I heard this phrase from the recent All In podcast and it reminded me think of what I suggest family and friends to do to “wet their beaks” in the crypto world.
There’s no doubt that cryptocurrencies are eating up the financial world and a lot of people are interested in getting some exposure. Although not an expert, here’s what I’d suggest my closest family and friends do. There’s absolutely no guarantee that adopting the following approaches will net you a positive ROI but it’s what I strongly believe in.
Buy Crypto P2P
P2P stands for peer-to-peer. To quickly get started in the crypto world, it’s be so much faster and more convenient if you were to buy Bitcoin or other cryptocurrencies from someone who’s in the game much longer and already holds crypto.
As a crypto aficionado and true believer in the technology, I would happily sell crypto to my family and friends at market rate and even offer to pay for the transaction fees as a gift. I believe this is way more productive and efficient for someone to quickly get exposure without spending weeks or even months down the rabbit hole and getting scared of scams and hacks.
Biggest Allocation in the King – Bitcoin
Bitcoin is still the most well-known cryptocurrency and one with the strongest fundamentals. Therefore, it’s best advised to put the most of your crypto allocation into Bitcoin and leave at most 20% for altcoins and other experimental shitcoin / ICO bets.
If you truly believe that cryptocurrencies will become a dominant asset type in the next decade, I have strong conviction that having 80% in Bitcoin is the best asymmetric bet you can do.
Dollar Cost Averaging (DCA)
Don’t be tempted by all the latest news to go all in Bitcoin at one price. Buy Bitcoin slowly and frequently. Plenty of crypto platforms offer recurring buy services. This will allow you to slowly accumulate Bitcoin and build a portfolio that can withstand market volatilities.
I would set up DCA on a weekly basis worth 100-150 USD or 10% of your monthly income. I believe this is the sweet spot for someone wanting to “wet their beak” and start getting exposure to the market without getting stressed out by the volatility. Weekly buys will dampen and smoothen out that volatility while also providing a decent portfolio size to feel the excitement.
Custody vs Non-custody
Because cryptocurrencies are bearer assets, you have the option to self-custody your own coins. Just like holding physical gold, you can hold your own coins in a software or hardware wallet with a 12 / 24 word seed phrase.
If you’re technically-savvy, I’d recommend you to hold most of your coins in self-custody. Download a software wallet and deposit your coins from a centralised exchange. Once you get more advanced, buy a hardware wallet and transfer your coins there. The hardware wallet should not be connected to the internet at any time.
If you’re not at all technically-savvy, I’d recommend you to sign up to an industry well-known, popular custody provider like BlockFi. Have your Bitcoin or other cryptos deposited in BlockFi and even earn interest along the way.
The most important thing here is to get your beak wet. Once you are in, you will go down the rabbit hole yourself on the merits of Bitcoin and cryptocurrencies.
