Three Most Important Rules in Cryptocurrency

  1. “You are your own bank”. You are your own IT, security, portfolio manager, trader, and customer service. What this means: You control all your accounts, passwords, trades, and transfers. If you have an issue or are confused about a protocol or a change in technology, there is no 1–800 customer service number to call, and Googling might lead to more questions than answers. Crypto, like most computer functions, is rather logical and linear. However, it has a steep learning curve, and is more abstract in purpose and function, which is why many people have yet to dive in. Be extremely conscious and careful during each step of every process!!! Yes, even after three years, I still double check whenever I send currency from one account/wallet to another (that means checking the type of crypto, and wallet addresses, twice!). You can never be too careful.
  2. Diversify! Diversify not only your crypto portfolio, but how much of your net worth you want to allocate toward cryptocurrency as compared to other assets. VC Fred Wilson received great publicity last year when he claimed that “true believers” could allocate 10–20% of their net worth into crypto, whereas “sophisticated investors” put ~5% of their worth into crypto. This is a good rule of thumb as, similar to the stock market, being diversified can help prevent too much exposure. In the event one asset/industry takes a hit, if you stay diversified, it won’t affect your portfolio as significantly. For example, if you are starting with $100 on CoinBase, you might want to put 1/3 of your initial investment into BTC/LTC/ETH. This way, if there are any sudden negative changes in the industry that gravely affects one of the three cryptos you are invested in, it won’t make or break your portfolio as a whole.
  3. “Never invest more money than you can afford to lose.” This applies to all investments, but most significantly to cryptocurrency. This rule is so important because cryptocurrency is speculative in nature, has low liquidity/thin markets, a high frequency of scams, and is notoriously volatile.

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A Crypto Consultant

A Crypto Consultant

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Researcher, Investor, Educator, Crypto Consultant. Love all things business, fintech, and cybersecurity.