Cryptocurrency is all the rage, but you don’t need to be a computer whiz or a financial wizard or even much of a math wiz to make money it. The biggest mistakes are simple: The first is putting in too much money at once.
The second is investing in the wrong cryptocurrency. The third is overpaying for an investment.
Cryptocurrency is a new technology, and it’s bringing a lot of new opportunities. But the very first thing to learn is that it’s not a get-rich-quick scheme. It is also important to understand how cryptocurrency works, how it can be used, how to keep yourself safe from hacks and scams.
The goal of this blog is to help you do so. I will give you advice on the big things: buying cryptocurrency, holding onto it, spending it, storing it, paying your bills with cryptocurrency.
There are three big mistakes you can make when you buy cryptocurrency. The first is that you don’t know what to look for and so you don’t know what you’re buying. The second is that you don’t have a good strategy for how to use it, and so you end up just sitting on your “investment” hoping that it goes up in value. The third is that you buy too much of it, because you’ve been suckered into believing that it’s going to go up in value.
Check out the Part 2: How to Buy Cryptocurrency Guide for more details on these topics and how to avoid them.
Cryptocurrency is the most untested, unproven and most dangerous financial technology to come along in a long time. More than that, it is one of the most dangerous things of all time.
To put it in perspective, if you were to compare cryptocurrency to a new form of nuclear weaponry, you could say it is more dangerous than both World War I and World War II combined. This is because a nuclear war doesn’t kill everybody and everything at once . . . but cryptocurrency does.
The whole thing is built on a foundation of lies, frauds and broken trust:
* The promise of decentralization was false, since the main way that blockchain networks are decentralized is by having the computers in millions of human hands running those networks. We have already seen this problem with Bitcoin, where an “unhackable” system was found to be trivially hackable by anyone who knew what they were doing.
* The promise of anonymity was false. Bitcoin users can easily be identified by any third party who wants to do so; I made my name public for three years before finding out how easy it was to find me behind the scenes (the same goes for other high-profile Bitcoin users).
* Some people talk about “trustless” systems as if
What cryptocurrency is
Cryptocurrency is a form of digital money that uses encryption techniques to regulate the generation of units of currency, and verify the transfer of funds. It was invented in 2008 by an anonymous person or group going by the name Satoshi Nakamoto. Cryptocurrencies can be used as an investment as well as a form of payment.
Cryptocurrencies operate outside any monetary authority, such as national banks. There is no central bank, which means there are no inflationary pressures. As a result, cryptocurrencies tend to have low transaction fees compared to other forms of payment. You get your money only when you want: there’s no charge for withdrawals from accounts, and you don’t need to share personal information to open an account or use it.
What we’re going to look at are the mistakes that can cost you money, not mistakes in thinking. The first is something weird and rare, which is the mistake of believing that if there’s a bunch of people making a lot of money, it must be honest. The second mistake is to think that everything you see on the internet must be true.
The third is thinking that because Bitcoin is anonymous, it will be immune to regulation. And the fourth is falling for a hoax or scam about Bitcoin.
You’ve heard that a financial bubble is when stocks are overpriced, so you buy them. But it’s more than that. A bubble is a special kind of misallocation of capital. It follows from the “winner’s curse.”