HODL: A primer on cryptocurrency investment for beginners

By ktn699 | Miscellaneous | 18 Nov 2019


A clear and disciplined investment strategy is the key to successful investment in any realm, whether its real estate, securities, or cryptocurrency. Unfortunately, the cryptocurrency space is filled with useless coins, expensive or fraudulent exchanges, and poorly executed use cases and value propositions. This post is a summary of my strategic roadmap and toolkit for organizing the savings and contributions process, minimizing fees and costs, and diversifying investments to mitigate risk. 

 

MAXIMIZE CONTRIBUTIONS

I try to save $250 into my coin fund every month. This is equivalent to about 5% of my monthly income. I also actively engage in crypto mining/faucet activities that are expected to yield another $25-50 a month. Overall, my goal is to save $300/month. Here are a list of my favorite sources of crypto income and fiat on-ramps.

Crypto Faucets

  • Brave Browser/Creator - earn BAT simply for browsing and posting on popular venues like Reddit, Youtube, your own website, etc. 
  • Publish0x - earn BAT, DAI, Hydro, and Bounty for publishing and reading content. 
  • Cointiply - a traditional adwall faucet. This site is well designed and runs efficiently. 

Proof of Stake mining

  • TOMO, NEO, PRV - PRV is my favorite so far. Check out the innovative platform, which is a side-chain of BTC and ERC-20 blockchains at incognito.org.
  • Still waiting on ETH.
  • Proof-of-work mining is essentially infeasible for many individual/consumer investors/enthusiasts due to power and equipment costs. 

Fiat On-Ramps

  • Coinbase - Safe, relatively secure, and easy way purchase BTC/ETH/DAI and other well established coins with bank transfer and debit card.
  • Sendwyre - Safe, relatively secure, and easy way purchase BTC/ETH with bank transfer.
  • Maker (DAI), Paxos (PAX), Circle (USDC), Tether (USDT), Gemini (GUSD) - I recommend on-ramping to stable coins to maintain crypto liquidity without suffering from volatility and excessive purchasing fees.

 

MINIMIZE FEES

If there's anything I've learned about investing, it's that you should avoid as many fees as possible. There's always some guy ready to take your money. Don't get lured into fancy technology or gimmicky deals. Pay only for what you truly need. Here's what I use:

Exchanges

  • KuCoin.com Exchange - Fast conversion, low fees, no KYC for coin-only use cases I was up and trading with 0.18% fees within 10 minutes. Withdrawals and deposits were fast and efficient.
  • Coinswitch.co - Fast conversion, anonymity, rare trading pairs/altcoins, high fees: Very high fees. I use it only to obtain coins that are not available to more trustworthy/accessible US exchanges.

Wallets

  • Keepkey - affordable and highly functional hardwallet: $50.
  • MyCrypto - generates ETH paperwallet. I use it for cold storage.
  • Argent.xyz - ERC-20 smart contract non-custodial wallet that pays for transaction fees/gas, with integrated Compound savings rate and Sendwyre exchange. An excellent choice!
  • Nexo.io (Swiss custodial savings wallet with zero transactional/network fees.
  • Coinbase.com - UK/US custodial exchange wallet with limited trading platform with high fees, but trustworthy fiat on-ramp.
  • KuCoin.com - HK custodial exchange wallet with decent trading platform and relatively low fees.

Equipment

  • I run instances of EC2 by Amazon AWS for my mining CPUs. It is fairly cheap and scalable, an average instance costs about $0.5-1/ day. I don't see the utility of committing thousands of dollars for mining equipment and electricity for crowded mining space. This way, if it doesn't work out, I can de-escalate with minimal loss.

 

DIVERSIFICATION

I cannot stress this point enough. Don't just dump all your cash in the hottest new coin. Time and time again, the hottest new ICO or "ultimate anonymity coin" ends up in court or in the garbage six months later. I recommend investing in coins and platforms that have at least 12 to 18 months of proven growth of adoption, income-generation, or at the very least, actual use-cases. Here are some of my favorites:

Dividend-income

  • Nexo Coin (Nexo) - must HODL on Nexo.io exchange to received earnings. 30% of Nexo profits are paid out as roughly quarterly dividends Estimated 8-12% APY. 
  • Ku Coin Shares (KCS) - must HODL on KuCoin exchange. 50% KuCoin exchange profits from trading fees are paid out daily. Estimated 5-8% APY. The advantage of this is system is daily compounding of earnings as KCS. However, greater KCS circulation creates inflationary pressure on the coin value.

Growth-Income

  • Binance Coin (BNB) - This is probably as close to a true security asset as there is in the cryptocurrency space. There is no promised dividend issued by Binance. HODLers wait for Binance to make a profit. Binance then essentially performs a coin buy-back AKA "burn." The burn creates increased demand and price growth for investors. BNB has done very well in 2019, managing to gain value in the face of a significant downturn in the alt-coin markets. 

Interest-income

  • MyConstant.com - Peer to peer lending marketplace. Estimated 8-12% APR, paid at the end of loan terms. Over-collateralized positions reduce various risks.
  • Compound.finance - money market/savings account for ETH, BTC, USDC, DAI. Estimated 4-8% APR, compounded every second. Collateralized and pooled lending positions reduce risk. Integrated with Argent.xyz wallet for frictionless (no fee) exit and entry.
  • Nexo.io - money market/savings account for stable coins. Estimated 8% APY, paid out daily. Over-collateralized positions and institutional insurance policy and auditing reduce various risks. 

Speculation/Volatility-income

  • HODL, buy and wait, buy hi sell low: However you want to call it, this strategy is high risk, high reward, because of the inherent volatility in cryptocurrency. Estimated -99% to 200% APY. This shouldn't be your entire portfolio unless you want to do pure speculation.

Arbitrage-income

  • Stablecoin fluctuations: Estimated yield <1% gains per trade but feasible with large sums. Minimal risk of value loss as stable coins typically track USD.

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Disclosures

Publish0x contains a wealth of articles about emerging blockchain and cryptocurrency technologies, but there are often clear conflicts of interest in reviews, testimonials, informational pieces. The views in this article are my own and do not constitute forward looking statements or  

Acknolwedgement

Cover image by Jp Valery; used with permission from Unsplash.com)

Read my other popular articles:

1. Mistakes of a Novice Investor: https://www.publish0x.com/miscellaneous/mistakes-novice-investor-xmjwwy

2. Make your crypto and cash work for you: https://www.publish0x.com/miscellaneous/make-your-crypto-and-cash-work-you-xkdgvr

3. Review of Constant:  a borderless, block-chain based P2P lending platform: https://www.publish0x.com/miscellaneous/review-constant-borderless-block-chain-based-p2p-lending-pla-xqqzlk

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ktn699
ktn699

Writer and technology enthusiast. Here to have fun and learn a thing or two.


Miscellaneous
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