I think that a lot of what you are suggesting relates to managing bitcoin position size, and the skills and/or the knowledge of the risks do not need to be known in advance in order for anyone to get started investing into bitcoin. Anyone should be able to get started investing into bitcoin with the ONLY criteria being that they have a discretionary income, and the more uncertain or scared they are about investing into bitcoin, then the more of a whimpy start that they would take and the more confident and/or bullish they are, then the more aggressive that they would be, and they can learn how to go from being whimpy to being aggressive as they are figuring out how to make sure that they have good cashflow management systems in place.
That is interesting perspective on getting started with Bitcoin investing.
You are saying that to start investing in Bitcoin we only need money we can afford to lose and we do not need to know about risks or how much to invest upfront. Your idea is good that people can start small if they are nervous and then invest more aggressively as they learn to manage their money.
While it is good to learn by doing and start small many people would say it is really important to understand risks and how much Bitcoin price can change before we begin. And when we start with small investment we will learn slowly and understand that how market move and also calculate the right time to buy. Sticking on plan is really important means we should never forget the strategy which we have started in the early stage. It can be changed with the passage of time but if this is still working good so we should stick on it.
Most people have the most basic skills to get started investing into bitcoin, yet at the same time, no one really wants to get into an investment and lose money, and so bitcoin is a very good investment as long as the person has a 4-10 year or longer investment time horizon, which will help them in terms of not focusing on getting rich quickly, but instead building cashflow management systems that help to keep them in the game, 4-10 years or longer down the road they will still be in the game and they maybe are tweaking their systems along the way to keep building, perhaps even being aggressive, while at the same time making sure that they are not going overboard in terms of making sure that they not only stay within the bounds of their discretionary income but also making sure that psychologically they are not investing money that they cannot afford to lose, psychologically... ...
so for example, we might have a person who finds out about bitcoin and just on the surface, they know that they have enough money to invest into bitcoin at a rate of $100 per week, yet on purpose they start out with $35 per week, and they
figure out their 9 individual factors.. and sure maybe after a few weeks or months they are able to increase their investment into bitcoin because they also figure out better their cashflow management systems and they start to put their systems into practice. .and some folks will be faster learners than others and with more experiences than others, while at the same time, they may even figure out ways that they are able to increase their discretionary income (by increasing their income and/or by cutting their expenses), which after several months they might even get up to investing $100 per week and maybe even more than $100 per week based on their both increasing their discretionary income and by improving their cashflow management systems.
So establishing position size can do a lot to address fear and respond to perceptions of risk, and if we realize that we can lose most or all of our investment due to either execution risks and/or due to risks of the asset, then at the same time, we can make sure that we are not investing beyond our competency and/or our level of knowledge, but that self-imposed limitation does not mean that we stay on zero, wait or study the matter, but instead we get the fuck started as soon as possible, but we adjust our weekly BTC purchase amount down to a level that is comfortable for our own finances and psychology, and then as we learn and we get more comfortable, we can slowly ramp up our weekly investment amount and/or any other ways that we might consider investing into bitcoin such as lump sum and/or buying on dips... to the extent that we might either realize that we have other funds that could go into bitcoin or that from time to time, we might realize that we have extra cashflows or other extra discretionary income that could be considered to be placed into bitcoin as compared with places that we would have previously (before our starting with bitcoin) would have had considered to be appropriate places to put our extra money.
Being your own bank comes with its own responsibility and how to manage your UTXO is also what one needs to know.
Yep. Even if a person might not take self custody of his bitcoin in his first 3-6 months of investing into bitcoin, self-custody should be something that he learns and prioritizes, even if he might just target 70-90% of his bitcoin as his self-custody stash.
Some guys believe that self-custody needs to be learned right away, yet personally, I think getting started, figuring out discretionary income and cashflow management are higher priorities than self-custody, yet at the same time, the power of bitcoin comes from self custody and not holding it on exchanges, even though surely there is a learning curve to self custody, and some self-custody solutions are easier to learn than others, yet the self-custody area and types of software, wallets and/or services are ongoingly evolving...
so finding a suitable solution is a moving target too that likely more security needs to be established the larger our Bitcoin stash gets or maybe the larger that bitcoin may well become a higher portion of a person's networth, so then they may well have to give more considerations to how they are holding their coins in terms of convenience, usability, economic efficiency, liquidity (and being able to move coins around if necessary), privacy, security and maybe even anonymity in regards to aspects of their stash.... so they might figure out systems to divide their stash into various parts with differing kinds of holdings for different parts of their stash.. and these are not likely learned early in the bitcoin investment journey - unless you might be some kind of a technical genius nerd type.. which is not a bad thing but not everyone has high technical skills and even some of the high technical skill guys screw up their bitcoin custody.
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There is minimum or we can say zero risk involved if we talk about investing in Bitcoin. It's just an inner fear or trust issue which one has to overcome and start investing in Bitcoin, rest is a smooth journey. We have discussed and seen many cases of investing in Bitcoin for longer duration, as long as someone intent is to HODL Bitcoin for 5 or more years he is bound to get good return.
It's important to keep investing in Bitcoin the discretionary income we have in our hand. If someone don't have any discretionary income for Bitcoin then he must think of how to generate that discretionary income.
This is a very wrong notion and I think this will definitely mislead so many morespecially the newbies, despite the fact that bitcoin has proven it's worth over the years as a potential coin doesn't mean that it is risk free.
volatility is one of the characteristics of bitcoin, which can increase losses and as such making bitcoin investment to be risky.so the only way the impact of volatility can be reduced is by investing in bitcoin for a long term like 10 years or more.
Bitcoin investment is not a risk free investment as you may think, so I don't know were you actually get that idea from.infact as an investor one needs to have a high risk tolerance to be able to hold bitcoin for a longer term .
In some sense both of you are wrong, because describing bitcoin as risky or not risky is problematic, since there are things that we can do to mitigate some of the risk, but we cannot mitigate all of the risk, so in that sense we try to engage in good cashflow and investment practices, so that bitcoin can end up playing out as something that we can recognize and appreciate to have fewer risks (in some respects) than the dollar, even though at the same time, bitcoin has some areas that it is risky in which the dollar is not... so it is not like risk can be described as just one thing since there are various kinds of risk, some of them we can control and others we can mitigate and others we can try to figure out, to the extent we might not know aspects the future, so some risks might ONLY become known at a later point down the road, not that we can even presume that any of us has complete (or perfect) knowledge in the first place, since some of us might know about certain kinds of risk but others might be ignorant in regards to that angle of bitcoin as compared with some other assets and/or currencies that we might choose to invest into.
volatility is one of the characteristics of bitcoin, which can increase losses and as such making bitcoin investment to be risky.so the only way the impact of volatility can be reduced is by investing in bitcoin for a long term like 10 years or more.
Bitcoin investment is not a risk free investment as you may think, so I don't know were you actually get that idea from.infact as an investor one needs to have a high risk tolerance to be able to hold bitcoin for a longer term .
I don't know how the volatility of Bitcoin increases losses for an investor that have his coin kept in his wallet and holding same for many years ahead. Maybe you are speaking from the angle of a trader which is not what the discussion is not about. As a long term investor, if you hold the opinion that volatility increases losses, then you have missed what volatility is hence, you should go back to the basics and refine your understanding.. I just want to make that correction that volatility does not increase losses for a long term holder.
For sure, long term holding time frame will soften out short term volatility, yet it still might not completely soften all volatility... yet at the same time, we tend to realize that on an ongoing longer term basis, bitcoin prices tend to gravitate upwardly, and we can see that
upward gravitation in the 200-WMA. Bitcoin upward price slope is not guaranteed to continue, yet there is no real evidence to show bitcoin's investment thesis is getting any weaker with the passage of time, and surely a lot of bitcoin's investment thesis and network effects (
as outlined by Trace Mayer) seem to be getting stronger rather than weaker with the passage of time, even though the upward slope of bitcoin's price curve (in terms of percentages) is not likely to be as steep as it has been historically.
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Minimum risk is possible for the long term but not risk-free or say 0 risk when it comes to bitcoin.
Everything has a risk especially when talking about bitcoin so we cannot say risk-free bitcoin even 0 risk even if it is done for the long term even though bitcoin is still very worth it to do.
In this context for the long term we actually only minimize risk because at least with the long term our risk will be smaller than for the short term but that does not mean this is 0 risk because after all when we talk about bitcoin and invest in it there will be no such thing as 0 risk. Don't because we are too sure that we forget or eliminate important things as if it were certainty even though risk is quite closely related when we are in the scope of bitcoin.
There is no risk-free investment - all have risks, but the risks are never the same. The risks of investing in bitcoin and altcoin are different - it is true that you can lose money, but the big risk of investing in altcoin is that you have no chance of recovering when the altcoin is no longer in demand by investors and the altcoin dies on its own. Bitcoin will never be in that position - it is quite reliable as a long-term investment, but you have to be able to understand the risks and
minimize them.
There are many guides on how to control risk and how to
minimize it - we can all learn. The risk is not only about the price changes - but also about how you secure your bitcoin and store it. One example of
minimizing the risk of bitcoin investment is - do not store your bitcoin online.
Even though the ideas are similar.. the better description is to "mitigate risk" rather than "minimize risk," especially since we should realize that we do not know all of the risks, since even if there are known unknowns when it comes to risks, there is also the category of unknown unknowns.. and so we try to mitigate as much as we can, whether we know or not, and we might not necessarily be able to address all of the risks so we might engage in practices to balance them out since we cannot really change them.. which is another reason that the expression to "mitigate risks" is better than the expression of "minimizing risks".. minimizing risks assumes that you know the risks and that you are able to address them rather than realizing that there are trade-offs and balances in regarsds to the known and unknown risks.
Sure, it may well be preferable to error on the side of having more emergency fund rather than not enough, and surely folks who do not have an emergency fund are likely ending up using their bitcoin as their emergency fund, which protecting the bitcoin investment should be part of the rationale to build and to maintain the emergency fund in the first place.
And, like I have mentioned in other posts, it could well take a guy a 1-3 years or more to merely establish an emergency fund and a bitcoin invested amount in which each adds up to 3 months, especially if we may well consider that a guy who is investing 10% into bitcoin and/or his emergency fund, it would take 10 years at such rate to invest 1 year's worth of income whether that is into bitcoin or the emergency fund or a combination of both.
Frequently I have argued that an emergency fund does not need to be more than 3 months, since the funds in an emergency fund are more strictly held for emergencies, yet if some folks want to build back funds beyond an emergency fund and to have more flexibility with the back up funds, then they could do that, even though if emergencies were to come in terms of increased expenses and/or decreases in income, then the back up funds would likely be tapped into and exhausted prior to tapping into the emergency funds and the emergency funds would be tapped into and exhausted prior to touching the bitcoin. And, yeah, it could take some decent amount of practice to figure out reasonable balances in regards to how to build up and to maintain various kinds of back up funds.
Great, now we understand each other and are pretty much on the same side.
I would like to say here that this also depends on your total capital and cash flows. There is nothing wrong with having an emergency fund in combination with a back fund. The general thing is that you can't possibly prepare for everything while being balanced with the rest of your finances, so it is not a problem that has an optimal solution.
I am not going to necessarily agree that we understand each other or that we are on the same side, since I don't claim to understand some of the things that you were saying, and I am not sure if you were purposefully being arrogant in some of your earlier claims that seems to border upon know it all proclamations that poo-pooed some of the cashflow management and investment management ideas.
Emergency fund is a kind of back up funds.. so back up fund is a more generic term that covers emergency funds, reserve funds and float money.
I also have my doubts that any of us are necessarily searching for perfection, but instead potentially trying the best that we can to tailor our approach to bitcoin towards our own financial and psychological circumstances... and sometimes as a beginner we might not really know what factors to weigh when we are considering how much or how to invest into bitcoin or to otherwise engage in attempts to build and maintain good cashflow management practices.
It is more of risk-balancing dance that is built on a good foundation of knowledge.
We do not necessarily need a lot of knowledge to get started investing into bitcoin since we can build on various kinds of basic knowledge that are the only foundational knowledge matters that will justify our getting started investing in bitcoin, such as determining that we have a discretionary income and investing into bitcoin within the boundaries of our discretionary income.
I personally like having a one-off very large fund next to the emergency fund now that I can afford it. A 3 month emergency fund would not cover something like an extremely expensive surgery and it is not supposed to, don't get me wrong.
Emergency funds would likely be meant to prepare for unexpected happenings, and sure if some things are more likely then we might want to have more funds besides the emergency funds, like you said, but if you have absolutely no bitcoin and you are building up a 3 month emergency fund and also some 1-3 month or more supplemental reserve fund, then you may well never start investing into bitcoin, which does not seem like a good plan. It actually sounds like a retarded plan that is meant to prevent folks from ever getting ahead if they are keeping 6 months or more of value in cash or other inferior investments merely based on ideas that those places are more liquid than bitcoin and will ultimately help them in times of emergencies or whatever the fuck purposes you are holding that much cash and failing refusing to invest into bitcoin because of your preoccupation to keep money in inferior places.
Depending on where you live and what kind of insurance is available, you may not need this anyway. Further, one does need to be discouraged if their fund or current goals are small in this context. I actually liked my path towards building my funds, and you can gamify your journey. Each milestone was a very proud moment for me. $1000 fund complete? Rejoice and prepare for the next build.
Having a large amount of assets denominated in dollars seems problematic to me. As several of us mentioned so many times, it is likely a good thing to build up emergency funds and other forms of back up funds at the same time as building up the bitcoin investment, and so at some point maybe there is enough money in the various back up funds and then more focus can be made to put more money into bitcoin and realizing that the various back up funds are not very good places to store value, even though a few months of emergency is likely good and also some amounts of funds for various anticipated expenses can be good too, such as saving for a computer, or phone, or to repair your sink, or a bicycle for your daughter, or to take your wife on a mini-vacation or some other kind of expenses that you might not have money for but need to save up for.
Choosing our position size is helpful in managing risk, and also considering that we are investing no more than we can afford to lose, so we are already appreciating that we could lose our money when we invest it into bitcoin.
Hopefully we figure out an appropriate balance in order to not invest too whimpily into bitcoin, since the guy who invested the last 10 years at $100 per week ended up doing way better than the guy who only invested $10 per week. In fact the guy investing $100 per week, ended up with a bitcoin portfolio size that would have had been 10x larger than the guy investing $10 per week.
I guess in general I would say that you shouldn't bite more than your finances or your emotions can manage.
There is nothing disagreeable about that point.
