Cryptos 101

My 7-day course on how to lose money on crypto

Day 1: Buy some Tinkerbell tokens and HODL


(updated 7 July 2019)

Almost surely the YouTube gurus and crypto websites have solemnly warned you that you shouldn't invest more money in cryptocurrencies than you are prepared to lose. Yeah, right. That's why you are into trading. You want to see how quickly you can lose your investment.

Now we have got that out of the way, let's find some ways to lose your money faster than you might do otherwise.

HODL

Just remember to buy the dips and concentrate on Tinkerbell tokens — those cryptocoins that promise a great future if you simply hold on long enough. You just have to believe in NeverNeverLand.

The strategy's known as HODLing. Apparently it came from a mistyping of HOLD. I prefer another explanation I read: HODL stands for Hang On for Dear Life.

Here are some tokens to HODL.

PICK LONG-TERM INVESTMENTS

Several crypto systems are going to change the way we do business, carry out financial transactions, organize our lives, maintain our essential records and protect our privacy in the age of internet surveillance.

A number of projects, among the 1629 cryptocurrencies recorded by coinmarketcap.com in mid-June 2018, are moving towards becoming full utility tokens. Even the oldest, bitcoin, launched in January 2009, still accounts for 42% of the marketplace and is used in something like 30% ($3.4bns) of the $11bns of the crypto transactions each day.

BITCOIN

Almost all the YouTube gurus will tell you to invest in some bitcoin (BTC) and hold on to it. You will have regularly read predictions that it would reach say $60,000 by the end of 2018. Meanwhile its price has dropped from $13K to $6K. As of June 2019, with commentators trumpeting its recovery, it hovered around $8000-8200. In July 2019 it hovered around $11K (see the price above from coinmarketcap).

ETHEREUM

Some people will tell you ethereum is the bitcoin killer because it aims to make possible so-called smart contracts (contracts controlled by computer programs rather than people or institutions). Its highest price in 2018 was $1401 and traded at under $500 in mid-July 2018.

But long-term it may seem a good bet, since it is taking steps to speed up transactions and allow its operations to grow without causing roadblocks in the way it operates. As of mid-June 2019 its price was around $250, i.e. its radiant future is really long term.

Hundreds of other coins use ethereum as their backbone. So it is going to be used for intermediate transactions for as long as they are around (its daily transactions are about one-third those of bitcoin's). So ethereum is another coin that it is good to have in your portfolio. It lost 12.8% of its value in the month before July 2018.

Cryptoslate says you could have lost 76% by buying at the peak.

STELLAR LUMENS

Some people think Stellar Lumens (XRM), which lost nearly 25% of its value in the previous 20 days (in July 2018), is even more promising. Its website says XRM will 'Move Money Across Borders Quickly, Reliably, And For Fractions Of A Penny: THE FUTURE OF BANKING IS HERE.' Of course, banking was common in the great German Depression that led to Hitler. Stellar in mid-June 2019 was the 17th largest cropto-currency, selling at $0.12, about hallf what it cost you one year before.

Cryptoslate says you would have lost 87% of your investment if you had bought on 7 January 2018 and hodled.

RIPPLE (XRP)

XRM's main rival, like Cain and Abel, since they have the same parents, is third in the cryptomarket, compared to seventh for Stellar Lumens.

Ripple says: 'Built for enterprise use, XRP offers banks and payment providers a reliable, on-demand option to source liquidity for cross-border payments'.

Both projects recognize that sending money abroad can be a slow and costly business. You can easily spend 10% of the money you want to send home in paying for the remittance itself and it can still take a week to reach your relatives.

But note the differences. Ripple is for enterprises and XRP is simply an option rather than essential. Banks and businesses using the Ripple network don't even have to employ the XRP token. XRP's life is much more adventurous than most major cryptotokens and is down 28% on the month.

Despite the talkdown, XRP in mid-June 2019 was the 5th largest cryptocurrency and sold at about $.40, three times as much as XLM.

This would have lost you 90% of your investment if you bought on 7 January 2018, according to cryptoslate.

EOS

EOS, making big news in the first half of June 2018, is 28% down on the month, too. EOS announces itself as 'the most powerful infrastructure for decentralized applications' (an ethereum killer?). Its $9bn main network went live on 14 June 2018 and then came to a halt when a bug froze transactions. Its price fell 5% in an hour, though the bug was fixed via a conference call. So much for blockchain's vaunted decentralization.

Though questions were raised about its decentralization, EOS in mid-June 2019 placed fourth in the value stakes and sold at $6, nearly half its price a year before.

It doesn't even appear in cryptoslate's scorecard.

IOTA

IOTA promises even more long-term disruption to standard practice since it is aimed at providing a system for the Internet of Things. This will enable everything from fridges to power stations to communicate with the gadgets and machines around them with minimal cost and incredible speed.

What makes it different from most other cryptocurrencies is that it does not use the blockchain to organize its records, but something it calls the Tangle. This makes every user a validator of previous transactions. It therefore works faster the more people or machines are involved.

IOTA also claims to be quantum-computer proof. This means it should be safe from superfast cryptohacking that frightens every developer who knows about it. IOTA tokens were $4 at the start of the year and now go for $1.19.

Though it's one of my favourites, in mid-June 2019 it was the 17th largest token in value (at least, in the top 20), but cost you only $0.40 and had dropped to $0.23.

Buying on 7 January 2018 and hodling could have lost you 91%. Only NEM did worse among crypto's top ten, according to cryptoslate.

CARDANO (ADA)

Cardano boasts it is "the first blockchain platform to evolve out of a scientific philosophy and a research-first driven approach. The development team consists of a large global collective of expert engineers and researchers".

Innovatively, it uses the highly secure Haskell programming language. Unfortunately for its hopes of speedy adoption, few programmers know Haskell.

On 8 January 2018, Kai Sedgwick at bitcoin.com described IOTA as "vapourware". Its price this year went down from $1.23 per token on 4 January to 32 cents on 4 February and pretty much stayed there. 2019 brought even worse declines. Though it claimed the 12th position in the charts, its value was only $0.085 in mid-June.

Cardano equalled IOTA's 91% losses by investing on 7 January 2019, according to cryptoslate.

ARK

Registered in France, ARK is based on JavaScript for easier application, It promotes itself as aiming to create "an entire ecosystem of linked chains and a virtual spiderweb of endless use-cases that make ARK highly flexible, adaptable, and scalable". It boasts 8-second transaction times, compared to minutes and hours for others, with its own wallet and support for a popular secure (hardware) USB wallet, the Ledger Nano S.

It's still down at number 70 on coinmarketcap. From $9.28 it has declined to $1.24. By June 2019 ARK barely made it into the top 300, and was at 294 with a price of $0.57, despite launching ARK Deployer to enable people to create their own blockchain without programming.


These are all favourite coins of mine. You can find a more technical explanation of all these cryptos at my crosslines website.

Check out the best crypto stories here too.

If you think this is financial advice you have no sense of humour or you have money to burn. Sorry,

You have completed Day 1 of my crypto investing series following up on superforecasting cryptocurrencies (I never found a way)

Tomorrow: Buy tokens that will be useful

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