Bitcoin Wisdom

Scripture Reading: Proverbs 13:11

"Wealth gained hastily will dwindle, but whoever gathers gradually will increase it."

Society recently expects quick, low-risk actions to achieve our goals. This mindset applies to Bitcoin investing, leading us to believe it’s a “one-way ticket” to wealth—wrong. Wrong.
History has repeatedly shown us that financial investment requires time, patience, and skill. The same goes for Bitcoin investing. So, despite its reputation as an “effortless side hustle,” Bitcoin is a highly volatile digital asset that requires caution and wisdom to generate profit. This article highlights common pitfalls for beginner and seasoned investors and offers methods to avoid them.

FOMO Investing

FOMO is the Fear of Missing Out. You certainly wouldn’t fall for this emotion, would you? The domination of social media is causing many to experience a crippling “fear of missing out.” As of this writing, XRP (Ripple) is up over 42% in the past seven days.¹ Are you invested in XRP - the third-largest digital asset by market cap?
Did you hear about the early investor who bought BTC at $3? He’s now in multi-billionaire territory. I’ve often heard people who have learned about Bitcoin - or read an Internet article - say they’re too late. They missed out on an incredible opportunity. As the opening line of “Can It Be All So Simple” says, “Everybody’s talking about the good ol’ days.”

Diving into Bitcoin can feel risky if you don't first learn about blockchain, its purpose, and how the market works. Studying the basics and talking with people with experience in trading and investing is a good idea. That way, when you're ready to pull out your wallet and begin your journey, you’ll feel more prepared and sure of yourself.

Remember the truth of Proverbs 27:17: “Iron sharpens iron, so a friend sharpens a friend.” This verse reminds us how important it is to learn and grow together.

Don’t Bet the Farm

I may start sounding like a broken record. Still, it's essential to note that Bitcoin is highly volatile, and making it your primary source of income will cause unnecessary stress during market turndowns. The best way to protect yourself (and your loved ones!) from the negative consequences of Bitcoin price dips is to utilize a DCA (Dollar-cost averaging) strategy. AKA investing a fixed amount of money regularly - regardless of Bitcoin’s price. Remember that patience is the most valuable virtue when investing - and that Rome wasn’t built in a day.

Locked Out

To keep your digital assets safe from hackers, they must be encrypted. What does that mean? Think of it as putting your money behind a locked door where you only have the key. If you lose that key, you lose your Bitcoin—and all the real money you used to buy it.

There are two main ways to store your Bitcoin: “hot” or “cold” storage. Hot storage means keeping your Bitcoin online, such as on a trusted crypto wallet provider like Coinbase. If you choose this option, be very careful when using the Internet or sharing information with friends and family—hackers might be listening.

Cold storage means keeping your Bitcoin offline. This often involves using a unique device or even writing down your private key on paper and storing it somewhere safe. While this can be a bit harder to use, it’s usually safer because it isn’t directly connected to the internet.

Don’t Put All Your Eggs in One Digital Basket

Ecclesiastes 11:1 advises, "Cast your bread upon the waters, for you will find it after many days." This wisdom urges thoughtful actions for long-term outcomes, especially in digital assets and cryptocurrency practices like cold storage. When safeguarding currency, consider "casting your bread" into cold storage—storing assets offline on hardware wallets, unconnected computers, or secured paper wallets, thus avoiding third-party dependencies. This practice reduces risks from server outages and cybersecurity threats.

Cold storage also protects against environmental issues like power outages and internet disruptions. Securing wealth offline prepares for the future, ensuring your managed assets are accessible when needed. By choosing cold storage, you safeguard your investments and embody prudence, ensuring that wisely handled investments yield returns at the right moment.

Fast Moves, Hidden Costs

Frequently buying and selling Bitcoin will result in transaction fees piling up quickly, not to mention exposing you to the dangers of Bitcoin’s ever-notorious price volatility. Like avoiding acting upon FOMO, try to hold onto your currency for at least as long as it takes the reselling price to exceed your total investment - fees included.²

Tax Troubles

Although not the most common source of income - any cash flow is subjected to taxation, and Bitcoin is no exception. Just as we stressed the importance of considering transaction fees during your trades, adhering to the law is just as crucial as utilizing bitcoin to create long-term financial stability.

Hook, Line, and Sinker

When discussing Bitcoin, it's clear that investors and scammers recognize its lucrative potential. Since its inception in 2009, fraudsters have devised numerous methods to steal your hard-earned currency.

Common scams include fake investment platforms, phishing scams, Ponzi schemes, giveaway scams, and malware attacks. Fake investment platforms often promise guaranteed returns while providing little business information. Phishing scams aim to obtain your Bitcoin data (private keys) and may misuse your email password to access your wallet. Giveaway scams and Ponzi schemes require you to relinquish your Bitcoin for supposed reinvestment to yield profits.

This list of dangers might intimidate new investors, so here are simple ways to protect yourself and your currency:

- Verify URLs and sources: Ensure trading or storage websites are official. Look for HTTPS and correct spelling.

- Research the platform: A quick Google search can lead you to previous users’ experiences.

- Beware of pressure tactics: Rushed decisions are often a red flag.

- Never share private keys. Just don’t.

Conclusion:

Let me include one of the most universally accepted pieces of advice that applies to anything. Starting something new is scary, brings in unpredictable circumstances, and can make you feel like you’re way out of your depth. This is all a beautiful and universal part of learning and growing, so let me leave you with a final piece of scripture to turn to in trying times - whether during market dips or times of personal hardship:

Hebrews 12:11

"No discipline seems pleasant at the time, but painful. Later on, however, it produces a harvest of righteousness and peace for those who have been trained by it," wrote the author of Hebrews.

1 https://coinmarketcap.com/

2 For further reading, check out Bitcoin Magazine Pro’s insightful article: "Weekly Analysis: The House Always Wins."