Welcome to "club complicated"...
Investing in cryptos takes work. And if you've decided to take the plunge into this sector, you might be wondering, "What did I just sign myself up for?"
Making five or 10 times your money off disruptive new technologies is a tempting deal. But there are a lot of hoops you need to jump through first...
Say you go to buy "XYZ" crypto. But you can't get that crypto out of a Fidelity or Schwab account. So you sign up for a Coinbase account, too. But you realize you still can't even get that crypto out of Coinbase.
Then you might have to create an account at Binance.US, Kraken, and Gemini. You also figure you should have your own wallet. But now you've hit another snag... the same crypto can be on multiple chains.
Cryptos are more complicated than you thought.
I get it. There's a lot to understand. But before you start thinking cryptos aren't worth the hassle, I urge you to think again.
As I'll explain today, some of the greatest innovations took time to work out all the kinks. And in the end, those innovations changed the world...
"Complicated" is a feature, not a bug in cryptos. Remember, if this wasn't a complicated process and all of these assets were available in the same place, two things would happen...
First, there wouldn't be any more 5Xs, 10Xs, and 20X gains. We wouldn't be able to get ourselves into certain tokens and then triple our money within a couple of months.
Second, folks like us wouldn't be able to set aside our investments into self-custody wallets.
If you're new to cryptos, you might be thinking, "I signed up for something that I thought was going to make me money. I was going to be able to participate in a new technology. I just want to buy and hold these things."
That's great. But even in today's modern world, we're still using "old" innovations. Just take the railroad and the telegraph, for example...
We still actively use railroads. And we're still essentially using the technology behind telegraphs, a wire with two communicators at the end of it. Of course, our version of a telegraph is much more advanced... but it was the users that made this successful in the first place.
Let's go back in time for a moment. Imagine it's the 1800s and you lived somewhere that was nowhere near a rail station, and you just heard about this innovation for the first time.
You might think to yourself, "How is this railroad going to help me? I have to mule train everything to a town, put it on a boat, get it to a place where there is a rail service. And then, it takes three weeks to get there." This seems like a complicated process, right?
Now imagine you're hearing about the telegraph for the first time. This device allows you to communicate instantly with another human. But you think, "I'll need to get on my horse and ride three days to a town that has a telegraph and then I'll be able to use this."
In other words, what's the point?
Those were valid arguments at the time. And that's where we're at right now with cryptocurrencies.
Sure, there are still complications that need to be worked through. But that doesn't mean we shouldn't invest in this space altogether or doubt its potential.
Now, there's one other "complicated" concept I want to touch on... the custody of your assets versus noncustodial. I like to think of this as a spectrum of complexity...
If you're the kind of person who can't find your wallet from time to time, or loses your cards or passwords, start small and maybe don't rush to take custody of your digital assets. That way, you can better protect your assets.
You know yourself best. So if you trust yourself to keep your information safe, take that route. If not, it might be better to let Fidelity, Binance.US, or Coinbase hold your cryptocurrencies. But also know that may limit what you're able to buy.
Again, the best way to learn in this sector is by starting small. Buy $100 worth of bitcoin, figure out where you're going to take it, and see how far you want to go.
Move $10 at a time until you feel familiar with cryptos. It may take some time, but you must learn where you fit on the "custody spectrum."
I know this might all sound confusing. But if you do your homework, the crypto market can deliver life-changing gains over time.
Of course, like any investment, you need to do what's right for you. But once you get past the complicated lingo and familiarize yourself with the many platforms in the crypto universe, you'll be off to the races.
And trust me, it will have been worth the extra work in the end.
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