How I Tried To Become A Crypto Millionaire

Become A Crypto Millionaire Cryptocurrencies have entered the mainstream. But how does that work? And how much money can you make with it as a layman in a few weeks?

Most cryptocurrencies have plummeted overnight, filling my screen with red numbers and falling bar charts. The day before, I sold my crypto investments and “realized profits”, as the stock market would say. As if I suspected something.

Cryptocurrencies are far from new, but they are slowly but surely making their way into the mainstream. Everyone knows the top dog Bitcoin, many have heard of Ethereum, number two. And “freak” currencies like Dogecoin appear repeatedly, at least in curious reports, mostly in connection with strange statements by Tesla founder Elon Musk.

supply and demand

The principle of cryptocurrencies is simple. Roughly speaking, they are digital currencies that – unlike “fiat money” such as the euro or dollar – are not controlled by central banks.

Each currency has a finite number (there will never be more than 21 million bitcoins, others have a limit per year), and the price fluctuates with supply and demand. The security of transactions is established through a network of many computers. So far, so simple.

But what exactly does that mean? How do I specifically invest in Bitcoin? Where do I buy cryptocurrencies and how do I get rid of them? And even more important: As a layperson, can I become a Crypto Millionaire within a few weeks?

For dummies

A few weeks ago, the idea arose to start and log a “Crypto for Dummies” self-experiment. I am the ideal candidate for this: my financial education is close to zero, and I have never invested a single euro in my life. All my money sits in one account, getting less and less with inflation when I’m not spending it with both hands.

Before I start, meet up with Lukas Leys. The Tyrolean is not only CEO of Kontractory (a company that specializes in the digitization of legal transactions), but has also been in the crypto business for many years and also gives seminars for beginners.

Four important rules

The two-hour interview is extremely interesting. From Ley’s explanations, I take away four important rules for newcomers. Rule 1: Never invest money you can’t afford to lose. Rule 2: Stick to big, well-known providers. As a layman, you can hardly recognize windy offers. Rule 3: Think about the tax. The crypto world is not as anarchic as some belief, profits are taxable. Rule 4: Inform yourself.

There are now several YouTube tutorials for trading with cryptocurrencies, and numerous free or cheap online academies and seminars. Leys quotes a famous phrase from investor Warren Buffett: “Never invest in something you don’t understand.” Let’s put it this way: I followed three of these pieces of advice.

Cryptocurrencies are bought on a trading platform. There are quite a few of them. However, beginners should stick to large providers such as Binance, Coinbase or Bitpanda – see rule 2. Incidentally, Bitpanda is an Austrian company and is now valued at four billion euros.

In principle, the platforms are similar: after a somewhat complicated registration process including verification of identity, you come to an intuitive interface. You deposit money, you can look at the rates of different currencies and buy and sell them.

Entry with 500 euros

The individual platforms differ in which coins are traded there. And in billing mode: the account is mostly free, you pay a fee per transaction and for deposits and withdrawals. The differences are not huge, but depending on the investment strategy, they can make a difference.

Patriotic as I am, I open an account with Bitpanda, deposit €500, and start building my portfolio. It’s an almost sublime moment. And not just because I can use the words “my portfolio” for the first time in my life. I buy Ethereum as a basis for 150 euros and a whole range of smaller coins.

I’m to be honest, only half prepared and more on feeling good than I should be. Obeying Rule 4 is the hardest and most time-consuming. My approach is stupid, but it can work. Experiments have shown that random investments don’t turn out badly statistically, at least in the short term. Like the famous monkeys who pick stocks and make a profit from them. I hope to be one of those monkeys.

Bad timing

A few preliminary remarks are necessary at this point for understanding. First, it’s not the ideal time for this experiment. In the weeks leading up to the September crash, bitcoin was regularly over $50,000, and other cryptocurrency prices were also relatively high. That doesn’t mean you can’t make money now. But there are much better times to get started.

And then I have another problem. Almost all experts recommend “slow and steady” tactics for unsuspecting laypeople like me when investing. So get in when prices tend to be low, bet on several large battleships, and then ideally not even look at the portfolio for a year.

Fluctuations usually even out over time, panic selling brings little. This tactic makes sense, but it’s also boring. You can’t fill two pages in the newspaper with that. To learn, I need to buy and sell more.

Rise, fall, rise

It doesn’t start all that bad. After one week, my portfolio is up to 30 euros. After two weeks it is 20 euros in red. These are all comparatively ridiculous figures. But that doesn’t change the fact that you hold your breath a bit as the page loads, waiting to see if there’s a green plus (profit) or red minus (loss) behind the value of your cryptocurrencies.

And the body still churns out a bit of adrenaline when one of your currencies is falling and you’re contemplating exiting. The little man’s Wall Street floor, so to speak. I will make it to the end without panic selling. The decision turns out to be the right one, and the prices stabilize again and again. But psychologically it is also easy to sit out the fall in a currency in which you have invested 100 euros.

The summer is progressing, and the value of my portfolio is meandering. Prices rise, fall, and recover. Sometimes it goes up 70 euros, sometimes down 50. From time to time I sell smaller currencies with a small profit and buy new ones. I write down what I could have done better, but overall I’m quite happy with myself.

I had three goals: I wanted to learn, I didn’t want to lose any money, and ideally, I even wanted to win something. Everything worked. But I also quickly realize that I probably won’t get that rich. The secret fourth goal – to quit my job – remains a dream.

market capitalization

Would that last goal have been within the realm of possibility? oh well Rather not with 500 euros, but in principle yes. A lot of money can be made very quickly with cryptocurrencies. There is one big but, however. To double or triple the value of my portfolio overnight, I have to invest in coins whose price is extremely volatile, ie fluctuates a lot.

These coins are mostly speculative objects with a small market capitalization. It is usually said that this value reflects the “popularity” of a cryptocurrency. It’s a bit more complicated, but thumbs up, the smaller the market cap, the more the prices fluctuate. SmMinorurrencies, which like to be based on internet memes, are prone to manipulation. They cannot be traded on most major trading platforms.

Investments in such coins are a ride on a razor blade. Let’s take the “Wifedoge” coin as an example: If I had bought Wifedoge for 100 euros the Sunday before last, I could have sold the coins for 300 to 400 euros on Monday morning. But that also has a downside: If I had invested 100 euros when I started writing this article, it would have turned into euros when I handed it in a few hours later.

Such price fluctuations are not impossible for the coins with a larger market capitalization but are less likely. If I had invested my money in smaller coins, I might be richer now. But I could have lost everything.

Eleven percent return

When I declare the experiment over, I still don’t know that I have chosen the ideal time for it. I have made a return of almost eleven percent on my portfolio in the past few weeks. You can now evaluate that differently: Of course, eleven percent is significantly more than anything I could get from a bank, especially compared to a normal savings book and for money that is available every day.

But then again, it’s not that simple. I invested with high risk and could have worked up with a big loss at any time. That doesn’t happen with a savings account, and the risk has to be factored into the calculation.

shift trading

With more preparation, I probably could have done more things right, but I don’t think I made any big mistakes. I left money behind due to the unnecessarily high number of transactions, which were necessary for the context of this experiment.

If I were to invest privately again – which I probably will – I would do exactly what I was advised to do from the start: wait for a moment when major cryptocurrencies like Bitcoin and Ethereum are low, both invest in $1000, and then leave it alone until I can sell it at a good time. A residual risk remains, of course, but this is a reasonably safe and feasible strategy even for laypeople.

The cryptocurrency market is extremely complicated and at the same time often simpler than you think. You can think of it like a sea: there are several layers, and the deeper you go, the wilder and less comprehensible the surroundings become.

Far below, oxygen is scarce, you can make a lot of money quickly and lose it again quickly. But if you venture out onto the relatively calm water surface in your small sailing boat and don’t carry out any risky maneuvers, you probably won’t go under completely.

After these weeks of buying, selling, and making a few mistakes, I now know a lot more about crypto investing. However, I still haven’t understood cryptocurrencies.

Nevertheless, I made almost eleven percent return. That’s only 55 euros, but still a win.

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