Crypto has been beaten down since the all-time highs back in November. It’s important to note that a lot of this has been due to external factors. For instance, most of the world has had to go through multi-decade high inflation, rising interest rates, and witness a war between two European countries.
However, it is also true that a lot of the damage has been self-inflicted and has once again exemplified the risks of decentralisation when combined with greed and bad actors. In this blog, we will go through 5 lessons that can be learned since the bull market, which in turn will hopefully benefit more people in the future.
Unfortunately, though, a lot of the points that will be addressed below are recurring lessons in Crypto from over the years, and ultimately, some of the same mistakes will continue to be made until regulation is properly in place.
For newcomers to the emerging industry, it is a confusing phrase to see. Almost everyone that enters the Crypto space will have heard of Bitcoin, although the dog coin mania phase may cause people to say otherwise. Regardless, Bitcoin is the first Cryptocurrency, and therefore its deflection away from Crypto causes confusion and rightly deserves an explanation.
Very quickly before I summarise why Bitcoin is not the same as Crypto, it’s worth emphasising that the confusion it portrays is completely understandable. We acknowledge that Crypto is already a complicated space, let alone when you hear these conflicting statements That’s why I am pleased to say that the launch of our upcoming education website, 123Cryptos, is coming very soon. The community-driven website will offer a free course as well as a forum dedicated to answering any question surrounding Bitcoin and Crypto. Stay tuned for this!
The distinction between Bitcoin and Crypto occurs because the two have gone down different paths in recent years. On the one hand, you have Bitcoin, a decentralised, open-source, permissionless code that is completely transparent. And on the other hand, there are Crypto projects that, for the most part, don’t offer any fundamentals or are heavily centralised, which ultimately defeats the purpose of Crypto in the first place. Whilst there is so much more that can be added, simply put, Bitcoin is not the same as Crypto.
It’s a classic saying and its importance gets reinforced after every bull market. The meaning behind the saying is that if you don’t control the private key for your Crypto, then you don’t have full ownership or access to it. Therefore, at any point you purchase Bitcoin or any other Crypto on an exchange, ownership will still be at the hands of the exchange. As a result, the term “not your keys, not your coins” were conjured up and it encourages people to move their Crypto onto a cold storage device such as Ledger or Trezor. At this point, you have full ownership and at no point can it be taken or seized from yourself.
Unless you are a trader and want to constantly buy and sell, moving your coins to cold storage is a perfect way of learning how to manage your own assets. Moreover, it prevents you from looking at alternative and riskier ways of storing your crypto, which in turn practices greater responsibility. Ultimately, people are free to do whatever they want with their assets. That is the beauty and very essence of decentralisation. But, when done irresponsibly or through misjudgement, you can end up suffering badly.
This is another classic saying but didn’t start from Crypto. It’s a generic life saying and holds a lot of truth in most cases. This lesson ties in with the previous, not your keys, not your coins because a lot of people suffered after trusting bad actors. Whether it is with Luna or recently with Celsius, you have to be careful of the risks you are undertaking when you are giving up your coins.
All too often, the lure of high APY rewards and passive income is too great for many investors and they fail to recognise the risks. When a company is offering 5, 10, or 20% returns, you have to ask yourself, how are they paying for this? This question becomes even more essential in DeFi because you are absent from government regulation and thus financial support. In summary, always be vigilant and take extra precautions.
All the classic sayings are coming out today. And yet, they need to be continually mentioned due to investors’ struggle to abstain from hysteria and FOMO. It is human nature for people to buy something when it is high because of its so-called proven trust and worth. The same can be said for people failing to buy low because they fear more downside. But, for the majority of cases, investors tend to put in more money than they can afford to lose in an attempt to ride the wave of the hype cycle. Additionally, without people knowing until it’s too late, what they’ve actually done is try to catch up to the train that has already left the station. Inevitably, too many people are left “holding the bag”, while the inside investors sell for profits.
Too many people still put blind faith in people’s words without having done their own research. This is particularly dangerous in a bull run where everything appears to be rising in price. During times of mania phases, all kind of wild price predictions and forecasts are given, when in reality, no one is sure where things are headed. Moreover, you can only start to gain conviction in something once you have taken the time to properly understand it. Furthermore, the time taken to read and research about an asset you’re interested in, such as Bitcoin, could more than likely pay dividends in the near future.
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