Everyone wants an edge when it comes to investing in highly volatile assets like XRP(CRYPTO: XRP), Solana(CRYPTO: SOL), Ethereum (CRYPTO: ETH) and other cryptocurrencies. Even if you’re locked in and willing to hold on to your coins for the long term, as you should be, there’s still no guarantee of success, so doing every little bit you can to improve your investing process is key.
At the same time, most investors are leaving a ton of value on the table because they don’t do one thing in particular. It isn’t a simple thing, but it’s definitely worth doing, so let’s jump in and see how you can become a vastly more astute crypto investor with just a little bit of extra effort.
If you’re like most people who hold cryptocurrencies, you probably broadly understand that such assets live on blockchains, which in theory can give them certain properties that dollars in your bank account can’t have, like being linked to something such as ownership of a non-fungible token (NFT).
And once again, if you’re like most investors, your degree of direct interaction with those blockchain technologies is very limited. That’s especially true if you hold your crypto through traditional financial accounts via an exchange-traded fund (ETF) for example.
Thus, the one thing that can dramatically improve your investment research process in crypto (and therefore your returns) is to get your hands dirty by working with the actual technology underpinning your coins rather than simply pressing “buy” or “sell” and then letting them sit quietly in your portfolio. You don’t need to do a deep dive and understand every technical tidbit; you just need to get a bit more clarity about what it’s like to be a firsthand user of these technologies.
The first step is to get your own digital wallet rather than letting someone else hold your coins as a proxy.
If you want to learn more about coins like Solana, XRP, and Ethereum, the wallet called Phantom is a quick and easy solution because it can work with all of the most common chains, meaning that it can technically manage multiple wallets for you, and it has an accessible user interface, too.
But there are many other effective wallet applications. And exploring the landscape of those is another good angle for learning about your investments because some coins are more popular to support among those applications than others, which is a signal in its own right.
The next step is to do some basic tasks with your new wallet. Try swapping one coin, like Ethereum, for another. Pay attention to the size of the gas (user) fees that are incurred by these transactions, as well as the other fees that may apply. Do that with each of your coins, and note which are less expensive, faster, or easier to swap.
If you want to learn even more, see if you can mint, or convert, one of the pictures on your phone into an NFT on each of the chains that host the coins you hold. You’ll find that minting NFTs on some chains, like XRP, requires a fair degree of technical knowledge.
Others, like Solana, make the minting process fast and easy with most wallets. The next part of the lesson would then be to see if you can put your NFT up for sale on one of the markets to assess how healthy they are, how expensive they are to use, and the ease or difficulty of the user experience. There’s no need to wait for a buyer; the point here is to go through the process.
If you’re still looking for another avenue to research, check to see how to stake the coins you hold for a return on each chain, then actually do it. Just be sure to use very small quantities of money that you would be willing to lose, and consider this as your tuition expense.
Going through the struggle of navigating the different applications you’ll need within the ecosystem of each chain is an important lesson, and there’s no substitute for it. You’ll quickly find that some chains, such as Ethereum and XRP, tend to be characterized by tooling that’s more technical, which makes it harder to pick up and use if you’re new.
But this is where it’s important to step back and remember that your user experience isn’t going to be the same as everyone else’s. The more you can put yourself into the shoes of other investors, as well as cryptocurrency project developers, the better sense you’ll get for how these assets might be expected to perform.
You don’t need to become an expert at the nuts and bolts here. Just do some exploring and some experimenting on the blockchains, and it’s close to guaranteed that your perspective on these investments will be incalculably richer than before.
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Alex Carchidi has positions in Ethereum and Solana. The Motley Fool has positions in and recommends Ethereum, Solana, and XRP. The Motley Fool has a disclosure policy.
