Channel: Truth Investor

Category: Science & Technology

Tags: tradingtrading sinwarren buffett cryptocurrencyeoscircle of competence cryptocurrencyethereumcardanowhat is a circle of competenceinvesting sininvestingcircle of competencecryptocurrency bubblelitecoincrypto investoraltcoinare you committing this crypto investing sin?trading mistakestechnologyinvesting mistakebitcoin bubblecryptocryptocurrencywarren buffett cryptoinvesting mistakeseconomicsripplemoneywarren buffett bitcoinbitcoinfinance

Description: Another huge mistake many people make when it comes to investing in cryptocurrencies is not sticking in their circle of competence. This is ironic given the fact that this concept was popularized by Warren Buffett and he recently stated that cryptocurrencies will end poorly. Many people use this same concept to argue against Buffett, but we'll revisit that later. Steemit Post: steemit.com/bitcoin/@cryptovestor/are-you-committing-this-crypto-investing-sin Your circle of competence encompasses what you know and know well, rather than what you think you know. In cryptocurrencies, four primary factors contribute to the size of your circle of competence: 1. Technology 2. Investing 3. Finance 4. Economics The more you know about each of these fields, the wider your circle of competence. Most importantly, when you invest inside of your circle of competence, you enable yourself to: 1. Better measure risk 2. Better measure the probability of success, defined as high ROI relative to risk taken on The video goes into far more detail related to four fields listed above. If your circle of competence is small, it is likely best to stick with some of the major cryptocurrencies, namely: 1. Bitcoin 2. Ethereum 3. Ripple 4. Litecoin Note that even these cryptocurrencies have flaws that I would encourage you to learn about. Bitcoin is slow and expensive, Ethereum has major competitors in development which promise better scale, Ripple is more centralized and competing with HUGE pockets, and Litecoin is often considered nothing more than a playground for Bitcoin. Bubbles occur because people invest outside of their circle of competence - They have no choice but to trust others on when to get in, and no choice but to trust others on when to get out because they don't know any better themselves. For example, recently Charles Hoskinson of Cardano and Dan Larimer of EOS had a "debate" over some technical aspects of Cardano. Most people don't have the skillset required to weed out the BS and hence agree with whoever better aligns with their views: Shocker, right? Expand your circle of competence and don't be the idiot who blindly trusts others. That's the jist of the video. Returning to Warren Buffett, many say he's talking outside of his circle of competence: I disagree. He knows better than anybody the psychology of markets, but it doesn't exactly take a genius to see how stupid this market is. It will end poorly at some point. The one part I disagree with is that this will be a permanent bad ending - In the long-run, there will be cryptocurrencies that make us rethink existing business problems & solutions as we know them. What are your thoughts? ================ If you like my content, you can support me through using ANY of the affiliate links below (I receive small compensation). The beauty of affiliate links is that I can pick and choose what I like rather than have companies approach me - everything I linked below (with the exception of Trezor since I like Ledger), I use myself frequently. ================ My Recommended Hardware Wallets: Ledger Nano S: amzn.to/2hZPj0q Trezor: amzn.to/2AxD9TN Ledger Blue (expensive): amzn.to/2hk7xst ================ My Favorite Book for Investing in Crypto: Cryptoassets: amzn.to/2zKDdCF This book is, bar none, my favorite book for investing in cryptocurrencies. It doesn't bog you down with technical jargon, but instead focuses on all the elements you should understand before you invest. It's a comprehensive book for both beginners and experts. Beginners will find information about major cryptocurrencies (not just Bitcoin) as well as details on historical market events (that you can draw on for future) and events to watch for moving into the future. Experts will find the chapters on valuation particularly useful. For those of you involved in traditional investing, this book is even more of a godsend as finance info is explored (correlations with other asset classes, ETFs, etc). ================ My Recommended Exchanges: Coinbase / GDAX / Bittrex coinbase.com/join/5a08b12e305a1401d79d10e0 If you sign up to Coinbase using link above, you and I will both receive $10 each after you buy your first $100 of Bitcoin using Coinbase. Coinbase is much less intimidating for beginners. Once ready, move up to GDAX for cheaper or zero fees. For altcoins, I recommend Bittrex. ================ Legal Stuff: I am a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for me to earn fees by linking to Amazon.com and affiliated sites. None of what I provide in my videos is investment advice. Please do your own due diligence. ================ My Platforms: Twitter: twitter.com/Truth_Investor SteemIt: steemit.com/@cryptovestor Medium: medium.com/@Truth_Investor Seeking Alpha: seekingalpha.com/author/truth-investor/articles