My experience with crypto in 2017
And what I learned from it about money and investing
Some background
I am sitting at home and taking the year off after I finished my 12th exams. Here in India, you just don’t do that; After 12th you go to college the same year, and taking a drop year is looked down upon. Now even though I have somewhat made peace with my situation, I want to do something that can help me make some money, or at least I can show that I wasn’t useless.
So, I started to search about finance, investing, and how to start earning. Even though I wasn’t ready for most of it I found something that could eventually help me with exponentially increasing the little money that I had saved up.
Jumping in the deep end
With the basic knowledge on how to open an account and the saved-up money that I had, I jumped in the deep end. I made an account on a and started small. Now I had a small amount that I bought bitcoin with initially the growth I saw was great. So, I started to learn more about the crypto space and tried diversifying.
The speed breaker
Even though I did see some growth I did not know much about crypto and how volatile it can be. My inexperience with investing made me vulnerable to any corrections that would be in store for me. And the first time my investment went down by 5 percent; I panicked and sold every Satoshi I had.
Not only did I book the 5% loss I also had to pay a fee that was levied on every transaction and that left me 6% down on my principal.
Being cautious
I saw the growth potential as well as the risk associated with bitcoin, which made me want to learn more about the technology as well as the whole space in detail. At the time that all this was happening, the information pieces around Bitcoin and other cryptos were mostly speculative.
Even though most did not understand blockchain or crypto, they acted as if they are the gods that are controlling the same. Even if I wanted to make sense of the noise, I couldn’t. Everyone was selling a dream but no one knew how to get there in real life.
Dipping my toes once again
Even though it felt like the wild west, I still thought of trying to enter this market once more. Now with all the “information” I acquired, I was sure that I will diversify this time. The 3 cryptos I got were Bitcoin, Ethereum, and Ripple.
At the time I felt like a genius but looking back, I had no idea of what I was doing. I invested in Bitcoin because it was the most talked-about; in Ethereum. After all, according to some article, the underlying technology was better than bitcoin and hence it was a good buy. I was a bit iffy about Ripple but I liked the name and saw some articles about it so I invested in it too.
Luck was on my side?
After investing all this I waited for about a week and by that time a lot of people were talking about crypto. And that helped my “portfolio” grow to 5 times of the principal. The amount invested was not high from any standards but I still got a good profit that was substantial for a guy who was new to all this.
I took out everything thinking that I will wait for the next opportunity and then get more returns. And in the meantime, I will learn more. Though My plan was turned upside down.
Not my cup of tea
I timed everything correctly and got a healthy profit out of it. What could be better? But by the time I was ready to invest again (January 2018), there was a ban coming our way. India’s finance minister at the time announced that crypto will be cracked down on and would not be legal in India. Not only that but there was a Ponzi scheme being uncovered by the name of BitConnect that wanted to profit from the hype of other cryptos.
This spooked me quite a lot and I turned to traditional investment instruments like mutual funds and the good old savings account. And I was anyways up for filling college applications and to prepare for entrance exams. So, I left all this for a while and focused on my studies. But a chunk of that money helped me pay for college applications so that was neat.
What did I learn?
As much as I would like to believe that I made the right decisions at that time, I know that it could have gone either way, and being this reckless with money could have caused me to lose my savings even though it wasn’t a big amount.
Investing in crypto is quite risky as the whole market is working on a belief system. Even though in the years since then, space has grown a lot and has gotten a bit safer than it used to be. But still, one has to be very careful when investing in crypto; don’t make it a significant portion of your assets. If you want to hold crypto, talk to people who really know about this and then go into it.
Last but not the least, I learned that investing in things I don’t understand will lead to false positives and false negatives which will only strengthen the biases I already hold about the things I don’t understand.
I hope you liked this article. Do tell me more in the comments down below.
Good Day and Stay Safe.
