11 Bitcoin Lessons From a Cryptocoin Investor

Over the last year, there’s been a seemingly endless discourse about bitcoin. Whether it’s been explained to you a thousand times by a thousand different tech bros, or clogging your Twitter feed, the topic is virtually inescapable. Yet for as much buzz as its getting, fundamental questions still remain: What is it? And how do I get involved?

To answer these burning questions, and find out once and for all what all the hype is about, we sat down with cryptocoin entrepreneur Richard Dearing, who started as a bitcoin miner back when a pizza purchase via crypto was $30. That might not make any sense to you, but maybe this will: today, that pizza would now cost “a fresh $250,000.” Soon after mining Dearing decided to make a small investment in bitcoin, and according to him, “it just kept growing.”

Dearing explains how Bitcoin was created using blockchain technology, which is defined as an open ledger with no central authority. The technology was initially created for the purpose of decentralizing cryptocoins, making them free from regulation.

Despite 50 Cent’s recent denial of his Bitcoin Billions in bankruptcy court, a few other rappers are admittedly jumping into the crypto-biz. Ol’ Dirty Bastard of Wu Tang is one who sees bitcoin as the future of money, and plans to be an integral part of it. His estate is set to release its own cryptocurrency, termed “the Dirty Coin.”

Cryptocurrency may seem like a silly trend, but it actually has a lot of staying power. It’s a technology that is revolutionizing how we think about money. If you’re interested in getting involved in the bitcoin hype, but don’t quite know where to start, have no fear: we’ve outlined Dearing’s key insights about crypto and we’re sharing them here. Read on for 11 pieces of advice from an actual bitcoin investor.

This should go without saying, but we’ll repeat it for emphasis: if you can’t afford to lose it, don’t invest it. Cryptocurrency may seem to have the power to turn anyone into Jeff Bezos, but it doesn’t. Even if you can afford to lose a bit, you should still try to minimize your losses, which can be done by diversifying your investments. In other words, crypto investments are not a sound replacement for your 401k.

Although bitcoin is the most widely-recognized cryptocurrency, it’s not your only option. Bitcoin was simply the catalyst that allowed the virtual currency revolution to begin. Despite its popularity, bitcoin’s crazy growth may not continue into the future, so it’s good to explore all of your options.

Although it has technically been around for a few years, crypto is still considered a new and developing market, so it's definitely worth investing as an early adopter. The last few years presented a huge opportunity for crypto investments, but it’s not too late to take advantage.

In order to purchase bitcoin or other cryptocurrencies, you must first set up an account with a crypto company, AKA crypto-platforms. Coinbase is a great way to make your first cryptocoin purchase, as their website is user-friendly for newbies . There’s also GDX, Coinbase’s platform for more advanced crypto users. Robinhood is another great platform for novices, however it’s only available in select states. Bittrex and Binance are a bit more advanced, but they also offer more coins.

Store your coins in an offline hardware wallet, such as Trezor, Ledger Nano, or Paper Wallets. This storage method keeps your personal cryptocoin information backed up, in case of an issue with your platform.

If you’re worried about crypto-investing taking up too much of your time, consider a long-term strategy. Long-term investments are a more reliable way to expect consistent returns with less stress. According to Dearing, “investors have found more success with this method, as bitcoin’s value raised to almost $20,000 this past year”—meaning if you bought bitcoin when it was just a few bucks and invested long-term, you would have made a fortune.

Day trading—AKA buying and selling within same day—crypto can be very profitable, but the strategy and skills required can take years to develop. But if you’re in crypto for the long haul, it can definitely be done. It’s important to note that morning hours have shown the most volatile trends, meaning lots of volume or price movement; that might sound scary, but it also means that the most profit can be made during those hours.

So what actually causes the daily price fluctuations of crypto that we always see in the news? The news itself. As with anything else, a crypto-coin’s value is determined because many people agree on it. The saying goes, “buy the hype, sell the news.” Typically, by the time crypto advice gets to the news, it’s time to sell.

Fear should not dictate whether or not you buy or sell cryptocurrency. Instead, it’s essential to form a strategy aligned with your own personal tendencies and beliefs. Dearing recommends the book Market Wizards by Jack D. Schwager as a general resource for investing guidance.

Bitcoin is very limited when it comes to features, meaning its main purpose is to be a peer-to-peer currency exchange. But there are other crypto companies that offer more features. One such company is Ethereum ETH, which specializes in “Smart Contracts.” There’s also Monero XMR, which claims to provide complete anonymity when making purchases or funds transfers.

Another currency with different features is VeChain’s VEN Token. VEN Token is a supply chain legitimacy currency that just announced a partnership with BMW. Its purpose is to verify the transportation of exotic goods. For example, if you’re ordering a bottle of wine from Italy, using VEN will guarantee the bottle’s authenticity and proper storage techniques to ensure that you get what you paid for.

According to Dearing, over the next 5-10 years, the use of mobile wallets will continue to increase, allowing users to make crypto payments from their cell phones. Additionally, more large corporations will continue to adopt cryptocurrency payments; essentially, blockchain will be everywhere.