Thinking About Buying Bitcoin? Early Adopter Cautions New Crypto Traders

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After seven years of watching the cryptocurrency markets, an early Bitcoin adopter is laying out his observations on the industry’s trajectory while cautioning new traders.

WhalePanda is the host of Magical Crypto Friends, a monthly podcast on YouTube where industry leaders Charlie Lee, creator of Litecoin; Samson Mow, chief strategy officer of Blockstream and chief executive of Pixelmatic; and Riccardo Spagni, lead maintainer of Monero, explain crypto news and technical issues.

Now that Bitcoin has completed its third halving event, WhalePanda tells his 227,000 followers on Twitter that the cryptocurrency is entering its next phase – a path that is fraught with risk and downside for get-rich-quick speculators who don’t understand the fundamentals of trading or the volatile nature of Bitcoin.

“With the start of the 4th Bitcoin epoch we’ll soon see another big influx of new people into this space. Here are some of my thoughts and observations after 7 years in this space.

Is it too late to buy Bitcoin? No, also: you don’t have to buy a full Bitcoin. Don’t invest money you can’t afford to lose or might need soon. This is a risky investment. Even if you decide to buy Bitcoin now, in a couple of years people will tell you that you just got lucky.”

“Should I trade?

On twitter I see all these people who are claiming to make huge amounts of moneyIf you’re already not 100% convinced if you should trade or not: don’t. Even if you’re 100% sure that you should trade I would still advice you not to. The majority of the people lose.

I’ve decided to not listen to you and trade anyway. Should I join a paid group? Or sign up for signals? Or pay for a (options) trading course.

No, those who can’t trade for themselves, teach (or run paid groups) since that’s the only way they can actually make money in this space

There’s so much free content out there to learn the basics of how to trade. The most important things are:

• stick to your plan/strategy

• surround yourself with a couple of people who are at a similar (or bit higher) level than you. These will be your best friends in 4 years.

I’ve heard from my friend R. that altcoin X will overtake Bitcoin. Should I buy X? 

That’s up to you, most people get burned buying altcoins and lose a lot of money.Bitcoin is the default currency, if you trade altcoins and end up with more USD but less BTC. You’ve lost money.

The day that an altcoin overtakes the Bitcoin marketcap means that this space is done. Bitcoin was the first one with its immaculate inception, best security and highest level of decentralization.

I heard Proof-of-Work is bad for the environment and my friend V. said that I should buy a Proof-of-Stake coin.

Sure, V. wants to sell you his heavy bags. Truth is that PoW is actually incentivizing the deployment of more renewables sources and helping build its infrastructure.

PoS has many issues but with every exchange now offering a stake service the complete centralization of it all should be the most obvious one for new people entering the space.

Why are the onchain fees so high? Why not just create bigger blocks?

The bigger the blocks, the more centralized the cryptocurrency. This should be an obvious one. Block space is a scarce resource which use should be optimized. Many exchanges fail doing that.

Keep in mind that the block reward is ‘only’ 6.25 BTC. We actually need fees to pay to miners to keep the security of Bitcoin as high as possible. Another important thing is that fees are paid in BTC and not in USD. So the higher the Bitcoin price, the higher the fee (in USD).

Layer 2 will also help with reducing the fees for more transactions going forward. There is so much development in this space that it’s really quite exciting.

A question you should ask yourself is if your coffee $2 purchase should forever be stored on the BTC blockchain.

If the answer is ‘yes’ then sure, go for it, but then you have to pay the fee to pay for the scarce resource that is block space, if the answer is ‘no’ then you can always use layer 2 solutions. You’re completely free to do whatever you want.

One thing to keep in mind in this space is that it often feels like 50% are scammers, 45% are crazy and maybe 5% seem relatively normal. Reason that there are so many scammers is because you’re dealing with money and non-reversible transactions with a certain level of anonymity.

Should I leave my coins on exchanges?

The obvious answer is ‘no’. Some would say that if you can’t take care of your own private key management you shouldn’t own Bitcoin. I’d suggest to buy a hardware wallet. But if it’s a small amount, it’s fine, as long as it’s a good exchange.

Let me end this thread with this:

• Find likeminded people/friends in the community

• If it sounds too good to be true, it is

• Be aware of the $5 wrench attack

• Try to educate yourself about Bitcoin. It will help you with key management.

• Be aware of the Dunning-Kruger effect

You can check out the full thread here.

Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any losses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.

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