Benefits of Cryptocurrency & Basic Investing Advice

Cryptocurrencies are simply a digital form of currency.

E.g. Bitcoin – The first and original, will be in high demand for the foreseeable future. The brand is super strong, but in terms of practical usage the network is backed up and the mining community has huge political fighting about how to solve its problems. So it’s not practical to shop with until they solve the scaling problem.


  • Decentralization – no need for a third party to agree or validate transactions (You don’t need a clearing house, not that no mining happens).
  • Security – cryptographically secured transactions provide integrity
  • Transparency and trust – As block-chains are shared, everyone can see what transactions were validated.
  • Immutability – It is extremely difficult to change a transaction once its been put onto a block-chain
  • Distributed availability – The system is spread on thousands of nodes on a P2P network, so its difficult to take the system down.
  • Simplification and consolidation – a block-chain can serve as a shared ledger in industries where multiple entities previously kept their own data sources
  • Quicker Settlement – In the financial industry when we’re dealing with post-trade settlement, a block-chain can drastically increase the speed of verification
  • Cost – in some cases avoiding a third party verification would drastically reduce costs.


This is not financial advise, but the following as helped me profit many times over (even during the dips):

  1. Invest for the long term. This means do not invest money you expect to need in the next 5 years. This will prevent you from being forced to sell at a loss since a 5 year horizon should give you plenty of time to recover from any short term losses.
  2. Invest regularly. There is NOTHING wrong with buying at an all time high. The only reason we Invest is because we expect the asset to increase in value. Zoom out far enough and the best stocks are always at an all time high. And, of course, invest during the dips too. Pick an appropriate amount to invest regularly and regularly invest that amount.
  3. Avoid having more than 5% of their assets invested in a single stock. This is to avoid taking on too much risk. Enron, WorldCom, any number of biotech companies—can all go to the moon or the bottom of the Grand Canyon. If you are gambling you can do what you like. If Ky are investing, stick to the 5% rule.
    • In crypto, you MIGHT decide that this means splitting your investment in at least 20 coins. But, my suggestion is to think of the 5% rule as the entire crypto portfolio as measured against other investments. Have $100 to invest? $5 to crypto. $95 to a diversified portfolio of stocks and bonds appropriate for your risk tolerance. My suggestion is you can’t go wrong with 80% VTI and 20% BND for that 95% of your portfolio. But you may be fine at 100% VTI and no BND. I was 100% in equities for 20-49 years old.
    • Of course you CAN go all in with Crypto and it might even make sense to do so if you have an emergency fund, a decent job and not very much money to invest. So $1,000, for example, need not be 95% invested out of crypto. $100,000, on the other hand, ought to be.
    • Whether you diversify the 5% among coins is up to you. You aren’t likely to get rich one way or the other investing 5% of your money in this space.
  4. Don’t worry about getting rich quick. Make sure you have an emergency fund to take care of expected and unexpected expenses. When I used to have cash I used it as my dry powder to buy when markets collapsed. I would do this again but I would not Invest emergency funds in a collapsed crypto market because that market does not have a long history of recovering, unlike the stock market.
  5. Invest for the long term. Don’t sell when the market drops, you buy more. Or, you buy at the regular interval as planned regardless of whether you are at a dip or a peak. You may think of this as the REASON to HODL. If you are doing this right, there is no reason to feel that “dear life” is even an issue because you have only invested at most, 5% and it isn’t going to feel like your life is at stake.
  6. Don’t speculate with more than 5% of your assets. You won’t be risking more than you can afford to lose.



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