Week 1 - HODL Experiment
Updated: Dec 15, 2021
Well it's been a whole week. 1 week? I certainly feel like I've experienced a brain overload of information. I liken it to being back at College trying to get to grips with a new syllabus. The learning curve has been phenomenal. Every time I think I've come to grips with a certain aspect of the trade, I would open a proverbial door to an area I didn't even know was there - leaving more questions to be answered.
Please don't let that put you off. Like any new skill, the learning curve automatically levels off once your basic understanding of it clicks into place. Think of it like driving a big 44T truck for the first time without any prior knowledge. The gears, for example, are orientated like a 5-speed box but with 4 different ratios for each - resulting in a total combination of 18 different speeds. With 1st gear the same as 5th gear, it sounds daunting thinking about shifting up and down through all those gears - yet that quickly levels off once you've master it.
Yes - I just compared the complexity of crypto trade to driving a truck
Maybe it's because it reminds me of the different layers there are to trading (Centralized vs Decentralized Exchanges), or the complexity navigating through the various hot wallets to be able to trade on those Decentralized exchanges. Why? To get to the more exciting tokens / coins you won't find on any Centralized Exchange.
For this first week I've tried to keep close to the mission brief. The main goal being to simply purchase a handful of crypto assets - as you would if you were investing in normal shares on the stock market, by reading suggestions and listening to advice.
I didn't want to go in too prepared (that is for my other experiments).
But of course I had to know how to invest safely, which meant knowing where to start trade from. Some good old fashioned reading and online searching filled in enough of the blanks to complete my initial goals (ignoring those unwelcome doors I mentioned earlier).
Choose a FIAT to Crypto Exchange platform (which includes traditional payment methods such as a debit card, credit card, or GBP bank account) - ensuring that my bank would interact with it without issue. The stories of stopped cards and frozen accounts plagued early forums - so I wasn't sure how relevant this issue still was for current traders
Find a user-friendly price tracking website for current and historical pricing & trends, to assist with decision making
Trade to a budget of £300
Why that amount?
Good question. Put simply, it was all I had left to spend in my bank account. And secondly, the experiment is more around my curiosity of how easy it is to invest and make money on these trades. And lastly, to improve my knowledge of the crypto trading world IE to make more informed trading decisions when I have the actual capital to do so.
So what did I learn?
Exchange options are numerous
There are a lot of FIAT to Crypto Exchange options out there. And to be fair, I actually went through the registration and verification process for a handful of them. Forbes.com's "Best Crypto Exchanges UK for 2021" was my main source for the few that I did register with, but I ultimately decided to use Coinbase (not Coinbase Pro) purely from an aesthetic point of view - and partly because I stumbled across the Learn and Earn feature within the Coinbase app that netted me £20.14 worth of cryptoassets simply by watching a few informative videos (win!) and answering a few questions.
So my portfolio showed five crypto assets without a single purchase made.
It went some way to ease the pain of the fees that Coinbase charge (which is one of the more costly offerings out there). But it's user-friendly interface is the better of the three options I tried. I will attach a guide on how to open your first Crypto Exchange in case you are interested. This can be applied to any of the exchanges you choose to go with.
Fees are extortionate!
I spent £300.00 on various purchases over a period of two days, and racked up £20.34 in fees - 7% of my investment lost. I am mostly to blame for this of course, making multiple transactions at small values - most of which attracted a minimum 99p fee. So hopefully you will learn from my mistake and plan your purchases better, as you can easily halve that fee total by keeping your portfolio smaller to begin with.
By the end of it I had a spread of 10 different trades (excluding my free assets above) covering meme coins, Altcoins, Tokens, blockchain payment platforms, and two Infrastructure platforms. I went off the advice "Don't keep your purchases in a single category".
It is addictive
I can't tell you how many times a day I check that damn app to see how my cryptocurrencies are doing! But it's fun. One minute your portfolio could be skyrocketing, and then after lunch you check and it's a different picture altogether. And that itch to buy more is very real, and very difficult to ignore. Thank goodness i am broke.
If you are following any of the Instagram and / or TikTok crypto accounts and Influencers, you will be inundated with options. I've started using Coin Market Cap for no other reason than it is easy to navigate and research new and existing cryptocurrencies, as well as viewing and crunching through historical data.
So how am I doing?
Well, including the five assets received courtesy of learn and earn, I have a portfolio of 13 crypto assets (two are overlap purchases of the Learn and Earn Ethereum tokens).
I left Bitcoin out of this particular experiment, as you have easy visibility of its position, and can track how your investment would play out over the year with relative ease
I went for the tokens and coins that were still priced low - in the hopes that these would grow and see a run that would take their price into the tens and / or hundreds of pounds
I also could not resist buying some Shiba Inu and Dogecoin (forgive me)
And the results after the first week?
Overall growth 12.34% as at Saturday
Best performing GALA @ 47.17%
Worst performing Fetch.ai @ -9.38%
Once I have a number of weeks data to work with, I will start to provide charts and summary graphs for easy reference.