Hey, gang.

There is no way for me to structure this request coherently. I am barbarously ignorant of the subject at hand, so please forgive any instances of clumsy wording you may encounter here or there. This is the only community I trust to give me sound, well-informed, and useful advice.

Here is my situation: I would like to invest in crypto, but my ignorance in this direction is magnificent. Indeed, it feels invincible to me. Furthermore, the very prospect of attempting to defeat this ironclad ignorance has presented itself to me as a somewhat insurmountable "ugh field" for the following reasons:

a) It seems like trading competently in crypto requires some degree of proficiency across multiple fields and practice areas: engineering, software development, data analysis, statistical modeling, cash flow assessment, insight into the psychology behind user behavior, an advanced understanding of economics, etc. I'm sure some of the requisite base knowledge is less self-evident, even, that that.

b) Existing information on the subject of crypto investing is so vast that any effort to consult educational resources on the matter tends to leave me feeling like I've just been washed about helplessly in a stew of concepts and details which seem very convoluted and carry very little meaning to my mind.

c) I don't know where to look for quality information or trustworthy sources.

How can I, starting from square one (complete ignorance), learn to invest wisely in crypto and maximize my returns on investment?

How much time should I reasonably expect to set aside for learning this?

Can anyone suggest quality educational resources for getting started?

What mistakes have you made? What should I avoid?

Also: what should I be investing in at the moment? Please take pity upon my indolent soul.

Any other advice, hacks, and pro-tips that may occur to you would be very much appreciated as well. I have no idea what I'm doing.

New to LessWrong?

New Answer
New Comment

5 Answers sorted by

JBlack

Nov 02, 2021

60

Crypto investing is essentially zero-sum at this point. You will maximize expected returns on investment by being better informed, better connected, or better resourced than most of the other fish in the shark tank.

If you were better connected or better resourced, you probably wouldn't be posting here but using your connections or paying people to give you private advice. You can become better informed than you are now, but it will likely take at least a year to become better informed than average. There are enormous numbers of unavoidable risks in crypto investing, so even with the best possible information you should be prepared to lose everything you invest, and (if you try to leverage your investments for higher returns on things that seem like safe bets) be prepared for bankruptcy or worse.

If that sounds like a reasonable risk, go for it! Other people may have more specific advice on how to become better informed.

Thank you very much for taking the time to respond. I appreciate it greatly. Your assessment (that I'm not well-connected or well-resourced) is correct. I am also, as you can see, not well-informed.

It would appear that trading in altcoin is essentially like glorified, overly-hyped-up casino gambling. There are ways to get an edge on it, but I suspect that also comes down to who you know, not what. Alas.

ESRogs

Nov 03, 2021

40

If you want exposure to crypto, I'd say: put a small fraction of your portfolio in the top coins on CoinMarketCap.com, and don't try to do anything fancier than that.

Thanks. I was hoping to enter into this by a different door, but this seems to be the most realistic/least devastatingly risky option for someone in my position.

gilch

Nov 02, 2021

20

It seems like trading competently in crypto requires some degree of proficiency across multiple fields

I mean, that helps, but you don't need all of that to make money. Risk management, an edge, and, you know, a funded account, should suffice.

What mistakes have you made?

I made the mistake of selling most of the Bitcoins I was mining at $13 to pay electricity costs. They're worth like $60k now. Paper hands. Exit strategy matters. When you're tempted to sell, maybe buy insurance instead. I then made the mistake of trying to scalp trade Bitcoins on Mt. Gox. Not your keys, not your coins.

what should I be investing in at the moment?

Totally not financial advice, but I have a lot of Ether right now ;) Also, have you considered non-crypto investments? Diversification is helpful.

Can anyone suggest quality educational resources for getting started?

Start here. Not specific to crypto, and the presentation quality is disputed, but I stand by the principles.

Any other advice, hacks, and pro-tips that may occur to you would be very much appreciated as well.

Also research Nassim Taleb’s Barbell. It's a good approach for speculation.

Thanks for the resources. I'll check them out. I really appreciate it. 

 

I have some small money in a Coinbase account and it's tied up in MANA and SHIBA INU. I can't gauge whether or not this was a mistake at this point, as both are fluctuating by the second as expected, and it seems when one plummets, the other rises and vice versa. But it's not enough money to hurt anyway. 

 

I've been considering Ether. How confident are you that it isn't already too late to invest in it? Or do you think it is, at this point, too late? 

 

What is scalp trading? 

2gilch2y
https://www.investopedia.com/terms/s/scalping.asp Now is the time of the Stacking*, when the proof of the stake will release the power of the Flippening*. In the end, Ether can be number one. Ether reached current levels in part due to the recent merge of fee burning. It could easily hit $20k by the end of next year. Squish Chaos makes a compelling case that it could briefly hit $150k or more after illiquidity caused by fee burning and the Triple Halving* due to The Merge of the proof of stake mechanism and likely simultaneous high demand from self-sustaining narrative, upcoming easier access, and expected high yield. So, no, not too late. How confident am I? About 15% of my portfolio. I was aiming for a bit less than that, but it's grown since I started. Epistemic status: I'm mostly aping* Squish here, so take my confidence level with a grain of salt. He could be wrong. Partially or totally. Squish says it's 90% of his portfolio though. Ether is extremely volatile, like most crypto: 90% drawdowns have happened in before. That's the size of the risk you're taking. Barbell strategy. There are probably altcoins* with the potential to grow by greater factors, just because you'd be getting in earlier, when they're still small and have more room to grow before slowing from high–market cap limits. The question is, "Which ones?" Shitcoins* quite frequently rug pull* or implode. *Crypto slang. (If it's not in there, Google it.)

Ezras

Nov 02, 2021

20

If you just want to make long bets on the ecosystem and don’t want to learn too many arcane things, buy a few popular tokens on Coinbase and hope for highly volatile long term growth. Some of them will probably go to zero! Good luck, have fun, and assume you may lose all the money.

Thanks for your response. As it happens, this bears some resemblance to my casino policy, except that obviously there's nothing long-term about that. :) 

Rafael Harth

Nov 01, 2021

20

It seems like trading competently in crypto requires some degree of proficiency across multiple fields and practice areas: engineering, software development, data analysis, statistical modeling, cash flow assessment, insight into the psychology behind user behavior, an advanced understanding of economics, etc.

I think I want to dispute this. (Or at least point out that it doesn't seem obviously true.) It's reasonably easy to buy cryptocurrency (not trivial, but something you can figure out in a day). The hard part is knowing which currencies to buy (or whether to buy them at all, but you're starting from the premise that investing is a good idea). But you can just rely on advice for that. Unless skillful investing implies rapidly reacting to current trends, in which case you can't rely on advice and I take back everything I said.

something you can figure out in a day

For example, you can create an account at Bitstamp, they will require some KYC paperwork first, then you can wire money to your account and buy/sell cryptos at any moment.

1 comment, sorted by Click to highlight new comments since: Today at 11:16 AM
[-]wzp2y110

I think approaching any topic with the mindset that 'I want to invest, where can I learn' is not a great approach. You should first form a solid understanding of the subject and then based on your understanding decide, whether it is worthwhile to invest or not. 

As for the resources, I am unfortunately probably just as magnificently ignorant in this particular subject.