Lost in Crypto? Choose Your Adventure Here
A guide to the different rabbit holes to jump in
Hey Uncryptors,
I have a confession to make.
I've developed a serious case of FOMO
Over the last week, I've found myself drowning in the brand new concepts, spaces, and voices in the crypto sphere.
EIP-1559 is massive for Ethereum.
Play-to-earn Axie Infinity is taking the world by storm.
7-day CryptoPunks trade volume just surpassed $200 million!
Social tokens and DAOs are the next big thing.
Before managing to get a proper grasp on something, a new thing starts sparking fireworks somewhere else. My attention constantly gets magnetically pulled to the newest, shiniest object. Before I know it... I’m already hit with a solid dose of FOMO.
Luckily being poor and honest with myself about how underequipped I am to assess the risks involved p̶r̶e̶v̶e̶n̶t̶s̶ ̶m̶e̶ ̶f̶r̶o̶m̶ ̶m̶a̶k̶i̶n̶g̶ ̶g̶a̶i̶n̶s̶ saves me from rash capital allocation.
Sometimes the fear of the unknown leads to catastrophic, irrational inaction. It disguises itself in the form of excuses and a nagging feeling of "not being ready". But this isn't it.
I stand by my principle: Your ability to dump hard-earned money into an investment is directly proportional to your level of conviction.
True conviction doesn't come easy. It needs to be earned.
Hype, FOMO, and making decisions based purely on others' opinions is not conviction, it's greed. Greed is not bad, but it blinds you from making sound decisions that inevitably result in losing.
You can't know everything
Repeat after me:
You can't research everything
You can't ape into everything
It's literally impossible to keep up with everything
This is something you need to accept, and you need to accept it fast. If you don't, constant FOMO and anxiety will lead to wasting precious time and capital.
The problem here is not that the metaphorical crypto textbook is too thick, it's that the book itself is being written and rewritten as we speak.
Even people in the space for a long time have trouble keeping up.
P.S. This is just a more recent account I found following NFT hype, not saying they are necessarily an expert. I've seen similar tweets from many OG crypto people.
A note on FOMO:
You will not necessarily lose when you act out of FOMO, it can get you into projects early and you can profit. Provided you know when to sell (hint: there's no right answer).
Feeling FOMO is not necessarily bad. You can use it for fuel — feel inadequate, get over it, then use it.
How to choose a path?
Like I mentioned in my first post, most of us are here for the gains. It's a given that getting gains will take effort. But at the same time, you don't want to be slogging it out in something you intrinsically don't believe in and pouring hours into something you hate.
Take the analogy of how people choose what jobs to get for the money.
Most of us work with getting a salary as the main goal, but we still try to choose jobs based on what we enjoy, what we are good at, and whether it helps contribute to purposes that we believe in.
You can apply this same approach to navigating the crypto space.
Ask yourself:
Do I enjoy the process?
Am I good at this?
Does it align with my values?
Ideally, you should find something that lies at the intersection of all three metrics. But if not, go for at least two.
Note: Things like effort-to-reward ratio for each endeavor vary. But that also depends on your talent or propensity to be able to find those paths with good ratios, and the ability to execute on them.
I've talked enough about mindset and approach, now let's get into the possible "paths" you can go down.
The list
I've compiled a non-exhaustive list of possible crypto-paths. There are probably more out there that I don't know about, and more are being created each day.
The HODLer (long-term) 💎🙌
The Small-Cap Gem Hunter (mid-long term)💎🔫
The Researcher (mid-long term) 🤓📚
The Trader (short-term) 📈📉
The DeFi Yield Farmer 👨🌾🍅
The NFT connoisseur 👨🏻🎨🎨
The Gamer 🕹️🎲
The BUIDLers 👷🏻🏗️
The HODLer 💎🙌
HODLers find tokens, build up a position in them, and then hold for a very long time.
They find projects in the space that are not only fundamentally sound but also ones that are extremely unlikely to become irrelevant in the coming years. This can prove to be a challenge because the crypto space shifts extremely quickly.
Take a look at the top 10 coins across the last 10 years, not many have stood the test of time.
Requirements:
Frontload research, and understand the projects to the core
Know the risk factors, and monitor developments passively
Act only if something fundamentally changes
All price movements are to be disregarded
This is suitable if you:
Like deep research
Have sizable capital/income streams to feed investments
Do not want to spend a lot of time on crypto
Examples:
Most traditional finance investors who allocate a % of their portfolio to crypto
The Researcher 🤓📚
The researcher is extremely similar to the HODLer, only that they aren't necessarily looking several years into the future. They find projects with economic moat and that are fundamentally strong and buy-in. They get out once they find greener pastures to reallocate their capital or if projects start to lose steam/display red flags.
Researchers usually contribute a lot to the communities of the projects that they support, and may or may not exhibit cult-like behavior. Check out the $LUNA community on Twitter that calls themselves #LUNAtics.
Requirements:
Fundamental analysis — crypto version (Hint: Cashflow is rarely part of the equation)
Good base understanding of the technical side of crypto
This is suitable if you:
Like deep research
Have significant time to dedicate to finding and keeping up with projects
Small-Cap Gem Hunter 💎🔫
The gem hunter is not looking for the 2x, 5x, or 10x. They are looking for 100xs. No other asset class gives you 100x opportunities within a single year.
Here's a short lesson on valuation and market cap:
Market capitalization, or market cap, is the total value of a cryptocurrency/asset. It is calculated by taking the price of each token multiplied by the total number of tokens available.
For a project to do a 100x, it needs to have a small market cap. To understand this, let's consider what it would take for Bitcoin to do a 100x from where it currently is.
Bitcoin now has the largest market cap of around $800 billion. A 100x means it needs to grow to $80 trillion in value, which would take up 20% of all financial wealth and assets in existence which currently sits at $431 trillion.
Long story short, the smaller the cap, the easier it is to grow %-wise.
To get 100x, you need to spot the hidden gems and get in early. Really early.
Requirements:
Deep and broad understanding of the crypto space
Third eye to spot the special sauce that will make a project explode
This is suitable if you:
Are ok with invested capital going to zero
Like treasure hunting
Are able to deal with uncertainty
Examples:
PEPE - "THE GOAT" (not endorsement)
Note: At the moment, there are no metrics to help you, no cash flow models, no parallel industry models that you can reliably and consistently lean on to find these gems.
One piece of advice I'm just passing on:
If you're confused about the differences between the first three, this table might help:
The Trader 📈📉
Traders essentially believe that it is possible to predict price movements (to a certain extent). Whether you day trade, swing trade, or cycle trade, you are taking bets on price movements to capture profits.
While it's generally accepted that nobody knows for sure where the prices will go, traders make use of charting and technical indicators to gain clues about market psychology and conditions. They then take calculated bets on those clues.
For the skeptics out there that think trading is a complete scam, let me ask you this:
Is poker a game of chance, or a game of skill?
I'm neither a critic nor a believer, but don't knock it till you try it.
Requirements:
Master charting, indicators, risk management, mindset
Watch the market for opportunities to act on them
This is suitable if you:
Have a lot of time
Want large returns with smaller starting capital
Examples:
@EmperorBTC, @AltcoinPsycho, @CryptoKaleo (not an endorsement)
And in case you're wondering, what value are you creating when you trade?
Whether you win or lose, you provide liquidity for the markets.
The DeFi Yield Farmer 👨🌾🍅
Decentralised Finance (DeFi) takes models from traditional finance and makes it permissionless and decentralised.
In DeFi, contracts are replaced with smart contracts, and the middlemen that take large cuts are taken out of the equation. The yields that were previously credited to the middlemen are now passed on to users of DeFi. The most common examples of this are being lenders on Aave or Compound, and being a liquidity supplier to decentralised exchanges like Uniswap and Sushi.
There are many different ways to get yields of 10%, 100%, and even 100,000% APY. Although usually the higher the yield the higher the risk. Insanely high yields often have “ponzi-nomics” at play in which earlier farmers' yield comes from the later farmers buying in.
Yield farmers understand
Where the yield comes from
Risks of each protocol
How to maximise their yield
This is suitable if you:
Enjoy managing cashflow
Have substantial capital
Examples: Taiki Maeda — this man dresses the part too
The NFT connoisseur 👨🏻🎨🎨
Let's play guess the price.
How much do you think this costs?
This right here is Chromie Squiggle #1862.
It sold for 90 ETH, on 26 Jul. That's ~270,000 USD at today's $ETH prices.
Let that sink in for a moment.
The hype for NFTs has been skyrocketing recently — 100s of millions of dollars in sales volume have been recorded over the past week alone.
Check out CryptoSlam! for the latest popular NFT collectibles.
Apparently, there's a method to the madness of collecting and flipping these art pieces.
"I know a lot of you guys are not going to understand NFTs and collectibles and stuff... and that's fine but you don't have to bash the space. There are people out there that are going to buy these regardless." — JRNY Crypto
This is suitable for you if:
You are an artist (in any way, shape, or form)
You like art/collectibles
Examples:
Zeneca_33, his/her NFT substack
"I really don't know (if bitcoin is becoming the currency of the world). The reason I've gone harder onto NFTs than currency is because I enjoy it more." — Gary Vee, Creator of VeeFriends
The Gamer 🕹️🎲
Blockchain games have introduced the play-to-earn to the world. We've seen the success of Axie Infinity it allowed players from the Philippines to earn incomes during the pandemic, and just take a look at this:
To be completely honest, Axie got on my radar only because of how much it's grown recently. I've also heard of land in Decentraland selling for a pretty penny, but personally, I have little to no interest in games.
For those who do, you can get started by trying to get into the crypto gaming community, using site aggregators to find games, and consult CAGYJAN's channel.
This is suitable if you:
Enjoy playing games
Can understand crypto game economics and how it translates into 💰
Have time to learn and grind
The BUIDLers 👷🏻🏗️
This means getting a job in crypto or starting your own crypto project or company. Crypto is growing fast and it needs people to contribute to its continual expansion.
If you're interested in a job, you can find role listings on cryptojobslist, which also includes a salary aggregator to help you along with the transition. By getting a job in crypto, you're almost guaranteed to have a global, remote working environment and the chance to get paid in crypto.
This is suitable for you if:
You want to contribute to the growing crypto ecosystem by leveraging existing skillsets
Want to transition into crypto full-time
Examples:
Tech-roles: Blockchain Devs, Data Scientists, Designers, etc
Non-tech roles: Analysts, Community managers, Marketers, Writers, HR, etc
Fringe roles: DAO contributer, NFT artists
On choosing
For the purposes of starting out, you might just want to focus on one or two areas that you're most interested in before diversify from there. This will help to keep you laser-focused on gaining specific, actionable, gain-catalyzing knowledge. It will also help you to separate signals from the noise and keep you honest in your progress.
However, at the end of the day, it's completely up to you. Being able to explore more than one area at once also depends on your interests, talent, resources, and work capacity.
Final thoughts
Getting into crypto can be extremely overwhelming — too many options, too much to catch up on, and too little time.
If you're diving in (and if you're reading this you should be), it's important to learn to embrace the process.
See something new > Feel inadequate > Get over it > Wet your feet > Dive in > Repeat.
Call it a movement, technological development, natural evolution, a new paradigm, or whatever else you want to call it. It's moving and it's moving fast, so put on your bunny suits and hop on in.
If you feel overwhelmed or paralyzed making friends along the way helps too. You can always reach me on Twitter and let's go down the rabbit hole together.
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