It took me about a 6 months to achieve a basic understanding of Crypto’s – what it means, why it matters and how to get started making money. After I quickly doubled my invested money I decided to take a deeper dive.
I synthesized many conversations and online videos down to the 5 ways people are making money in this area and ordered them roughly from least to highest risk. The purpose of this post was to detail an honest and actionable investment strategy that I am using, how it makes sense to me or in Mandalorian “This is the way”.
1. Dollar cost average Bitcoin and Ethereum: This “way” is to buy and hold (aka HODL) the coins that will be around forever, will likely always go up and have the least risk of going to zero. Every crypto is “money+” meaning they are a means of payment but also do something. Bitcoin’s purpose is being the most universally accepted coin which no other crypto can dethrone (BTC is a unique case), Ethereum’s purpose is their code which is the basis for nearly every other coin.
Goal: Dollar cost average the 2 largest, safest coins.
Full-disclosure: I use Swan to buy Bitcoin every day (not Coinbase) and occasionally buy Ethereum on Coinbase whenever it drops.
• Coinbase as the all purpose standard to buy BitCoin, Ethereum and other major coins.
• Authy for authentication of Coinbase and, I think, all other crypto sites (and someday every financial site). You must install this on your phone.
• SwanBitCoin to buy Bitcoin because they have the lowest fees. (Coinbase is pricey)
2. High Interest Savings account – Stable coin USDC: This “way” is to move some of your savings into a high earning (currently 8.6%) savings account. Your account still has the same dollar value except it is in a fixed Crypto coin earning a much higher interest rate than in a bank. I don’t know how long interest rates like this will last but they can’t last forever.
Stable coins are fixed to the value of a dollar. It took me a solid week before I realized the power of stable coins and what the impact will be and is. Crypto’s are money+ and one purpose of stable coins is it allow US Dollars to be instantly sent and received without fees. Think back to how many problems you have had from waiting for a check to clear or for someone to get your money. Now add some zero’s to your fees which corporations, governments etc are faced with. Now imagine you or these large agencies doing the same transactions, in the same currency, but instantly and with no fees. It’s already being done and those that try it don’t go back to the old way. This is here to stay and will disrupt the banking industry.
Goal: Earn a high interest on your savings account.
Full-disclosure: I put 10% of my savings in BlockFi in USDC coin and I selected all interest to be paid out in Ethereum. I think the USDollar might lose value substantially over the next few years so my plan is to limit investment to 50% of my savings.
• BlockFi: Referral https://blockfi.com/?ref=dcbd998d
3. High Interest Savings Account – Non-stable coin BTC, ETH: This “way” is the same as above but instead of USDollars you put Bitcoin (6.0% interest on BlockFi) or Ethereum (5.25% interest on BlockFi) into a savings account instead of USDollars. This is obviously only for people who already own crypto’s.
Goal: Earn a high interest on your crypto savings account.
Full-disclosure needed: I haven’t done this yet but I will soon. My plan is to have 50% of savings in stable coins and 50% in non-stable coins.
• BlockFi: Referral https://blockfi.com/?ref=dcbd998d
4. Speculative Cryptos – Buy the minor cryptos in the hope that they achieve wide adoption: This “way” is the most exciting and the one aspect those “in the know” want to talk about the most. Only problem is it is far more complicated and confusing than it sounds. It isn’t possible to jump from old-school banking ideas and investment strategies to this “way” before investing time and money in the previous crypto “ways” above. If you don’t own Bitcoin and Ethereum you shouldn’t invest here. Period. There are thousands of coins, there are hundreds of websites. Every website does something different, most websites don’t accept fiat currency, every site has regulatory restrictions (USA vs Germany vs Japan), every site sells and trades different coins each each with wildly different rates and fees, every coin has its own story, and every week countries are passing new regulations impacting everything. This requires a lot of time and effort to manage. Just a hint at the complexity: I opened a KuCoin account a month ago and now US citizens are banned. Also, since cryptos are money+ what they do gets bizarre: they can be artwork, they can be a contract, they can be a parts supplier via 3D printers. etc. Beginners should ignore this area entirely!!
Goal: Make tons of money on speculative coins.
Full-disclosure: I have some money in a few coins but I am wary of recommending any of them to beginners. I own ChainLink and I will be buying PolkADot. These coins allow the transfer of all other coins in the banking world and are basically essential. After that I get totally lost and give up.
Hundreds of sites. I likely have an account with whatever you find so you can ask for a referral.
5. Trading Crypto: This “way” is the same idea as trading in the FOREX currency market.
Goal: Make money on the volatility of the crypto market.
Full-disclosure: I haven’t done this yet but I spend hours every day working towards it. This is high risk.
Apps/Websites I use:
• I am not telling because you shouldn’t be using them.
Receiving Cryptos: This isn’t a “way” but soon we will need a simple method of transferring money. Step in Unstoppable Domains. You buy your own user friendly domain name so anyone at anytime can transfer money to you.
Goal: Simple user friendly system to be paid. One link does it all.
Full-disclosure: I purchased one account: danielbarringer.crypto. I have not used it yet but feel free to send me money.
Unstoppable Domains. Referral: https://unstoppabledomains.com/r/2f956b9a3a48448
• I didn’t write this to make money on referrals which amounts to like ~$20 we each would get, but I added it anyways and to prove these are the sites I am using and to limit correspondence.
• I have found Crypto websites to be challenging to navigate. You will be required to go through a lot more security than a regular bank.
• I am not anyone’s financial advisor. Invest at your own risk.
• Thanks to M.T. for teaching me everything.
• Goal was to explain this using the simplest possible terms. Advanced crypto users will find “errors” in my explanation. Suck it, no one cares.
I have spoken.