How Bitcoin investors go broke 📉
Bitcoiners,
I personally went broke in 2017 when I first started investing in bitcoin.
Granted, I was a college student with only a few hundred dollars to my name at the time but it still did not feel great.
I have seen many investors go broke in the bitcoin space. I compiled a list of 6 ways I personally have gone broke and have seen others go broke over the years. My hope is for you to avoid as many of these seemingly good ideas as possible to end up with a bigger bitcoin stack years in the future from now.
Things that kill a Bitcoin investor:
Bitcoin backed loans
Trading with leverage
Seeking yield on their bitcoin
Trading bitcoin for other crypto
Keeping bitcoin on the exchange
Keeping large amounts of bitcoin in a hot wallet
Bitcoin backed loans are when you use bitcoin as collateral for a loan. Trading with leverage means to borrow additional money to make a larger bet. Due to bitcoin's volatility, both of these are a very bad idea for when you get margin called or leverage wipes you out.
Seeking yield means to stake your bitcoin on an exchange for an additional gain of somewhere around 5%. This past year, many exchanges have gone bankrupt from these offerings and people are left with zero bitcoin to their name.
Trading bitcoin for other crypto is not necessarily bad if you treat it more like gambling in a casino. Yes, there is potential to make huge gains on other cryptocurrencies, however, there is much more risk involved than just buying bitcoin. This is how I personally went broke.
Leaving your bitcoin on an exchange or in a hot wallet is convenient but also risky. Keeping your bitcoin in a hardware cold wallet is the best way to ensure your funds are safe.
Hope this helps you from not going broke!
Happy Wednesday,
-Pod
Follow me on Twitter: @epodrulz
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Eric Podwojski
Founder, Bitcoin EDU
Twitter: @epodrulz
Disclaimer: This should go without saying: This is not financial advice. This is not investment advice. I write this newsletter for education and entertainment. Act accordingly.
