If you're an absolute crypto beginner, or if you're pretty advanced and you feel you've lost your way, this is for you, and it's something you can send to someone brand new. I'm writing this after I talked to a guy in an Alcoholics Anonymous meeting today who told me he'd started buying a little bit of crypto. I realized, holy crap, I need to put together something specifically for him.
The number one thing you need to know if you're an absolute beginner in crypto is a simple Warren Buffett idea that Kyle Langham from DFINITY shared with me the other day on a call. Buffett's advice is that if you use a product, you might then consider buying that company's stock. In blockchain, this means if you actually use a blockchain, if you use the technology behind a crypto, then you could consider buying the coin.
The number one thing I see people doing wrong in crypto, and I've done this probably more than most since I started in 2014, is buying crypto coins where I've never used the technology itself. There's no reason to invest in something just because you think it might go up. You need to actually use the product first. Imagine buying stock in a company you don't believe in. In my experience I wouldn't buy stock in a company unless I love the company and use whatever they offer all the time.
Use the technology before you buy the coin
Let me give you an example of how you can do this easily, and for free. To me this is the number one crypto worth owning, even though it sits far below Bitcoin, all the way down around number 30 by market cap. It has the most advanced technology in crypto, and you can use it totally for free when you're on my website. My website is hosted on the blockchain. No other crypto can do that. There are also community channels, like the OpenChat channels, where I gave away $1,000 worth of Bitcoin today in my open chat. OpenChat is an application like Discord or Telegram, a social media and community-building application that is hosted fully on the blockchain and has incredible capabilities.
So let me show you what my top two crypto investments are. My number one investment is Internet Computer Protocol, because I use the blockchain every day hosting my website, I use the blockchain every day on OpenChat, and I use the wallet every day, which lives in the Network Nervous System. I have about $38,000 of Internet Computer and OpenChat locked up in there. Then I have a few thousand dollars liquid. Then I just sold an account with another thousand dollars, another thousand ICP in it, which puts me at close to around $50,000 or so in crypto. All of it is on Internet Computer Protocol. And that's because I actually use the blockchain.
Now, to be clear, when I first bought this I had never used the blockchain before. I had a wallet full of coins sitting on exchanges that I had never used. The biggest, smartest thing I've ever done in 11 years in crypto is that I took all my coins off exchanges and started using them. And where there was no reason to take a coin off an exchange, where there was too much of a gas fee, some of these coins you can't even withdraw without paying a huge fee, I sold those immediately, because I could see how worthless they are.
When I started using the Internet Computer Protocol blockchain, which you can research at internetcomputer.org, I discovered that this is a real-world computer. The tech is incredibly advanced. So I started asking why. Why is this crypto down at number 30? What's with all these other coins? What's going on? And then I realized a horrible fact about crypto that I knew getting into it: almost all of crypto is lying, cheating, and stealing.
Why this matters even with $100
This is exactly why it is extremely important that, under no circumstances, you buy a crypto without actually using the blockchain, without actually using the technology, without having at least some basic level of understanding. It doesn't matter how little money you're putting into it. The guy today told me, well, I'm only going to put in $100 or less. That's how I started with Bitcoin too. And soon enough I had my entire bank account in Bitcoin, and when the price dumped I lost thousands of dollars just trading Bitcoin alone in 2014.
Especially if you have an addictive personality, or if you're looking to get rich quick and you're struggling with your money, in my experience you should never buy a crypto without using the blockchain and without understanding what value the technology has to offer the world. These cryptos, especially the big ones, but also many of the smaller ones, are lying, cheating, and stealing in order to get you to invest in them. Some of them are not, but in that case you should know exactly what you're investing in.
And if you're holding your crypto on an exchange like Coinbase, you don't even own the crypto. You don't own it. On ICP, I have direct control. My holdings are directly on the ICP blockchain. My devices have control over this crypto. There's no third-party exchange sitting there controlling it. If you had this same portfolio on a crypto exchange, you wouldn't actually have any of that crypto unless you went to withdraw it.
How exchanges manipulate the market
Some exchanges are making themselves all kinds of money and then collapsing, like FTX. Others have survived doing the same things. When people deposit crypto on exchanges, the exchanges are double, triple, ten times over, selling way more crypto than they actually have, and then buying it back cheaper. The prices are manipulated. People making videos about crypto are very often lying and uninformed. When you're a beginner, you need to realize what a dirty, nasty environment this is. This is an environment where whoever pays the most money, hires the most influencers, and fakes and lies the most about their blockchain can often get a huge valuation.
So if you ask why Internet Computer is down here when it has some of the best technology, it's because they're not cheating. They're just building the best technology and doing their marketing by making products like my website, like the Network Nervous System, like OpenChat where I ran that giveaway, which you couldn't have done any other way. Their marketing strategy is to make technology so amazing that people share it for free. That takes a while. Almost all of these other projects have done anything it takes to grow their market cap and get listed on exchanges, and they have no real fundamental value. There are very, very limited exceptions.
The way I look at it is that the only thing worth investing in is that which you've actually used yourself. Would you buy stock in a car company when you drive a different brand of car? That seems insane. Why not buy stock in a company whose car you've driven and liked? Why would you buy stock in Walmart if you shop at Target? It's insane, and that's exactly what people are doing in crypto.
Timing, Bitcoin, and third-party wallets
Internet Computer Protocol is, to me, the example of an ideal investment, because it appears to be drastically undervalued precisely because it's not lying and cheating and stealing like so many of these other cryptos are. That's not going to last forever, though. It will get accurately valued by the market eventually. So timing is everything in crypto. Finding Internet Computer Protocol before most other people figure it out could be very good, while many of these other cryptos are going to go to zero, or they'll have much smaller gains than ICP.
Bitcoin, to me, is not worth investing in at this point either, because the market is so big that you're just not going to get many gains out of it. And you can't take Bitcoin off a crypto exchange in small amounts. With ICP you can withdraw five or ten bucks, no problem. With Bitcoin you have to pay a $5 or $10 fee just to take it off an exchange. You have to use a third-party wallet, unless you're going to download the whole 600, 700, 800 gigabyte Bitcoin blockchain onto your computer, like I've done multiple times. If you're not going to do that, you're left using a third-party wallet.
The guy I talked to this morning asked, well, what about things like Coinbase Wallet? That's a third-party wallet. The only wallet I trust to hold all my crypto in is one that doesn't require a middleman. ICP is hosted directly on the blockchain, and because the blockchain can serve web, I can go straight to the wallet with no third party in the middle. If you want to go deeper on how I think about money, holdings, and the mistakes I've made, I've put a lot of it into my Money playlist.
So if you're an absolute crypto beginner, my honest belief is to stop buying crypto, start doing more research, and maybe sell everything you've got and start over again. The worst thing in crypto comes in when confirmation bias hits. When you buy something, you become a holder, then you start showing it to your friends, then you want the price to go up. All of that can be cleared up by correcting the initial mistake. It's an absolute mistake to buy something you've never used yourself, and buying a crypto on an exchange does not count at all as using the product. Use Internet Computer Protocol yourself, and join us in OpenChat where you can ask more questions.