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Do you recommend trading?

Photo by M. B. M. on Unsplash

In short, no.

The temptation for newcomers to the space to try their luck at the crypto-casino is far too great. Exchanges are designed to maximise their revenue. They want you to trade. Every trade represents more money in the exchange’s back pocket. Even if an exchange starts off as ‘Bitcoin only’, they quickly start to add shitcoins onto their platform, because that’s what their customers demand but more importantly, customers will go elsewhere. You can request an exchange to add all types of new features and security upgrades to their platform, but adding shitcoins will always get priority because it directly lines their pockets. If they don’t add them, customers go elsewhere and that’s lost revenue.

I don’t blame exchanges. I blame customers. I blame their behaviour. They are displaying what Austrian economists call ‘high time preference’. They are looking to make a quick buck. They measure their success in increased AUD or USD. They simply have not recognised Bitcoin as a superior form of money. The newcomer does not understand that their wealth should now be measured in the number of bitcoins they have ownership of.

The more advanced trader preys on this lack of understanding. Enter the charlatan. A charlatan is someone who claims or pretends to have knowledge or skill on a topic. In this case, they believe they are able to ‘time’ the market. They believe they are able to predict market movements and use it to their advantage and seek profit. In reality, charlatans possess one quality – the ability to convince you to part with your bitcoin in exchange for shitcoin. The charlatan is likely to be on the other end of your trade. Be wary of their claims.

In summary, we have a perfect storm of 3 factors at play here:
1. Exchanges wanting you to trade, giving you an array of coins to choose from.
2. Your lack of understanding and your desperation to get rich quick. You also waste your time learning about these coins when you should be learning about bitcoin.
3. Charlatans preying on this fact.

Looks like a disaster waiting to happen.

If you are thinking of ‘trading’ coins, you need to focus your attention on the fundamentals of Bitcoin. You haven’t done enough reading. Understand the theory of why it was created, what purpose it serves and how it enables a better world. Start educating yourself about these qualities. Invest the time to learn. Many are already embarking on this journey. I’m happy to help point you in the right direction or get you up to speed if you’d like.

By trading Bitcoin for other coins, you are displaying ‘high time preference’ behaviour. You are being impatient. You want to make money quickly. Every person who has parted with their Bitcoin has regretted it or will regret it. Every person who has held off buying Bitcoin because it was ‘too expensive’ and bought shitcoin instead, has regretted it or will regret it. In the words of Andreas Antonopoulos, Bitcoin was never designed to get rich quick. It was designed to get free quick.

Do not trade your Bitcoins for any other coin. Keep accumulating. Don’t worry about the price. A good strategy is dollar cost averaging (DCA). Buy a certain amount every week/fortnight/month out of your income. Put in an amount that you are willing to lose. Take into consideration your situation, your responsibilities, your commitments. It may mean you downgrade your lifestyle if you have to. Do whatever it takes to justify putting that amount into Bitcoin. Over the long term, it is my belief that this is how you will win. Your patience will be rewarded. I understand the pain today. But you now have a big incentive to save. Let’s go back to those basics of saving and build a better tomorrow.