Lessons from a Year in Crypto.
Reflections on my mistakes, 4 important lessons, and interesting content I've read recently.
Hello friends, I know it’s been a while since I last posted. I have been busy with uni and was in a creative slump with little inspiration to write. I’m hoping that’s behind me now and I will try keep this going more consistently. I thought it was relevant to get back into writing as I’m approaching a year of involvement in crypto. Thank you for sticking around.
Today marks a year since I bought my first NFT and fell down a deep rabbit hole. What feels like an eternity has somehow only been a year of active involvement in the Web3 space. I have learnt so much from my own mistakes and from the mistakes of others, and I am constantly reminded of how much there is still to learn. In this post, I have collected some of my most important lessons from my time so far.
1. Don’t buy into hype/FOMO.
Typically, if something sounds too good to be true, it probably is. Scammers often create false urgency to encourage their targets to click links or connect their wallets to malicious sites without properly checking what they are connecting to. For example, a false mint site claiming to be another collection from the BAYC ecosystem might emphasise that the collection is a limited drop and claims are only open for a short period of time so that users place less focus on security and are more concerned about quickly signing transactions to claim their piece—a fatal error made possible by exploiting a person’s fear of missing out. FOMO is not only limited to scams: only a few days ago I decided to buy a significant amount of ETH (for me, at least) because I saw the price had been rallying up the past week or so. The day after I bought, there was a crypto bloodbath with popular exchange FTX becoming illiquid, preventing users’ withdrawals and ultimately leading to a 25% decline in ETH (and worse for other currencies) value as tokens were dumped for cash. The lesson I learnt here was to not rush to buy something purely because its price is increasing. I had been dollar cost averaging to slowly build up my portfolio and be less impacted by short-term price changes. This got thrown out the window because of my own fear that I would miss out on the price run. Of course, there was no way for me to predict a collapse was imminent, but sticking to my original methods would’ve limited my exposure to losses and have me better prepared to capitalise on buying opportunities. Luckily for me in this case, I plan on holding ETH for the long term anyway. More on this later.
2. Don’t be immobilised by fear.
Research is important. But you will never learn everything by just reading. Learning requires action. Sometimes you need to accept the fact that the best way to learn is by trying and failing, and then trying again. Without skin in the game, there is less incentive to learn and develop your skills. When I bought my first NFT, I had been researching both Solana and Ethereum blockchains for the months leading up to me finally buying an NFT. My desire to learn more was weak because there was nothing on the line for me if I didn’t learn anything. Until I put my own money on the line. Finally, my incentives were much clearer—if I didn’t want to lose money, I had to do my own research. Naturally, it was loss aversion which compelled me to go deeper into the rabbit hole. I’m not saying you need to lose money to learn, but if you are lacking the interest or the dedication, put something on the line. Create incentives for yourself so that it’s in your best interest to learn as much as you can and apply your knowledge. It’s hard to improve from the sidelines. Don’t let your fear of doing the wrong thing prevent you from doing anything. This does not just apply to crypto.
3. Have patience.
Crypto markets are extremely volatile. Whilst a lot of money can be made from investing with short-term perspectives such as trading, without the appropriate mindset and experience, this can be emotionally taxing. It is so easy to continually check the price of the latest coin you’ve bought, or the floor price of your NFT portfolio. A simple mental procedure I like to use when investing in projects is to imagine whether I’d still want to hold them a year into the future. If the answer is no, then I won’t buy in. It’s an easy check that I’ve found to be beneficial when I take it seriously. When I checked the price of ETH this week and saw it was down 25% in the past 48 hours, I didn’t panic because I don’t plan on selling anytime soon and the reason I bought ETH in the first place was because it’s a technology I strongly believe in (yes, FOMO played a small part too). Day to day price movements are generally irrelevant in the long term, provided you have chosen an appropriate investment vehicle to begin with.
4. Engage with communities.
Some of the greatest value I have received so far has come from interacting with communities either online or in person. My favourite example was an event hosted by Psychedelics Anonymous earlier this year in Melbourne. I found it so inspiring to interact with people from various fields of expertise while also sharing a common interest in NFTs and crypto. These interactions need not be limited to in-person only—hanging out in discords and striking up conversations with other community members is a low-risk activity with the potential for a high reward. You will often find that most people are typically willing to take time out of their day to explain things to you or to help you out with something. The hard part is asking. Even knowing when people are in a similar position to you can help you get through difficult times. Almost like an emotional support group, but for crypto!
Closing thoughts:
I have definitely made many mistakes over my time so far and I am by no means an expert. My aim with this post was to provide some sort of guidance to whoever has joined this space recently, or to anyone who has not been as active for whatever reasons. Crypto is a tough field, but stick around for the right reasons and you will be rewarded in many ways. I hope you have found at least one thing in here useful. If you have, please consider sharing this post with someone who you might think would benefit too.
Some interesting pieces I’ve read this week:
How to learn more in crypto:
How to contribute more to crypto:
Dealing with the recent events:
Vitalik’s 2015 blog post on the value of blockchain technology:
Why do we need blockchains for anything, what kinds of services should be run on blockchain-like architectures, and why specifically should services be run on blockchains instead of just living on plain old servers? Exactly how much value do blockchains provide: are they absolutely essential, or are they just nice to have?
PS: Nothing in this article is intended as financial advice. As always, do your own research. (NFA/DYOR)
Until next time.