FINANCE & LOANS
In times of unprecedented inflation, many in Sweden are beginning to realize that the purchasing power of money is rapidly diminishing. It wasn’t long ago that Friday chips cost 15 kroner instead of 29 kroner, and during the same period most people have seen wages go up marginally and pension payments increased by a few paltry percentages.
More and more Swedes are looking for value-preserving investments such as gold and are discovering bitcoin and cryptocurrencies (source). Michael Saylor, one of the most prominent voices in bitcoin, recently talked regarding his 21 rules of bitcoin. Here are those and the most important lessons:
1. Understand Bitcoin as an asset
Bitcoin is not just a digital currency; it is a new asset class. Understand its unique features and how it differs from traditional investments. Bitcoin is decentralized and secure, making it an attractive option for many investors who want to protect their capital from inflation and economic uncertainty.
2. Keep your own keys
“Not your keys, not your coins.” Store your bitcoins in a private wallet where you have full control over your private keys. By having control over your own keys, you reduce the risk of your assets being stolen or lost due to external factors such as hacking of crypto exchanges.
3. Don’t diversify
Saylor advocates putting a large portion of his investments in bitcoin instead of spreading them across many different cryptocurrencies. Bitcoin has proven to be the most stable and reliable cryptocurrency over time, making it a safe haven for long-term investors.
4. Avoid day trading
Do not try to time the market by buying and selling bitcoin frequently. Instead, hold long-term to benefit from its growth. Day trading can be very risky and requires extensive knowledge and experience to succeed. Long-term investments tend to be more profitable and less stressful.
5. Use dollar-cost averaging
Regularly invest a fixed amount, regardless of the price of bitcoin. This reduces the risk of buying everything at a peak. By spreading your purchases over time, you even out price fluctuations and reduce the risk of making a bad investment in the event of a temporary price rise.
6. Learn regarding the technology
Understand the basics of blockchain and how bitcoin works. This helps you make better investment decisions. The technology behind bitcoin is complex, but understanding the basic principles can give you a better understanding of its potential and risks.
7. Be prepared for volatility
Bitcoin price can fluctuate wildly. Be mentally prepared for big swings and stick to your long-term plan. Volatility is a natural part of the cryptocurrency market, and it’s important not to let short-term price movements influence your investment decisions.
8. Back up your keys
Keep copies of your private keys in safe places. If you lose your keys, you lose your bitcoins. Having multiple backups reduces the risk of losing assets due to accidents or technical problems.
9. Follow reliable sources
Follow news and analysis from trusted sources in the cryptocurrency industry to stay informed. The market is changing rapidly, and it is important to stay up-to-date on the latest trends and regulations.
10. Avoid debt
Don’t invest money you don’t have. Avoid taking out loans to buy bitcoin, as the market is very volatile. Investing money you can’t afford to lose can lead to financial problems if the market suddenly falls.
11. Pay attention to taxes
Make sure you follow all tax rules and laws that apply to cryptocurrencies in your country. Tax rules for cryptocurrencies can be complicated, and it’s important to stay informed to avoid legal trouble.
12. Follow rules and regulations
Be aware of the laws and regulations that apply to cryptocurrency investments in your jurisdiction. Regulations can change quickly, and it is important to follow them to avoid penalties or fines.
13. Educate yourself continuously
The cryptocurrency industry is developing rapidly. Continue to educate yourself on new trends and technologies. Staying informed and up-to-date is key to making smart investment decisions.
14. Save for the long term
Think of bitcoin as a long-term investment and avoid selling at the first opportunity. Long-term savings help you take advantage of bitcoin’s potential growth over time.
15. Understand financial freedom
Bitcoin provides financial freedom in that you can be your own bank and transfer value without intermediaries. This reduces reliance on traditional financial institutions and gives you greater control over your assets.
16. Be prepared for change
The cryptocurrency market can change quickly. Be prepared for new regulations and technological advances. Being flexible and adaptable helps you manage change effectively.
17. Build a security strategy
Have a plan for how to protect your bitcoins, including using hardware wallets and two-factor authentication. A robust security strategy reduces the risk of losing your assets due to security breaches.
18. Keep track of your investment
Monitor the performance of your investment regularly but do not obsess over daily price movements. Having an overview of your portfolio helps you make informed decisions without being overwhelmed by short-term changes.
19. Share knowledge
Help others understand bitcoin by sharing your knowledge and experience with friends and family. Educating others contributes to a better understanding of cryptocurrencies and can help more people make informed decisions.
20. Be aware of scams
The cryptocurrency market is full of scams. Always use caution and verify all sources and offers. Being vigilant and thorough reduces the risk of being scammed.
21. Be patient
Bitcoin is a long-term investment. Be patient and let your investment grow over time. Patience is the key to successful investing, especially in a volatile market like cryptocurrencies. Investing in bitcoin can be a daunting task, especially for those who are new to the field. But by following Michael Saylor’s 21 Rules and staying informed, one can navigate this new financial world with greater security and confidence. Whether you are a beginner or an experienced investor, it is always important to do your own research and make informed decisions.
Photo: IncRev
