Are you invested in cryptocurrency?
A few years ago I decided to learn about crypto by putting in just a little money. I’m not an investment advisor, and no one was sure what was going to happen. But I decided to do it anyway. And that my approach would be that this is play! As an effective steward of my money, it was important to me to invest only as much as I could afford to lose. And for me that meant money I could put in and completely forget about. Something that wouldn’t even be edgy. So I put in $150 and basically walked away from it for about two years.
I came back to nearly 400% return on my investment. No one was more surprised than me. I took my gains and I felt completely triumphant! (When you win, pause there and just feel it for a minute — it’s rare in our recent world to have a straight up win.) I was very, very excited!
And that win helped me have the courage to reinvest that gain in other cryptocurrencies.
Since then I’ve gotten more involved, and I’ve had some losses along the way. It’s just as important to look at the whole picture and not just be rosy-eyed and overly optimistic. To make the best of an opportunity, we need to evaluate outcomes as well as studying crypto itself. As I’ve learned more, I’ve invested more, and become a lot more savvy about crypto, defi, rewards, staking and so on.
And I’m dying to share what I’ve learned with my community and clients!
Meanwhile I’ve had clients who are also into crypto and I’ve learned on the journey with them as well.
And it’s fun to invest!
Here’s some things I noticed:
- It’s easy to get lost in the complexity of cryptocurrency. There are many kinds of coins and a lot of strategies you can use depending on your goals.
- Crypto is very hot right now and everyone is talking about it and there’s tons of information out there. But even with information, I still needed to play with many coins before I got a sense of how crypto works. And even then there’s more to know than I realized.
- Cryptocurrency can be a very high-touch form of investment if you’re not just holding long term — you may keep a very frequent eye on the valuation of the different types of crypto depending on your goals. (Are you in it for the rise and fall of the coins? For DeFi and rewards? For governance? Fun?)
- A high number of transactions increases the complexity you’re dealing with, which is hard to keep track of. The taxes, the fees — am I even gaining or losing??
- Crypto wallets might offer you a dashboard, but what is the dashboard trying to say?? Is it giving you the information you want? It’s super easy to get overwhelmed.
If you’re investing in crypto, you probably already know all about these pitfalls.
Compared to traditional currency, it’s still early days of crypto investing. And these pitfalls are why our crypto clients reached out to us initially. They needed help with keeping records of their transactions and understanding whether their investments were working. And that meant they needed knowledgeable bookkeeping!
I started by making a spreadsheet about my own crypto investments. We love a spreadsheet!
As I bought and sold my crypto, I tracked my transactions. Buying, selling, investing in new coins, deciding whether to stake a coin or not, and so on.There are a lot of potential decisions in crypto. By updating my spreadsheet every time I made a transaction and cross referencing it at decision time, I could better see what the heck was going on.
Mainly I wanted to know just three things:
- where I’m making money
- where I’m losing money
- should I keep going?
The crypto wallets were just not giving me this information.
I wanted to know in total how much I invested and what return I got from each type of coin as well as my total crypto ROI. The wallet dashboards only showed me the total up and down, so any amount I took out in gains made the portfolio look less successful than it was. Annoying!
My spreadsheet broke it down by coin type and solved the wallet problem of making cashouts look like portfolio “losses”. Some investments that I thought were doing good were actually doing great. Others that I thought were doing okay were…uh, actually not okay. It was dismaying to find out about their underperformance, but knowing — having clarity — was more than worth its weight in … crypto!
It became really clear to me that I was actually making a lot on just a couple of coins. And my tracking system made it clear where to invest and where to slow or stop my investments. Most importantly, I needed to be clear about the metrics that I wanted in order to have those reports be useful to me and functional in the long term.
In other words, tracking my coins more closely and clearly by metrics that *I* chose rather than the metrics of the crypto companies created a whole bunch of clarity that I didn’t have when I was just looking at the dashboards. Because I set up my own bookkeeping system via this spreadsheet.
This thing that happened with my spreadsheet?
This kind of thing happens with bookkeeping all the time. It’s hard for business owners to track closely what’s happening with their money. A consistent bookkeeping system tended to by a professional bookkeeper solves that problem, freeing up the business owner’s time for making important decisions informed by the bookkeeper’s reports.
But you have to have the right data, the right system, and the right reporting to make that happen.
Nearly every business owner who has come to me is seeking clarity in one form or another. It’s how you can refine your strategy and make great business decisions instead of terrible ones! And what we at Bliss Your Money do best is make sure you have the clean, trustworthy, timely reports that you need to do your best work.
Because I took the trouble to really track my crypto investments, I became a more empowered, knowledgeable investor who can make smarter, more savvy decisions. That’s exactly what I love to pass on to clients.
If you’re a crypto investor and you want to work with bookkeepers who understand how to track and analyze your transactions, reach out to Bliss Your Money today. We’re here to Bliss Your Bookkeeping!