Won’t you join the crypto boom?

In the spring of 2017 I looked at the money I had saved and invested. I had spent 3 years diligently investing in a well-balanced portfolio of stocks, index funds, bonds, commodities and gold, for a very respectable 22% return. And I would have been happy with that, had I not recently seen a headline that Bitcoin had shot up 71% in the last 3 weeks.

I wanted in on the fun, with cryptocurrencies like Bitcoin and Ether making headlines not just for their rapid rise in value, but with very knowledgeable people commenting on the possibilities presented by this seismic technological breakthrough, the blockchain. They compared the investment opportunity to being able to go back to 1999 and buy tech stocks at a ludicrous discount. Amazon at $25, anyone?

Ether was riding an all-time high of $95, and Bitcoin was around $1500. I took some money I might otherwise have spent on old records and bought in right at the top of the market. At the time of writing, Ether and Bitcoin have gone up about 4.5 X since then. Even though it was the top of the market, if you had bought at the same time as I did, you would have done very well.

But I’ll be the first to say that this was pure dumb luck, that I had no real motivation for my timing apart from irrational optimism, and that the money I did put in was just a small amount, something I could afford to lose. Please don’t be stupid.

How to start investing in cryptocurrency: timing the crypto market

The cryptocurrency markets are extremely volatile, so it’s impossible to time these things. If you buy into just one coin today, whether you choose Bitcoin, Ether, Monero or Icon, you are at the mercy of one price, which is tethered to a single moment in time. There’s a much better way.

Image credit: https://cryptopop.net

If you want to start investing in cryptocurrencies, what makes more sense is to buy into an index fund and dollar cost average your investments in over time. That way, you spread your risk over multiple assets and multiple price points. You still get almost all of the long-term benefits of investing in the crypto boom (this is 1999, remember), but with significantly reduced risk.

In typical financial vehicles, you might dollar cost in monthly, but since the crypto market prices move so quickly, you might choose to average in weekly, or even daily. The best crypto index fund we know of is called the HIVE Index, which spreads your risk over 25 different coins.

Why the HIVE Index?

We like the HIVE Index because it holds the top 25 assets on the Iconomi platform, ranked by the combined holdings of each asset in all the other funds on the platform. In other words, if the entire community could talk, the HIVE Index would be their consensus. The fund also employs a ‘sell half on the double’ strategy to permanently lock in any gains, and is rebalanced quarterly.

Now I’ll show you exactly what to do get into the fund. This is a relatively straightforward process, but it can be a bit daunting if this is your first exposure to buying and using cryptocurrency. I’ve tried to make this as simple as possible, but if you get stuck at any point, we’re here to help.

First, you need some Bitcoin or Ether

Step 1: Open a Coinbase account. This is one of several exchanges you could choose, but it’s very simple to use and the one I recommend.

Step 2: Set up a recurring purchase of the amount you want to invest in Bitcoin and Ethereum, recurring weekly.

 

Then you need an Iconomi account

Step 3a: Open an Iconomi account. Visit the site and click the ‘Register Now’ button on the homepage. Iconomi recently became the world’s first crypto company to complete a Proof of Solvency – a form of blockchain audit – performed by Deloitte, the largest ‘Big Four’ professional services firm in the world.

In order to deposit up to $14,000 of Bitcoin or Ether you will need a Tier 1 verification. This involves completing a text message authentication and uploading your ID and a picture of your face. It’s a bit fiddly but simply follow the instructions within the Verify section of your Account tab. Verification is usually approved within 24-48 hours.

Step 3b: Once you are approved, transfer the Bitcoin and Ether you bought on Coinbase to your wallets on Iconomi. To find the right address, go to the Deposit section of your Iconomi account and select either Bitcoin or Ether depending on which one you plan to send. You can then copy the long collection of letters and numbers – this is your Iconomi wallet address and the address you tell Coinbase to send to.

If you click in here, you will find your Bitcoin and Ether wallet addresses on Iconomi

Having copied the address of your Iconomi Bitcoin wallet, you then go to the Coinbase menu and click on ‘Accounts’. Press the Send option within your Bitcoin wallet on Coinbase and paste in that address. This transfer should take about an hour.

Only paste your Iconomi Bitcoin wallet address in here. If you paste anything else, you could lose your funds, so double check the address.

Step 4: Once your funds arrive in your Iconomi wallets, you can buy into the HIVE index. The tokens you are issued are called HIX. You can buy with either Bitcoin or Ether.

Step 5: Come back weekly (or daily, if you have the diligence) and repeat Steps 3b and 4.

Welcome to the crypto boom!

Step 6: Congratulations, you’re ahead of 99.99% of investors around the world as wealth moves onto the blockchain. Now all you have to do is enjoy the jouney. As long as you have the patience to ride out any ups and downs, you’ll be golden.


Please comment if you have any questions!


 

How to Easily Start Investing in Bitcoin, Ether and Other Crypto Currencies

Paul French

Paul has been immersed in blockchain technology since first exchanging euros for Bitcoin while put on hold with telephone banking. As part of the Berlin startup scene since 2013, he helps companies with everything from content creation to full-scale strategy.

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4 comments

  • Really intriguing prospect Paul, I love the step-by-step approach and this article makes it very tempting to give this process a try. My main question is how much time do you think you should realistically take per week or per day to keep on top of it? Just as a rule of thumb.

    • Hi Goldie, thanks for your question! To be honest, I believe that this is as hands-off as investing in this asset class could possibly be, while offering you near-unbeatable ROI on your time. Once you have everything set up, it would take you just 10 minutes a month to cost average into the HIVE index. If you wanted to do this weekly, then I estimate a total of 30 minutes a month. Daily is a little overzealous when you consider that HIVE already algorithmically sells half positions if a coin doubles in value and then rebalances with the profits (but I can see the attraction for those who want a hands-on approach). But for the average investor who just wants some skin in the game, 10 minutes a month will suffice. Let us know if we can help with anything else!

  • I like the idea of ‘lazy’ investing, But,
    Who owns the private keys to my funds when I invest on their website,
    What happens if the company goes belly up ?
    Can they simply run off with my / our money/assets?

    • Hi Adrian,

      thank you for the question. I’m also a big fan of laziness… or idleness as I prefer to put it. I think it’s good to recapture the concept from all the Puritanical thinkers who want us doing 1000 things at once.

      There are two parts to the answer.

      The first one is that the Hive Index (HIX) is one of the few DAAs on the ICONOMI platform that is a fully tokenised ERC-20 token. This means you can withdraw it from the platform and store it in your own private wallet. This is also possible with their own DAA the Blockchain Index (BLX) and a handful of others. This is a level of security I recommend all ICONOMI investors take if they have the means and the knowledge to do so. Maybe we will publish an article on how to do that at some point.

      The second part is that the underlying assets have been cryptographically audited by Deloitte. You can read about the process here: https://medium.com/iconominet/setting-new-standards-for-the-blockchain-industry-iconomis-digital-assets-verified-by-deloitte-64af063fecf8 Your HIX tokens represent the value of the underlying assets, and can be sold back to ICONOMI or on a decentralised exchange. So you hold the keys, but ICONOMI holds the assets – this is the trade-off you make for the opportunity to have your assets managed in this way. And I think ICONOMI are doing a good job in their transparency with things like this audit – it’s not totally trustless, so you need to look at their record and their incentives too.

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