What i wish i knew before investing in crypto (Part 1)

There are so many things i wish i knew before i made my first steps into the Crypto Space.

For insights, i started to get involved in crypto during Summer 2017. Back then, the market went wild and i made massive gains before getting wrecked a few months latter…
I got hit, emotionally speaking, so hard that my interest in crypto fades until Spring 2021.

Yeah that’s right after the massive pump occurring between the End of 2020 and April 2021… Apparently i learned some lessons from the previous experience but timing wasn’t one of them. 😅

After nearly one year going crypto investing full time, I summarize for you all the insights i gained along the way. With this knowledge and the same amount of work, i would have been able to multiply by more than ten times the solid gains i made.

Don’t ever leave your crypto on exchange

Maybe the most important one and the hardest to understand as a beginner. There is a saying in crypto : “Not your keys, not your coins”. But what does that really means ?

When you use your favorite exchange (Binance, Kraken, Kucoin, Coinbase to name a few), the cryptos you bought are placed on wallets that are being handle by one of the previous Entities. This wallets are called custodial wallet because the exchanges have custody on them : they control private keys (keys that are used to sign transaction) and seed phrases (a series of words to gain back access in case of lost password or username).

The are some advantages to use custodial wallet :

• You are not responsible for it. So in case of lost user informations, the customer service can retrieve it for you.
• Generally speaking, when some hack occurs, the platform and their insurance provide for the loss.
• It’s easier and instantaneous to sell idle coins.

The hidden cost

People who have control of the wallet, gain utility and the rewards that comes with it.

In fact, when you send your cryptos to a non custodial wallet (= a wallet you control) you can use them and reap associated rewards :

1. Participating in the security of the Network by Staking. Usually you get 8 to 30% per year (called APR) paid in the coins or token staked. Sometimes it can get to a lot more : i had more than 100% or even 1000% for short periods. Note that this yield doesn’t take compounding effects into account.
2. By staking your cryptos, you often get reward with Airdrops. Airdrops are basically free crypto send to you by new projects for bootstrapping their network. Some Airdrops are worth for more than 1000$.
3. It’s the first step to use DeFi (Decentralized Finance) and have additional rewards by providing liquidity (more advance usage)

There is a small price to be paid. For this gains and the massive freedom, you have full responsibility for your actions. Since the blockchain is immutable, if you make an error, your crypto are lost… You also have to learn how to use a non custodial wallet (quite easy) and pay some gas price for each interaction with the blockchain. Which most of the times won’t cost a lot. There is an exception though, which is Ethereum Network (or for ERC 20 tokens), which can get to some hundreds dollars during high activity period.

If you choose to use a non custodial wallet, i urge to consider using a hardware wallet to keep your private keys safe and protect your asset from hacks. I personally use Ledger but any hardware wallet should be fine.

Nevertheless, if you don’t feel like taking full responsability for your wallets

I encourage you to use some Yield Protocol. It’s a platform that still use custodial wallets (so you don’t have to worry about private keys and security) and use you crypto (lending, staking, DeFi, …) to give you some yield. So you have gains just for holding your cryptos. 😉

It’s also called Centralized Finance : an entity handle your wallets in exchange for yield. The yield is split between the Entity and you, which is a great deal considering you don’t have to do anything and your crypto-currencies are available at anytime.

There is a lot of Centralized Finance platform. For my part, i use two of them :

• Nexo : the most ethical one. On top of the great yield they provide, they also offer a great swap service (exchange of crypto-currencies) for low prices and they pay for some of the transfer fees (depending of your level of Loyalty)
• Celsius : one of the first. A very good one and very transparent. They don’t pay for transfer fees but to compensate, they have very aggressive deals when you open account and when transfer some cryptos.

Each platform will propose you to be paid with the deposited crypto-currency or with their own token (NEXO or CEL) in which case you get additional bonus. The yields range from to 6% to 12% per year (compounding included, called APY) paid out on a daily basis.

All the previous link are affiliate ones. Nexo give you 10$ in Bitcoin for 100$ deposit and Celsius get you 50$ in Bitcoin for 400$ deposit. I get the same amount if you use the links. If you don’t want to use it, feel free to go directly to their website but it would be a shame to pass on an instant 10% gain, don’t you think so ? 😇

Have a plan and stick to it

Maybe the most underrated side of crypto investing. It’s a psychological side and reflexion most people tend to avoid : despite being one of the most important.

Having a plan set out, thought off in advance and written will force you to :

• Know what to do in advance. Giving you clarity and diminishing stress during the period where you have to take actions.
• Avoiding the trap of having to make emotional decisions. Especially during a rush or in an emergency situation.
• Take profits on the way up when you see fit. Keeping you away from never realize gains and reducing your risk.

The main point is to keep you playing the game. As the more time you stick to investing, the more likely you will have gains at the end(the same goes for stocks or real estate). Don’t be like me back in 2017, buying some cryptocurrency and don’t know what to do with them once you did. And when things go south, you are kept riding the wave on the way down (like i did during the Crypto Winter between 2018 and 2020).

In crypto, the act of buying is easy compared to selling. Because you always will fear selling too early and miss the next pump…

This article is already too long … So i divided it in 3 parts, to make it more digestible.

Hope you enjoy this one and learned from some of mistakes. Remember it’s okay to make mistakes : you and i will certainly make more in the future. The real issue is to not learn from them and perpetuate them, hurting your future self in the process.

Kind regards.

Guillaume