In the previous bull run many people contacted me to tell me that they wanted to invest in cryptocurrencies. I was positive surprised, after a few years of advocating for Bitcoin there was finally some interest. The disappointment came a moment later when the next question was asked:
‘What coin is good to invest in?’
Bitcoin wasn't mentioned at all. Almost all of them didn't own any Bitcoin within a few weeks after their first investment (regardless the fact that I advised to keep AT LEAST 80% in BTC). They all were addicted to hunt for ‘the next Bitcoin’ and spend all their BTC on hyped altcoins. Now almost all of them are at a loss while they bought their Bitcoin to get started below the current price……..
Invest your first money AND effort in Bitcoin
Many entered the market after seeing the huge gains in especially altcoins and were driven by FOMO and greed. Because many altcoins outperformed Bitcoin percent wise Bitcoin was forgotten and especially coins that were priced low per coin were extremely popular (This alone shows how uninformed the market was).
Educate yourself on Bitcoin first
Satoshi Nakamoto accomplished to create digital scarcity (all other digital stuff can be copied, so can’t contain value), found a way to create trust without the need for a 3rd party and created a network without single point to attack. These features combined were not just interesting, but groundbreaking and revolutionary. This technology is able to solve real world problems on massive scale, this in combination with the limited supply is why the value appreciated enormously.
Most of the crypto investors nowadays don't start with (self) education about Bitcoin. This creates the situation that investors are investigating ‘what a coin can do’ and the basic features that made Bitcoin revolutionary in the first place are often forgotten. Many altcoins are doing something that could be done before the invention of Bitcoin, but now it is interesting because it is called a ‘cryptocurrency’ or ‘blockchain’.
Sending digital money in a centralized way is not special, banks and Paypall are doing this for ages already
A centralized blockchain is an inefficient database
Many altcoin can do wonderful things, but the network has never proven it’s resilience and security because they are not important enough yet to be attacked
Many altcoins claim to scale better than Bitcoin, but we only know this for sure when they are at scale!
The following features are making Bitcoin extremely strong and resilient, I will write a separate article about every single feature in the days to come. All these features are only found in Bitcoin OR at least Bitcoin is best at it:
The revolutionary basic features of Bitcoin are way more important than ‘what a coin can do’
- Decentralization
1. Proof of work - Game theory for an asset that is decentralized and nobody can control
- Store of value
- Censorship resistance
- Open source and permission less
- Limited supply
- Battle tested
- Multiple network effects
- Truly decentralized consensus
- Crypto reserve currency
Bitcoin is extremely resilient and strong because of it's amazing features
After education it is time to buy some
When you understand Bitcoin and why the properties are so important you can create a wallet, buy some and play with it. You can also buy a little bit (what you can easily afford to lose, you can buy as less as 10 USD) before you educate yourself to boost motivation (the more you own, the more you want to learn and the more you learn the more you want to own).
It is very important to start with Bitcoin first, because all the other coins are based on the same technology or say they are. When you understand how Bitcoin works and why it is special it is way easier to figure out which altcoins are interesting and which are not (or even a scam). You will also see that Bitcoin is the most interesting coin because BTC plays all the games on the highest level.
Beside that the Bitcoin community will teach you about money and the current financial system (something you will not learn at school or from mainstream media). When you learn about that you will see how extremely important the invention of Bitcoin is and that the ones that focus on fancy applications of a certain ICO are totally missing the point.
Also Bitcoin is the least volatile and the volatility of Bitcoin is certainty something you will have to get used to first. Furthermore Bitcoin is a safer investment for the long term, because Bitcoin will finally be able to do everything what altcoins can do (2nd layers), but altcoins will probably never be able to do everything that Bitcoin does. Also about security you will learn most when you play around with Bitcoin, because the possibilities with BTC are simply most diverse. Most software and hardware is available for Bitcoin.
But I missed out on Bitcoin, so I am looking for the next Bitcoin…..
Many think that they are to late to invest in Bitcoin because huge returns have been made already and they think that Bitcoin is currently expensive around 10k. It is true that some altcoins will give bigger returns (some penny stocks give more return than
Apple, Google, Amazon too), but the risk is way higher. A 50% drop in one day is very possible, so you could lose all your profit over night.
I think the potential for Bitcoin is still HUGE and can be easily go another 100x within a few years. The current market cap is under 200 billion, and to become a serious asset class it have to go in the trillions (20 trillion will give about 100X). Let alone when it becomes ‘the internet of money’ what I envision.
As long as you don't understand where you invest in you should consider it gambling and only invest small amounts that you can afford to lose!
The altcoin hype could be a phase of denial
I think that the altcoin hype is a phase of denial of Bitcoin. Many powerful entities don’t like Bitcoin and figured out that they can’t destroy it. The first reaction is denial:
2009 until 2014: Bitcoin is risky, for pedophiles and criminals and will never be adopted…..
But Bitcoin got adopted by respected companies like Microsoft and Expedia and serious new tech came out, shit we can't deny it anymore!
2014 until 2015: Bitcoin is not interesting, but blockchain the underlying technology is…..
Till they had a closer look and saw that a blockchain without decentralized currency backing it doesn't bring the amazing security benefits and is actually an inefficient database. I don’t hear much about blockchain anymore, what about you??
2016 until 2017: Bitcoin is old, these altcoins are way better = blockchain 2.0…….
Since they know that altcoins are way easier to control than Bitcoin, it could be a good strategy to hype an altcoin and compromise the centralized part of it to take control. Bitcoin would be forgotten and a controllable altcoin takes over the hype. Oh shit, Segwit is implemented half a year now and Lightning Network, RSK and Liquid are being rolled out and Schnorr, Bullet Proof, ect are on the horizon.
2018 till ?: Bitcoin is the only real and proven blockchain and 2nd layers will be able to do everything! It is the internet of money! We have to onboard now to buy in cheap! (Be before them and become extremely rich)
Big chance Bitcoin will play this game and not a fancy altcoin
My investment strategy
I understand the fundamentals of Bitcoin, so I am a BIG believer in it. I even expect hyperbitcoinization eventually. I think Bitcoin and precious metals are the ONLY safe investment at the moment (all regular markets are huge bubbles because of the huge amount of ‘free’ money), so I am as good as all in in cryptocurrencies.
I try to keep 80% of my crypto’s in Bitcoin to HODL as long as possible and the other 20% I use to bet on promising (or even hyped for short term) altcoins. When a certain altcoin makes me a 20 or 30x return I sell a part (1/2 to 2/3) to buy more Bitcoin to HODL. When this altcoin makes another huge return I repeat this action. When a return is not made I hold on to the coin till it dies, I never sell for a loss. The skyrocketing coins are delivering so much that it can pay easily for the failing coins, but the best thing is that my BTC stack keeps growing!
Previous post:
https://steemit.com/bitcoincash/@michiel/warning-be-extremely-careful-when-you-want-to-invest-in-bitcoin-cash-many-red-flags
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Disclaimer:
This is not investment advice, just my view on the market. Investing is risky and should always be done after YOUR OWN INVESTIGATION!
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