Finance Session Post - 7 ( Crypto )

[GoldenWarrior]

Hello everyone , hope everything is good.

This Post is about :
1) What is Crypto as a whole
2) How can one invest in crypto smartly
3) What to look at while investing
4) Common mistakes made (very important)

1) WHAT IS CRYPTO AS A WHOLE

I am sure everyone knows about what Cryptocurrency is , but ill still explain it for more clarity
Cryptocurrencies are virtual tokens that are used for decentralized peer to peer transactions. These tokens are built on blockchains. When i say blocks chain , it actually means a big chain where every transaction gets added like a block .

People have wallets , where they can store or buy their tokens ( phantom wallet ) , and you also have exchange platforms where everyone can buy tokens eg Binance

Now when we think about investing in crypto , one should know that its not going to make you tons of money overnight. You can make money very quickly and also loose it all very quickly. its all about smart decisions.

moving forward - Understand , the layers of crypto , crypto has 3 layers ( technically 4 if we consider layer 0 )

Layer 0 - network and the hardware
Layer 1 - the blockchains ( bitcoin , solana , eth, etc )
Layer 2 - also known as layer 2 solutions , coins built on layer 1 ( its more like a tech , used to scale things )
Layer3 - applications further built on layer 2 coins , or even layer 1


2) Investing smartly in Crypto

In terms of investment , you can invest in all 3 layers. ( how to invest them we will go about it soon ) , but first understand why these layers are important , cause it helps in choosing the projects.
Every Token is backed by projects , its backed by a meaning , including in meme coins. So when your choosing a project , imagine yourself as an investor for shark tank. You see projects Infront of you

ask -
- what does the project do ?
- what problems is it solving ?
- who are the brains behind the project ?
- who are they being funded by ?
- find their Twitter account , or discord or telegram
i( personally go a step further by going to the LinkedIn of the founder of the project and check his education background)

Now , once you know about what basic questions to ask , we go deeper into the kind of tokens

Native coins -( like btc , eth , sol ) there layer 1 , there born with their blockchains.
Stable coins - designed with real world assets like usd , there less volatile ( eg - usdt , usdc )
Utility tokens - designed as layer 2 , these tokens help you use services of a project , for example Binance has its own utility token
Meme coins - as the word suggest , these are based on whats trending on social media , ( very volatile , and also people make a lot of money here , and loose it fast as well )

Now it depends from person to person , where they would like to invest. If someone wants to invest long term , Native coins , Stable coins ,[ Utility tokens ( long term but with a span of 3-4 months ) ]
Meme coins are very very very ... volatile , within seconds it can grow massively and go down to 0. There are temporary , millions of meme coins are made everyday ( only skilled traders should go here or people who are okay taking risks )

3) WHAT TO LOOK AT WHILE INVESTING
(technical analysis)

Now , there is a quote ( buy low , sell high ) it means buying any token at a low market cap , and selling it at a high market cap

a) Market cap - it means the total value of all coins there.
When new coins are formed they will have low market cap obviously , and if its a decent coin that can be trusted , buy it. In order to know if it can be trusted , all the questions ive told you to ask while selecting the coin should be tick marked

Note : Coins with higher market cap have less amount of growth potential , while coins with lower market cap can grow much higher
Lower can be anywhere between ( 30kmc - 200k/300k mc ) [ usd ] If you buy a coin with already 20M Mc , there is a less chance of it growing . ( Layer 2 )


also note , decent trusted projects will usually start around 30k - 40k mc , so dont buy a coin with 1000mc or anything less than 10k mc ( atleast i wouldnt trust it )

b) Liquidity - How easily you can buy or sell the coin without any big price swings on your end. ( Now what this means , on a trading chart there is constant buying and selling , green candles and red candles
Now if the liquidity is low , and you sell the coins the red candle will be moved massively bcs of your trade , and the other traders will sell as well , in this case , youll tank the price very low , and youll mostly have a loss cause the price fell too.

Note : Liquidity is also shows the actual money , funded by the owner of the coin to trade , so low liquidity tokens are a no go to invest ,
if its a new coin it will still have atleast 30-50k liquidity , so buy coins with decent liquidity in the start


c) Volume - A very simple term just , tells you about the amount of people trading here , the volume will increase as the coin grows , which is a good sign that people are investing in this , if the volume is decreasing it means people are selling and you should sell too


4) COMMON MISTAKES MADE ( VERY IMP )

1) In order to buy or sell anything first thing comes is gas fees , without gas fees your transaction either gets lost or it wont happen. ( i lost 18k usd cause i forgot to have gas fees to sell the token )
Gas fees for a blockchain will usually be the token born in the blockchain , so for Solana , gas fees is Solana itself .


2) Loose small , win big. In the start when your investing newly , just invest in small amount as per your consideration. DO NOT put your entire networth in one GO , you might just loose all of it.

Everything in life starts as a small and slowly grows large , you trading portfolio will also grow in the same way. Acc to a research 80-90% loose money in crypto , cause there controlled by emotions.
Dont be emotional in trading.


3) Slippage is like a fee used , to make transactions go safer , see it like being able to easily buy and sell. Usually coins with high volatility will have higher slippage cause the markets going crazy up and down , its all emotion based the market , so do some research about what slippage suits better for the coin your buying. If its a meme coin your buying slippage should be 20% higher .



And thats all there is too it , to be honest , you can go deeper and niche out in crypto and there is always more to learn. Il be glad to make more posts , on what people would like to know more about in crypto niche specific.


Thankyou for Reading ,Hope i helped you.
- GoldenWarrior