Great post, RJF, with some great advice! I am finding that more and more, building true wealth in the cryptospace is not too much different than the old fashioned way: slowly, gradually, methodically.
I would love to see the list of coins you invest in. I have about three that I'm fairly actively accumulating and a few others that I play with or use in some way but am not trying to accumulate. I would like to know about some more good ones to buy and hold for the sake of improved diversity. I've noticed a bunch of new ones are coming on the scene but haven't had any time to research them adequately. I try to stay away from the P&D coins, but sometimes you do find yourself sitting on one unintentionally.
What I've found great about Cryptos is that I found a way to learn a lot about how various investing vehicles such as trade exchanges and stocks and even lending sites and so forth actually work because the cryptospace allows you to play with those things in small amounts and with low fees. For example, in the fiat world, the lowest I've seen for buying or selling stocks is $6.95 on discount sites such as Scott Trade. That's fine if you're buying several thousand dollars worth of stock, but it's a major bite if you're only able to spend $50. But with Crypto, trade fees are generally around 0.2% no matter how large or small, so it's workable. That's probably been the biggest benefit for me. I consider myself to be priced out of most fiat investments because putting in the minimal amounts is just too much of a risk for me at this point. But it's no problem for me to experiment with $10 or $20 worth of cryptos at a time and I can afford to lose that (and often do!). Plus I don't buy my cryptos using family money; I earn them in various ways and that's my play money.
I find it always helps to relate the various alt-coins I own back to their value in USD. This gives me a more realistic view of the actual value of my stash in terms of something that can actually buy me the things I need and want. Like RJF said, a coin that's worth only a few satoshis isn't going to be worth much to you even if you own several million of them. In fact, there is one low value coin I earn and regularly sell by the millions. At first it felt kind of weird going through millions of them in such a short time, but now it's just very normal. I guess that's probably not too far off from how people living in a place like Zimbabwe (where the currency is severely devalued) feel about spending hundreds of thousands on fairly small items. From the speculating point of view, of course, you hope to find the magic coin where you can buy and hold several million of them and while you still have them their value goes up to a dollar or more per coin and voila, instant millionaire. I think that is going to be pretty rare, though, and it's not going to happen with just any coin. I could see it happening with DNotes because of all the surrounding infrastructure, but it may take ten or fifteen years to get there. That is way more long term than most people in the cryptospace are willing to consider. To really make it in this world, you have to get out of speculating mode and invest in coins that have good fundamentals and then you have to keep track of what they're doing and how they're building value and so forth. Otherwise you could end up with something that has been abandoned or plain has lost its fundamental value (in which case you want to sell before everyone else figures it out). You have to be willing to unload those assets and not cry over what you lost from them on paper. But you also have to be willing to in a sense earn your cryptos. Do honest work in exchange for them, or outright buy them using fiat that you've earned and set aside for that purpose. As many people have observed, the over emphasis on speculation tends to hurt everyone, but the steady accumulation through honest work and a bit of smart trading and investing... well, there are probably way more opportunities here than in the fiat world, at least for those who aren't already wealthy, to make out really well that way.
Not too long ago I was catching up with an old friend I'd met back when I was more heavily involved in promoting the use of silver as a currency. He was still very much into silver as the best form of money and very skeptical about cryptocurrencies, but I told him some of my experiences anyway. He made this interesting comment to me: "The way you approach it is vastly different from the way every other person I've talked to about it has approached it. For you, it's all about value. You do some work for someone; they pay you in some kind of digital coin. Then you trade that coin into something else or keep it or cash it out. But you bring your value and basically exchange it for an equivalent value and then try to make that value grow." I got the impression that most of the people he'd talked to saw the whole thing as a speculation train or get rich quick opportunity. I guess I never saw it that way, which probably explains why I find some of what's said about Bitcoin, etc. to be totally incomprehensible. My involvement with crypto is a bit of a combination between a fun hobby that happens to at least fund itself and a part time job that doesn't yet pay commensurate with the time I put into it. But I do believe my involvement will pay off fairly well in the future, so in a sense it's also an investment, but not of the speculative type. At the very least it's extremely cheap tuition for the school of financial literacy.
It's interesting to see people's perspective on crypto and how easily money is lost and services are here today, gone tomorrow. Something I think we forget to take into account with this industry and, investment opportunity, is just how easy it is to get involved yet we continue to compare it with other investment markets such as stocks and commodities both consciously and subconsciously.
For example, what would you consider a workable portfolio in the stock market that could produce extended future earnings, ie income, for an individual? $100K? $500k? A million or more in USD? If your talking about life long income or retirement, more than a million invested is really needed.
However, you can buy millions of crypto coins for pennys compared to stocks and traded commodities making it very easy to buy in. But, here's the rub, value and future value. Our minds tend to play a dirty trick on us when we work with money and value. A million alt coins valued at a tenth of a cent is nothing like a million US Dollars yet, our subconscious doesn't see it that way. Our mind ignores the vast difference in value and tells us we must be making a great investment since we are getting so much for so little completely ignoring the vast difference in real value.
And, that's a problem.
Anyone can buy in and risk whatever they bought trying to manipulate the market, without risking much really. "Pump and Dump" has become so prevalent, yet totally illegal, that coins are created specifically for the purpose. Companies run by people with no financial acumen hold themselves out to be crypto-financial advisers applying unproven and untested theories to your money!
The only saving grace comes in two things: it's early, the industry needs to shake out and settle down and, believe it or not, regulation. We absolutely need to follow the rules that apply to what I will call the "real financial world" since we are quickly becoming that very world.
So, we invest, we buy, we gain, we loose. You have to look at it as a learning curve and be glad you not spending mega dollars to learn a hard lesson unless you play with Bitcoin itself, then, all bets are off, good luck!
In conclusion, Alts like DNotes are, without a doubt, the best way to build a future but, to those "instant gratification" types out there, it won't happen overnight. Building value and real use cases for a crypto takes time and an enormous amount of work. It also takes talented people fully committed to the task such as we have here.
In conclusion, I have, over the last year or so, consolidated my long term holdings down to about 8 to 10 coins that I continue to invest in and support. That from about 60 at the height of it all. I see this further shrinking to perhaps 5 with DNotes at or near the top. No instant miracle coins, no super high tech wonders, no overnight "to the moon" projects, just good old fashioned hard work, good marketing, committed development team and, good use case with ongoing development.
So, you pay to play but sooner or later, you pay to invest so your money can pay you back. Then you can play some more...
Thank you RJF, great post. I believe this is the line of thinking our industry will move towards and we are starting to see already.
"Building value and real use cases for a crypto takes time and an enormous amount of work." Absolutely correct, and we will continue to work on the projects that have use cases and real value in the world for everyday users.
Excellent post, RJF. It could be a great article for DCEBrief.
DNotes, by choice, elected to take the most difficult path. However, I have no doubt that it is absolutely the correct path. What is so ironic is that our industry is dead-set against banks "creating money out of thin air" but at least it is done through some form of debt obligation. Crypto, on the other hand, through P & D literally creates money out of thin air but some constantly walked away with the hard earned coins of tens of thousands of "bag-holders". Sadly they have always been able to attract another bunch of suckers. Admittedly, I got burnt a few times too. So, thanks for your great advice, RJF.
