Something to consider before reading this post:
What is your current crypto strategy?
Six months ago when I started with crypto, I felt like a kid in a candy store. This whole new financial world had opened up for me which was so fascinating, exciting and confusing, all at the same time. There was so much to learn, I'd spend hours consuming blogs, reading telegram channels and trying things on my own until my comfort level improved.
The biggest thing I felt like was missing for me when I got started in crypto, was creating a crypto strategy or plan for myself. When I got started, I treated it like the wild wild west where I was moving from one thing to the next, buying this and buying that and before I knew it, I had spent a lot more money than I intended to spend!
I think part of the process of getting started with something like this, is just to get started. You have to actually do things to understand them and once you do those things you have a better idea of why you should or shouldn't do those things again. I can now look back and start to put some order to my approach to crypto and formualte a plan for how I want to move forward. This article is meant to give you some ideas so you can do the same for yourself.
I am not an expert in crypto and this article is not meant to be financial advice. However, I am a beginner. And beginners often have great perspectives because they don't know any better. So they just do some things that seem right based on what they've read, what others have told them or just by dumb luck! Beginners don't put limitations on things. My intention with this article is to help others who are interested in getting started in crypto or are new to crypto so you can create your own crypto strategy.
This list includes some of the things I wish I would have considered when I started my journey with crypto. Take what works for you and leave the rest! I'm sure you have other ideas as well so please feel free to leave them in the comments so others can learn from your experience.
Ways to Create a Crypto Strategy
1. Set short and long term goals. What do you want crypto to do for you? Are you buying for the long term hodl or are you looking for quick gains and then to get out? Or maybe your goals are a combination of both? It's a good idea to start thinking about this in the beginning because this will help you determine things like: the types of wallet(s) you choose, what you invest in and where you are going to keep your money.
2. Set a firm amount to invest & when. This is really the core of your crypto strategy, to know up front how much money you have to work with and how often. When you first get started in crypto, it's like a whole new world has opened up to explore. I often wonder how how missed joining this world for so long! There's so much to learn, take in and understand. It's easy to get swept up in it all and want to buy it all. And the feeling is to hurry up and buy it now, because you might miss out!
This is all great and fine if you have unlimited funds. But most people don't so it's important to set limits on what you are going to invest in crypto and when. Are you going to invest a certain amount each each week or month? Are you going to use funds you already have set aside in another account? Are you going to stop investing in one area so you can start investing in crypto? Only you know the answers to these questions and it's important to set boundaries with yourself so you don't get carried away. Only invest what you are not afraid to lose.
3. Buy into projects that interest you. There are sooooooo many options available, how does someone new to crypto know where to get started? Besides Bitcoin, you can also invest in altcoins which include stablecoins, security tokens, and utility tokens. According to Investopedia, "altcoin" is a combination of the two words "alt" and "coin" and includes all alternatives to Bitcoin. According to CoinMarketCap (as of 3/28/21), Ethereum and Binance Coin were the largest altcoins by market capitalization in March 2021.
Once you start exploring past Bitcoin and Etherium, you will start to see there are many new decentralized projects being created and many of those project allow you to "buy in" and purchase their tokens. So what are crypto tokens? Going back to Investopedia for a clear definition:
These tokens represent fungible and tradable assets or utilities that reside on their own blockchains. Crypto tokens are often used to fundraise for crowd sales, but they can also be used as a substitute for other things. These tokens are usually created, distributed, sold, and circulated through the standard initial coin offering (ICO) process, which involves a crowdfunding exercise to fund project development.
Purchasing crypto tokens helps fund development for the project and this is where it gets exciting! There are so many new projects being developed and when I started exploring this, again, I asked myself "how did I miss this?". Once you start to see all the fun and exciting projects that are out there, it can become tempting to want to buy them all. Unless you have unlimited funds, that isn't going to be possible. So one way to narrow your focus is to invest in projects that are interesting to you. Find projects where you support the cause or what is being developed. It can be really fun to see these projects grow!
4. Diversify your storage. In a typical American banking scenario, the funds we put into a bank are insured up to $250,000. As you probably know, there is no insurance with crypto which means there can be more risk. Risk isn't necessarily a bad thing. With risk comes reward (usually). When we are aware of the risks, we can also take the appropriate steps to protect ourselves. There are two things to think about when you think about diversifying your storage. Where to keep your private keys and how much you want to keep in each wallet. I'll explore these ideas separately as I believe they both have value for consideration.
First, let's talk about deciding where to store your private keys. Before I do that, I want to explain the difference with private and public keys. Coin Market Cap defines them as
Private keys are used to authenticate asset ownership and encrypt the wallet, while public keys are used to derive public addresses used to identify the wallet and to receive funds.
When I'm talking about storing your keys, I'm talking about storing your private keys. When you set up a crypto wallet, you will typically be asked to set up a 12-24 word seed phrase. These are a bunch of random words which are the identifiers that tie you to your wallet. If you loose your wallet or have to restore it, you will use the seed phrase to recover your crypto. These are EXTREMELY important and not to be taken lightly! Have you heard the phrase "not your keys, not your crypto"? Simply put, if you loose your seed phrase, you loose your wallet. Whoever has the keys has the crypto! Writing them down and storing them are a critical component to owning crypto.
Writing down your seed phrase(s) on actual pen and paper is one way to store your private keys. You could also invest in a seed plate where you engrave your seed phrase on a titanium card. But you don't want to leave these lying around just anywhere. Do you have a home safe? If so, you should consider storing a copy of your private keys in your safe. You may even want to consider storing your private keys at another trusted location such as a safe deposit box or in the safe of another trusted family member.
The temptation can be to want to store your private keys digitally on your phone in a notes app, photo or other method. This is not recommended as there are many ways for this information to unintentionally get into the wrong hands. Remember, whoever holds the keys holds the crypto so decide a storage method that is right for you.
The second thing to consider when thinking about diversifying your funds is the limits you want to keep in each wallet. As I mentioned in the beginning of this point, most Americans are used to their funds being secured up to $250,000 in an American bank. Since crypto doesn't offer the same safety net, one thing to consider is to having various wallets to keep your crypto and decide how much you want to keep in each wallet. You may want to set personal wallet limits where once a wallet reaches a certain amount, you start putting funds in a different wallet. This can be time consuming but it is one option to diversify your risk.
5. Read, read, read and then read some more. Sites like CoinDesk, Daily Hodl, and Publish0x are great places to get started. Join telegram groups for your favorite tokens and read and ask questions. Listen to podcasts about crypto. Learning about crypto is like going back to school and immersing yourself in the topic. Don't be afraid to explore and learn! Remember, take everything you read with a grain of salt. No one can predict the future and when it comes to investing, if you've done your research you will know what is right for you!
6. Earn interest on your crypto. In the U.S., savings accounts are typically paying around .10 to .15% interest in 2021. You may have noticed in the crypto world you are able to earn interest rates from 5%-30% for keeping your crypto in different wallets and keeping them there long term. Another term you may have heard to describe this is called staking. According to Coinpedia, staking can be defined as:
Staking generally refers to the holding of your cryptocurrency funds in a wallet and hence supporting the functionality of a blockchain system. The cryptos are being locked in their wallets by the stakeholders. They are then rewarded by the network in return. Staking provides a way of making an income.
Staking is a process similar to having a savings account with your bank and earning interest on the deposits. Staking is a great addition to the cryptocurrency space which offers notable applications. Staking also brings the aspects of familiarity, engagement, and reward into the ecosystem. This makes the investment all the more worthwhile.
There are many ways to stake your crypto and the options vary based on the wallet, so this is too much to get into for this article. If you are looking for an easy way to get get started staking your crypto and earning high yields, a great place to do this is through PointPay. PointPay Blockchain Bank is a platform which allows users to receive a complex daily interest on deposits in cryptocurrency. With the option for storing your crypto in both a checking and savings account, users can decide how they want to store their crypto.
Pointpay Checking accounts "are convenient for daily usage. It allows a user to make an unlimited number of operations for receiving and sending funds in cryptocurrency. The interest rate on Checking account is lower than on Savings account." (Source: PointPay FAQ)
PointPay Savings accounts "are suitable for storing funds, has a higher annual interest rate on a deposit, but it is allowed to transfer funds from it only three times a month. When funds are withdrawn from the savings account more than three times in the current month, the interest rate on the savings account is reduced to the checking account rate in this month for this cryptocurrency." (Source: PointPay FAQ)
The PointPay app has a simple and easy to use interface which makes it an excellent choice for both beginners and those who are more experienced with crypto. They also have a very responsive and interactive Telegram channel where you can go to get your questions answered. At the time of this article, their PointPay token is yielding up to 30% in the savings account. Bitcoin is yielding 6.2% and Tether, USDC and DAI are yielding 8%. in the PointPay Savings account.
If you own crypto, earning interest from your crypto is a great way to create passive income for yourself. Not only do you have the potential to earn more as the value of your crypto increases, you can also earn interest on it as it happens!
7. Most importantly, have fun! Crypto is a fun new world that many of us are getting into. This is still the early stages of many new innovations being developed and that means there is a lot more to come! If you can look at your investments in crypto as something fun to explore, it makes everything you are doing more exciting. Investing in crypto should not be something stressful. We have enough of that in our lives! Take the stress out of it by never investing more than you can afford to loose.
Learn, explore, try things, try them again and see where crypto takes you in 2021 and beyond!
Ways to Support Create What You Speak
- Follow this blog by clicking "follow" below this post
- Use the tipping option below
- Help me keep the podcast going by donating. Donate here.
- Invest in yourself with my 33 Days of Magic Course
- Sign up for my newsletter
- Join my Telegram Channel
- Follow the podcast on your favorite podcast player
- Leave a positive review for the show in your favorite podcast player
- Comment on this post and let me know what you liked and what you learned
- Share https://cointr.ee/sloanefreemont with your friends and on social media so others can listen to the show
- Connect on Minds https://www.minds.com/sloanefreemont/
- Connect on Gab: https://gab.com/sloanefreemont
- Join my Gab Group: gab.com/groups/25315
- Connect on Gab TV: https://tv.gab.com/channel/sloanefreemont
- Connect on Clouthub https://clouthub.com/sloanefreemont
- Contact me with any questions, suggestions or comments: www.sloanefreemont.com