I lost 2800 rupees($39) in cryptocurrency and this what I learned

So I have been busy learning cryptocurrencies and blockchain for the past couple of days. It's interesting, challenging, and fascinating stuff.

The more I learned the more I was confused as to how are these things getting so popular?

Like we understand stocks, it’s basically companies that build and sell products or sell services and we value them and want a share of it and the share price increases. Cryptocurrencies on the other hand cannot be valued based on a product or performance of any product or service but it’s an alternative currency that gained popularity because it works against the existing centralized systems, it's the product in itself that is gaining popularity based on the demand-supply fundamentals.

Sounded more like we value bitcoin because others do.

I’m sure the tech enthusiasts were attracted to cryptocurrencies because it sounded cool and the underlying blockchain technology is really fun to learn and understand.

So in spite of all the doubts and questions I had in my mind, I bought a litecoin today through an exchange (I know many of you haven’t heard that name yet). Litecoin is a lighter bitcoin that works on a different algorithm than Bitcoin and basically copies everything else. Another difference is their current market price. It’s still humanly (read middle class) possible to buy a coin.

People who missed out on the bitcoin and Ethereum explosion had an opportunity to catch up with the game with Litecoin. So I bought one shiny round coin today morning (pure imagination, it's digital currency) at 21921.08 INR.

As a smart and realistic investor, I started imagining my journey to become a Millionaire.

Little did I know that speculation in the USA about a possible ban on crypto exchanges and currencies would force the crypto-loving people to depart with their dear darling shiny round coins. As more and more people joined this selling frenzy, I saw the graph going down. As a smart and realistic investor, again I smirked and waited for the value to go high (we all know this a super volatile market).

At that time another news hit — China has banned crypto transactions.

That was a blow. If India decides to follow her neighbor and which is very highly likely to happen, I do not want to lose my “test-the-waters” fund. So, for the first time in this whole deal, I actually thought smart and pulled the plug at a loss of 2800 INR.

Had I waited for 2 more hours, I would have lost 6000 INR ($81).

How litecoin performed today

So what was the biggest learning here?

  1. Trust your brain — if something doesn't make sense, it isn’t the right choice for you. I understand the tech behind these cryptocurrencies and deep down I knew this doesn’t make sense in the real world where authorities want to watch and control everyone and yet I trusted the crowd.
  2. Temperament is the key— I was totally tempted to buy 2 coins but followed the ground rule of investment — “test the waters first”.

Stay safe and Play safe!

Writer, Programmer. On Pilot Retirement from Nov 2021 to Oct 2022. Here to write about Life, Tech and Personal Finance.