4 mistakes to avoid for 2021 crypto-investors

The purpose of this series is to share the knowledge i gained and the mistakes i made along the way in the cryptocurrency universe. With hope, maybe you can avoid doing the same errors. But if you still do, no worries, it’s part of the learning curve. Sometimes you need to fail multiple times to advance. Have a growth spirit and more important be kind to yourself! 😀

For starters, i have been investing in Stocks and Real Estate for the last 10 years (and a little in crypto as you’re about to find out). I had some success and some losses. To give you an idea, i have now a portfolio with around 800 k$ net worth. Cryptocurrencies are only a small percentage of it (i will share why in a future article)

Disclaimer : As i think honesty and integrity are the one of highest values a human can possess, i won’t hide any mistakes or loss i had. Nor that i inflate my successes. I’ll try to stay the most explicit with you while being compassionated to my former-self. I’m just sharing my experience, it doesn’t constitute an investing advice in any way.

It all started in a rainy afternoon in Mars 2017 in a café-restaurant on the east side of Paris. At that time, we co-hosted an investment club with a friend (shoutout to you Déné if you come by), helping people managing their money and invest. The session was going great. A guy named Loïc, a new member, started speaking about bitcoin, crypto-currency etc. This was the first time i was exposed to this world. To give you some context, Ethereum (ETH) was around 40 $.

Frankly, this guy seemed passionated about it and shared with us the moves he made the last month of course the profit he did. I listened to what he had to say, asked a few questions. To my eyes, he hadn’t any real data to back up his speech. I reckoned i was thinking : it felt great to him because he won money, equal an emotional response. Since I rather approach investing rationally, i continue to speak to the other participants.
Just before leaving, the guy left me his number. While i already had my mind set up, we still met some times to discuss this topic. Looking backward, i already made several mistakes.

1. Failing to reason by myself with heavy bias

Let’s be honest, i wasn’t thinking straight. I automatically shat the door to critical thinking just because i imagined there was no coherent points made by the people at the club. I thought it was speculation or gambling, which i pictured like a giant casino.

My main argument was it didn’t generated any revenu on it’s own, unlike real estate or stocks for instance, which me call assets. If you want financial freedom, investing should be buying assets which generate income and gain value overtime.

Back then, i compared it with precious metal like gold or silver. I said “if i got 100g of gold one day, i won’t have 101g the day after”. While the argument was valid at the time, i did no research at all, not even a google request. Unlike the younger-me : Always do your due diligence before making a decision.

2. Thinking the gains were only for the early investors

In a sense, i can’t tell you right now that if you buy some coins you will make as much money than the early investors. And this is true to every kind of investment : who do you think made much money the guys who bought the facebook stocks or the Angel investors who have been there from the start ?

In other words, i thought the only way to use crypto-currencies was to buy and hold them (without again asking questions or making any due diligence). Meaning buying with the hope that someone is willing to pay more in the future. That’s why i believe it was a Ponzi scheme. I saw it like a virtual currency like any other fiat currency ($, €, etc.). Saving won’t make you gain much.

If you keep your dollars on your bank account and expect it to double, you are going to get disappointed. If you want fiat currencies to generate income you have to invest it. The same goes for crypto-currencies : the point is not to let it idle but to understand what you can do with it.

3. I thought no government was going to allow decentralized currency.

I thought no government was going to allow decentralized currency. The ability to print money is essential to any state. As lawmakers, i’m sure they’ll begin to dig in the crypto system, which they’ll see it as:

  • Something they need to “protect” their citizens from. Meaning controlling the pace.
  • A fresh source they can use for new taxes. Especially after the massive loans contracted since the multiples lockdowns.

The thing is cryptocurrency was already there and making its life on its own. That is still the reality today! Which doesn’t mean it’ll always be unregulated by the way. 😉

4. It is a get-rich-quick scam

When i heard the return made in this sector, sometimes more than 500X a year meaning 50 000% return yearly, it smelled funny to me. Used to the real estate sector where you could make 50–60% yearly of your down paiement or the stock market with >20% net return yearly (which make you a genius if you’re doing it long terme), i assume it to be a fraud. This returns couldn’t be possible.

Hilarious, i let me seduced by the hype train a few month later and bought it a few month before the dip of January 2018.
I didn’t understand back then you won’t get real return with just buying, but rather with staking, trading, etc.

Now, i’ve learned my lesson: Always be open and ask questions. What you don’t know is worth so much more than your current knowledge. Last advice, and maybe most important: think for yourself. Common sens and critical thinking are pure gold while investing, never loose it.

See you next time
Kind regards
Guillaume

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