About two months ago I wrote a post highlighting my foray into the cryptocurrency space and since I bought my first digital coins late last summer I can truly say from a first hand experience that this has been the wildest financial ride I have ever been on. Looking back, the only regret I have is not buying more when prices were much lower in the summer. In the end, I feel good about all my purchases for the long term. I truly believe this train will continue to chug along and we’ll be reporting five digit values for Bitcoin and much higher levels for many of the alt coins as well.
As I have stated in my original post, I do not intend to trade my coins, rather employ a ‘buy and hold’ strategy for many years down the line. I approach my cryptocurrency buying exactly the same way I have been doing with my long term dividend stock portfolio which is by nibbling into positions and dollar cost averaging up or down almost every day. Specifically, I use my Coinbase account (referral link) but do all my buying on GDAX.com which is fully owned by Coinbase. The reason I buy through GDAX is because I am able to set limit prices and buy the cryptocurrency with zero trading fees and with a spread of close to zero. Buying directly on Coinbase will subject you to a trading fee as well as a much higher ask price for the cryptocurrency. I just want to point out that there’s nothing wrong with using Coinbase. My very first buy was done on the Coinbase platform but I quickly learned that using GDAX was much more flexible and efficient. Here’s how I set up my typical buys:
I set up several limit buys each day and simply wait for my price to be reached and trades are executed automatically. For Bitcoin each of my limit buys are set for 0.01 BTC. For Litecoin I typically set up buys for 1.0 LTC and for my Ether my buys are set up for 0.3 ETH at a time. In this way I am able to slowly build up a position every time my buy price is reached and not have to remain glued to my screen and monitor the wild daily price gyrations.
The beauty of buying into Bitcoin or any alt cryptocurrency is that it is well within the reach of everyone. Each cryptocurrency is broken down to eight decimal places which means the smallest unit of Bitcoin you can own would be 0.00000001 or 1 Satoshi. Think of whole Bitcoins as dollars and Satoshis as the cents. So there you have it. My general plan for buying digital coins. At the end of each day of successful buying I transfer all my coins to a hardware wallet and cold store them.
As all you of already know the cryptocurrency space is full of hardcore proponents and opponents and whether you are one or the other I think everyone should own at least some cryptocurrency on the side. No one says you have to risk thousands of dollars. While there is a risk of owning cryptocurrency, there is also a risk of not owning it either.
I truly believe that cryptocurrencies are here to stay and not some Internet fad. Of course, the question of which currency or currencies will reign supreme remains to be determined. Until then, I’m happy to be a part of the movement and go along for the ride.
What do you think about cryptocurrencies and their applications? Do you already own or plan to own any digital currencies? Please let me know below.