Investing in Cryptocurrency — Warren Buffett Style Part III

Will you use what you’re investing in?

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Obligatory Disclaimer: To modify a quote from Tim Ferris, “I am NOT a financial advisor, and none of this advice should be taken without speaking to a qualified professional first. Also, my results [are most likely] due to pure luck and zero skill.” But…this is working for me.

Before I invest in any cryptocurrency, I ask myself four specific questions. I created these questions based on Warren Buffett investment philosophy and advice from Tim Ferriss’ book Tools of Titans. If I can’t answer all four of these questions with a resounding “YES” I don’t invest.

The second of these four questions is what I’ll walk you through today:

Would I use the tech or company myself?

I’ve had several people ask me what specific tokens I would recommend they invest in. Nearly 100% of the time I don’t give them a specific answer. Why? Because I prefer to give solid advice about how to invest, instead of just saying “you should invest in XCoin.”

Investing preferences will change person to person depending on a lot of different factors. I don’t want people to blindly follow my advice about any particular token. I want them to do their own research, and make their investments personal. This is an extremely important concept to Buffett-style investment.

When you commit to personally use a tech or company, you’re affirming several vital things about your potential investment:

You understand how to use their product or service You like the way they do business enough to spend your time and money on them If you are willing to use their product or service, odds are other people will as well

Asking yourself, “Would I use this tech” changes the dynamic of your investment from impersonal to personal. The transaction between you and the company is no longer just about profit — it’s about establishing a lasting relationship between a good business and an involved customer.

So what’s a practical example of investing in something you would use? Consider, for instance, cloud storage. Whether it’s Dropbox, Drive, Box, or OneDrive, it’s something we all use, probably on a daily basis. Cloud storage is convenient and almost necessary for personal and business use. But let’s be honest, it has some big problems.

Cloud storage is just someone else’s computer

It’s crazy expensive

And it’s not nearly as secure as it should be

Luckily, there are decentralized, blockchain solutions like Storj and Sia. Both companies have created some cool alternatives to popular cloud solutions. In essence, you upload your files using their software, and those files are broken down into fragments and distributed across every computer on their network.

Imagine one file as a puzzle with 150 pieces. With companies like Dropbox, you upload the entire puzzle to their server, where it is stored. If your Dropbox is ever compromised, retrieving personal information is simple. You just take the file. Using decentralized storage though, thieves’ lives get much more difficult.

Using Storj or Sia, the puzzle is broken down into its individual pieces and each piece is stored on a different computer. Now if your account is compromised it’s practically impossible to access your files. And on top of that, both services come at a fraction of the cost of their mainstream competitors!

Getting to know both of these companies, it seems pretty easy to answer the question, “would I use this tech?” In this way, you are no longer randomly buying a coin and gambling that its value will increase. Now, you are investing your money in something you believe in. And the market always rewards good business. It only takes time.

Have you had success asking yourself this question before you invest? Let me know in the comments! I’d love to hear from you.

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