Hackernoon logoMy Inglorious Path to Crypto and the Mistakes I Made Along the Way by@1korda

My Inglorious Path to Crypto and the Mistakes I Made Along the Way

Author profile picture

@1kordaOK

On the Internet, nobody knows you're a banker buying Bitcoin • Maker @cryptoradarco

Unfortunately, I don’t recall a precise moment in time, be it day or month, when I first heard about Bitcoin. It’s only the year that I am certain about: 2013. In that year I had started my first job after finishing my studies the year before. Most likely, it was a headline about the rising price of a virtual currency. I snapped it up somewhere but paid no further attention to it.

What I consciously remember, though, is having a conversation with friends in summer 2013 when someone mentioned that he either should’ve bought or shouldn’t have sold Bitcoin. My memory is foggy here. Anyway, the comment served only for a quick laugh and wasn’t the main focus of discussion but it tells me that at this point I must’ve been at least faintly aware of the topic.

The Bitcoin Entanglement

It wasn’t until the price began to rise further in October 2013 that I looked into Bitcoin more deeply. I read about its features, its open-source origin and learned that there are alternative coins (altcoins) without delving into them, although I liked the “Litecoin is silver to Bitcoin’s gold” narrative. I should’ve spent more hours reading, but I had one problem: the longer I read, the higher the price of Bitcoin rose.

FOMO crept up on me. For those of you who don’t know what FOMO stands for: It’s the fear of missing out, a social anxiety stemming from the belief that others might be having fun (e.g. at a party) while the person experiencing it isn’t there. I wasn’t acquainted with such a feeling before, but it was hard to bear.

To shake it off I needed to join the Bitcoin party immediately. After working for a couple of months I accumulated some €1,000 through saving some % of my paychecks. That money was just waiting to be invested, so why not get some bitcoin. I started looking for places to buy some.

The first hit was a site named Mt. Gox and I signed up for it immediately. However, I couldn’t buy anything as I had to wait for my account to pass verification. But I didn’t want to wait. I wanted to buy bitcoins right now. Going back to the search results, I stumbled upon another site called BTC-e. The verification worked way quicker and they offered funding your account via an online payment service. That was exactly what I was looking for.

The Altcoin Detour

The previously described steps took several days if not weeks to accomplish. In the meantime, Bitcoin’s price had risen from $200 to almost $1,000. Suddenly, it didn’t look like an attractive investment to me anymore. My budget was capped at €1,000. I wanted to buy more than just one lousy bitcoin. My investor psychology was weak back then.

So I looked around what else was being offered on the platform and discovered a Litecoin-Euro trading pair.

Litecoin was an early Bitcoin alternative that was created in October 2011 by copying Bitcoin’s open source code and playing with some parameters.

Litecoin’s price had risen from €10 to €30 in just a few days, but compared to Bitcoin, I could still afford to buy a multitude of them (yes, that’s how beginners think and we’ve seen this kind of thinking among people in 2017 too).

In technical details, it was nearly identical to Bitcoin. Why shouldn’t it continue its rally just like Bitcoin? So I bought 30 litecoins at a price of slightly above €30 ($36) per coin on November 27, 2013.

The joy about my very first crypto investment didn’t last long: On the next day, Litecoin hit a top of €39 ($48) and began its decline. At first wasn’t worried at all, but I didn’t understand why people were suddenly selling.

The lower the price kept falling, the more uncomfortable I felt. Once it became clear that I am deep in the loss zone, the feeling turned gut-wrenching and was comparable to the fear of missing out, except for, it was fear of losing it all.

The market had no mercy. I burnt half of my investment in a matter of days. When the price fell below a certain point, it couldn’t get much worse. In my mind I had already written off my investment, a view that helped me to keep it. It’s not a loss until you sell, right?

This is how I got into crypto (and not even Bitcoin). Luckily, I didn’t demonize cryptocurrencies and continued to deal with the topic. But what did I learn from this?

  1. Don’t FOMO. I learned the hard way that sharp price rallies (pumps) are followed by corrections (or dumps) — it’s just a matter of time.
  2. Don’t invest blindly. I bought litecoins instead of bitcoins by chance. That’s not how you invest. Take your time and do your research.
  3. Don’t think short-term. Investing is a long-term game and not a casino play. If you can’t cope with the price movements along the way, your exposure is probably too high.

What happened next?

In the following years I went on to build my own cryptocurrency miner, joined an exchange as an early employee at a time before they exploded in growth, took a banking position holding keynotes on Bitcoin and Blockchain basics and started my own crypto side-project.

Follow me on Twitter to read more about my crypto journey and learn from my mistakes.

Tags

Join Hacker Noon

Create your free account to unlock your custom reading experience.