than sheep? You had to look for a cow owner that accepts your sheep, or exchange your sheep for corn so you can finally buy the cow. A currency helps make things way faster, you sell your sheep, you get some cash, you git cash to the cow owner and voila!

An asset is something quite different, it is something that puts money in your pocket. What is money? it is something that has value. Time is money, so time is a value. When you perform paid work, your are being paid for using your time for a particular task. That is better know as a service. You can also use your time to learn some skill, then use that skill to build something valuable for someone else. For example a jar. You sell the jar, you get money. So you are putting money on your own pocket, then your skill is an asset. If you own a cow, she might produce milk, you spend your money (wether cash or your own time or both) for that purpose. How about selling the milk? That will transform that cow into an asset, because it is producing money, cash in this case. Then time comes when you have to sell the cow, guess you expect cash instead of sheep, right?

Sources of learning

I got into this world by looking for investment opportunities. A book that helped me to make the decision is “Rich dad, poor dad” by Robert Kiyosaki, lots of things to learn from this guy. But be cautions, some concepts need further reading so don't fear to buy more books from Robert and similar authors. A good on-line store must link you to more sources of learning.

Cryptocurrency | Investing

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