Valuable lesson from recent Cryptocurrency crash

A Cryptocurrency is a digital asset that can serve as a medium of exchange between people.

Cryptocurrency
Cryptocurrency

What is Cryptocurrency

A cryptocurrency (crypto) is a digital asset that is created by “mining” a digital coin on a computer. It’s ownership can be transferred and verified using technology called Blockchain. It can serve as a medium of exchange of digital assets between two parties.

Hard lesson in learning difference between investing and speculating

One of the most famous crypto currency in the world is Bitcoin. Bitcoin recently went from being valued ~$60,000 to ~$30,000 within a matter of days. Along with Bitcoin, almost every other crypto coin fell off the cliff.

Big crashes devaluing more than 50% of the crypto values have occurred regularly. The crypto world is full of extreme volatility. It would be nice if you have a time machine to get in and out at the right time, but you don’t.

Folks, this is what an unregulated (free) market truly looks like. There are no government bailouts, no central banks pumping money into the system, no circuit breakers, and no tax-loss harvesting. Scary!

Crashes are common in stock market also, which serves valuable lessons to differentiate between investors and speculators. But in crypto world, I am not sure how many are true investors, unless they got in when Bitcoin was below $5000. But again, was that being smart or plain lucky?

Do not put your life savings in crypto, don’t depend on it for your retirement and don’t consider it as an “asset”. Think of it like you are going to a casino to have fun. If you double your money, all good, but don’t fret over if you lose all of it. Treat it as “play money.

Prepare to be humbled! Investing is as much a mental game as financial. If your ego is hurt, you have no business trading cryptos. This is high-risk/high-reward game. Proceed accordingly!

Final Verdict

If you do decide to buy crypto, make sure you truly understand what you are getting into. Are you speculating, doing it for fun or serious about owning digital coins. Perform your own due diligence before venturing into the Crypto world!

We hope the information in this post will be helpful in your journey of aspiring nirvana!

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