<jupyter_start><jupyter_text>Cryptalt's Crypto CompendiumA concise overview of crypto assets, investing, and learning resources.Best viewed at: [https://cryptalt.github.io/cryptalt-crypto-compendium/](https://cryptalt.github.io/cryptalt-crypto-compendium/) --- Table of Contents Introduction[Disclaimers](Disclaimers)[Goals](Goals) Mindset[Virtues](Virtues)[Cognitive Biases](Cognitive-Biases) Investing[Investing Basics](Investing-Basics)[Compound Interest](Compound-Interest)[Buying and Selling](Buying-and-Selling) Risk[Risks](Risks)[Risk Management](Risk-Management)[Portfolio Allocation](Portfolio-Allocation) Taxes[Taxes](Taxes) Laws[Laws](Laws) Crypto[Defi](Defi) Links[Recommended Resources](Recommended-Resources) --- Disclaimers Not adviceNone of this guide constitutes financial advice, and is only for information and entertainment purposes.Please consult with the appropriate professionals concerning investment decisions, laws, and taxes.All projects mentioned are for example purposes only. No specific crypto projects or currencies are endorsed by this guide. Intellectual PropertyThis project, including all of the files and their contents, is licensed under the terms of MIT License. See [license.txt](license.txt) for details.This is a freely given work in progress. Suggestions, feedback, and contributions are welcome provided they are given freely relinquishing all restrictions on use including copyright.Any images or quotes used retain the respective copyright of their owners and are used under fair use. Requests from copyright holders to remove quotes, content, links, or images will be respected.Contact: https://twitter.com/cryptaltd Scams* Never send crypto to anyone who asks for money or promises return, especially if they are claiming to be me. I will never ask you for money.* Never enter your seed phrase into any website. * Assume everyone in crypto has an ulterior motive or is trying to scam you. * Assume all email links or search engine results are phishing attempts.* Assume wallet plugins/wallet software are trying to steal your seed phrase and coins. AccountabilityDo your own research. Own your portfolio. Own your future. No excuses. --- Goals* To explain the values, principles, mental models, and strategies for successful crypto investing.* To be a starting map of the journey to do your own research (DYOR). To show some of the questions to ask and where you can research more answers. * To fully embrace the principles of WAGMI (We're all going to make it), rejecting the zero-sum belief that for one of us to win someone else needs to lose. A rising tide lifts all boats. Even though there are winners and losers for individual trades, over time crypto is creating exponential value by solving real problems and disrupting real industries through greater innovation, efficiency, and security.* To encourage the spirit of GM (Good morning) — to celebrate the courage, wisdom, and success of those willing to do take ownership of their own future by taking managed risks and doing the work.* To help protect investors from scams, ignorance, fear, greed, and malice. Anyone who has been in crypto for any length of time has made mistakes which has cost them painfully large amounts. May you be more successful, and may your failures may have a smaller price.  --- VirtuesYour success depend more on your discipline, and control over your emotions than your intellect. Being smart is good. Awareness of yourself, your emotions, and the market is better.  Patience> "the wise ones bet heavily when the world offers them that opportunity. They bet big when they have the odds. And the rest of the time, they don’t. It’s just that simple."— <NAME>> “The trick in investing is just to sit there and watch pitch after pitch go by and wait for the one right in your sweet spot. And if people are yelling, ‘Swing, you bum!,’ ignore them.”— <NAME>> "It never was my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight! It is no trick at all to be right on the market. You always find lots of early bulls in bull markets and early bears in bear markets. I’ve known many men who were right at exactly the right time, and began buying or selling stocks when prices were at the very level which should show the greatest profit. And their experience invariably matched mine–that is, they made no real money out of it. Men who can both be right and sit tight are uncommon."— <NAME>, Reminisces of a Stock Operator Focus> “You don’t have to be an expert on every company, or even many,” he says. “You only have to be able to evaluate companies within your circle of competence. The size of that circle is not very important; knowing its boundaries, however, is vital.”— <NAME>> "Use your specialized knowledge to home in on stocks you can analyze, study them and then decide if they’re worth owning. The best way to invest is to look at companies competing in the field where you work. Someone with deep restaurant-industry experience would have predicted the success of Panera Bread Co. and Chipotle Mexican Grill Inc., he says: “If you’re in the steel industry and it ever turns around, you’ll see it before I do."— <NAME> --- Cognitive Biases Incentive Bias — Conflict of interestBe extremely skeptical of any recommendation to buy anything. Many or most of those shilling projects have powerful incentives to lie to you, and themselves about the future of any project. Most projects will not "go to the moon", and will eventually go to $0.> “If you can't understand why someone is doing something, look at the consequences of their actions, whatever they might be, and then infer the motivations from their consequences.”—<NAME>Media and social media are filled with paid promotions, many undisclosed. They are either being paid to lie to you, or being paid to dump their payment in coins on you. If someone is telling you to buy, they probably bought it at a much lower price.>"Consider the presentations of brokers selling commercial real estate and businesses. I’ve never seen one that I thought was even within hailing distance of objective truth. In my long life, I have never seen a management consultant’s report that didn’t end with the same advice: “This problem needs more management consulting services.” Widespread incentive-caused bias requires that one should often distrust, or take with a grain of salt, the advice of one’s professional advisor, even if he is an engineer. The general antidotes here are: (1) especially fear professional advice when it is especially good for the advisor; (2) learn and use the basic elements of your advisor’s trade as you deal with your advisor; and (3) double check, disbelieve, or replace much of what you’re told, to the degree that seems appropriate after objective thought."—<NAME>, The Psychology of Human Misjudgement Self-deception>Above all, don’t lie to yourself. The man who lies to himself and listens to his own lie comes to a point that he cannot distinguish the truth within him, or around him, and so loses all respect for himself and for others. And having no respect he ceases to love.”—<NAME>, The Brothers KaramazovIf you own anything, you are already subject to incentive bias.This can cause you to make the following costly mistakes: * not taking profit* adding to your losers* cutting your winners instead of letting them run Ownership - the cure for laziness> “Taking complete ownership of your outcomes by holding no one but yourself responsible for them is the most powerful thing you can do to drive your success.”— <NAME> Resources on cognitive bias| The Psychology of Human Misjudgement - <NAME> |     || :--             | :--     || Summary Article |  https://www.fool.com/investing/general/2013/06/10/charlie-mungers-18-biases-that-cause-you-to-fool-y.aspx    | | Video           | https://www.youtube.com/watch?v=pqzcCfUglws || Transcript      | https://fs.blog/great-talks/psychology-human-misjudgment/ | --- Investing Basics  Interest| Terrm              | Meaning          || :-- | :-- || Debt               | Money owed -     || Asset              | Money owned +    || Principal          | The initial amount before any interest || Interest           | Percent added to balance of the debt or asset at fixed interval  || Compound Interest  | Interest on the new balance, which is higher due to previous interest. || APR                | Annual percentage rate of interest excluding compound interest || APY                | Annual percentage yield of interest including compound interest. APY is higher than APR || rate of supply change | the rate at which the supply of a currency changes. This can be linear, decreasing or dynamic || inflation          | The rate of decrease in the purchasing power of a currency. High increases in the supply of a currency typically cause high inflation | APR vs APYThe larger the APR, the larger the difference between APR and APYWhen comparing rates, be sure you are comparing APR to APR,or APY to APY| APR  | APY    | | :--  | :--    | | 10%  | 10.5%  || 100% | 171.5% || 200% | 635%   || 500% | 14,246% |Site for converting APR  APY: https://www.aprtoapy.com/ ---  Compound Interest The formula for wealth> _Compound interest is the most powerful force in the universe.> He who understands it, earns it; he who doesn’t, pays it._Nothing is more important to your financial future than benefitting from compound interest.Every \\$1 invested has the potential to become \\$100 or more. A penny saved is a dollar earned. Spend less. Invest more. You can either compound your wealth or compound your debt.Almost all wealth in the world is the result of compound interest over long periods of time. Wealth goes to those who patiently buy the strongest assets at a good price and hold them for years or decades.> It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price.— <NAME> Compounding: high APR for long timeThe amount of money you start with is important, but the sustained rate of growth is far more important the longer it has time to compound.Be extremely skeptical about claimed APRs. Losing money is negative APR, so you need practice strong risk management about what to buy, when to buy it and when to sell it.> Rule number 1: Never lose money. Rule number 2: Don't forget rule number 1 — Warrent Buffet Time compounds exponentiallyAs you can see in the table below, you can double your final amount either by doubling your initial principal or doubling the APR.Doubling the duration, however can increase your amount by more than 70x, depending on the APR and duration.| Principal   | APR   | Years | Final Amount  || :--------   | :---- | :-----| :-----------  || \\$1000     | 1%    | 25    | \\$1,284      || \\$1000     | 1%    | 50    | \\$1,648      || \\$1000     | 10%   | 25    | \\$120,000    || \\$1000     | 10%   | 50    | \\$150,000    || \\$1000     | 20%   | 25    | \\$300,000    || \\$2000     | 10%   | 50    | \\$300,000    || \\$1000     | 20%   | 50    | \\$22,000,000 || \\$2000     | 20%   | 50    | \\$44,000,000 | Any difference increase in APR compounds very rapidly. The difference between 30% and 20% returns is much more than between 20% and 10%.<jupyter_code>p = 1000
n = 365
t = np.arange(0.0, 21.0, 1.0)

def compound_interest(p, r, n, t):
    return p * (1 + r/n)**(n*t)

def ten_percent(t):
    return compound_interest(p, 10/100, n, t)

def twenty_percent(t):
    return compound_interest(p, 20/100, n, t)

def thirty_percent(t):
    return compound_interest(p, 30/100, n, t)

# Plotting both the curves simultaneously
plt.plot(t, ten_percent(t), color='r', label='10%')
plt.plot(t, twenty_percent(t), color='g', label='20%')
plt.plot(t, thirty_percent(t), color='b', label='30%')
  
# Naming the x-axis, y-axis and the whole graph
plt.xlabel("years")
plt.ylabel("amount")
plt.title("$1000 principal for up to 30% APR")
  
#plt.xlim([0, 20])
# Adding legend, which helps us recognize the curve according to it's color
plt.legend()
  
# To load the display window
plt.show()

state = False
toggle_code(state)<jupyter_output><empty_output><jupyter_text>Crypto investments have the potential for average triple digit APRs over 4-6 year periods. You can see the 150% APR absolutely dwarfs the 100% APR in only 6 years.<jupyter_code>p = 1000
n = 365
t = np.arange(0.0, 7.0, 1.0)

def compound_interest(p, r, n, t):
    return p * (1 + r/n)**(n*t)

def fifty_percent(t):
    return compound_interest(p, 50/100, n, t)

def hundred_percent(t):
    return compound_interest(p, 100/100, n, t)

def one_fifty_percent(t):
    return compound_interest(p, 150/100, n, t)


# Plotting both the curves simultaneously
plt.plot(t, fifty_percent(t), color='cyan', label='50%')
plt.plot(t, hundred_percent(t), color='orange', label='100%')
plt.plot(t, one_fifty_percent(t), color='purple', label='150%')
  
# Naming the x-axis, y-axis and the whole graph
plt.xlabel("years")
plt.ylabel("amount")
plt.title("$1000 principal for up to 150% APR")
  
#plt.xlim([0, 6])
# Adding legend, which helps us recognize the curve according to it's color
plt.legend()

#fig, ax = plt.subplots()
#ax.ticklabel_format(useOffset=False)

# To load the display window
plt.ticklabel_format(style='plain')
plt.show()

state = False
toggle_code(state)<jupyter_output><empty_output>
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