My take on Cryptocurrencies – Part 1: The Ugly

Hi cRIPto’s, I heard they outlawed “having a PF blog without a post about Cryptocurrencies”.
Let’s fix this now
.

I was lining up at a Hooli cafeteria, small-talking with a colleague that I’ll call Mr.Crypt. It was… I don’t remember exactly when it was, but I found a note to myself that says “write a post about cryptocurrencies and Mr.Crypt story OMG OMG!” dated back in mid September 2017. I assume I wrote that note to myself shortly after the episodes I’m about to describe.

Everybody at Hooli was talking about Bitcoin skyrocketing “above 4k USD“, “OMG it was below 1k at the beginning of the year, this is the year of the Bitcoin!!” and all things like that.

Someone went nuts and started mining.

Someone else started gambling investing.

Someone else threw himself into arbitraging.

It was the beginning of a second, stronger, nerd wave on Bitcoin.

Not just Bitcoin, this time there’s a wide variety of Cryptocurrencies available!

I was being on the fence, not contributing much to the discussions and not sharing the same enthusiasm of all other colleagues. I just built some strong technical knowledge around the basics (blockchain, wallets, mining,…) to be able to have informed opinions and to not appear as a caveman in front of cutting edge tech nerds & cryptoexperts.

Mr. Crypt was a somehow close colleague of mine. Not in the same team, but in a team that shared our cubicle. He didn’t seem to be involved much in cryptotalks, I rarely heard his voice in the cubicle during cryptofights.

I thought I found another skeptic, and I just wanted to connect with him.

Hey Crypt, how come is everybody getting crazy about this bitthing? Don’t you think they are overreacting? Yeah, it would have obviously been awesome to have mined or invested back in time, but I think it’s too late now, isn’t it? 🙂

He calmly replied: “I don’t think it’s too late. 99% of circulating money are still FIAT money!

Ok… so you’re a crypto fan too? Are you investing in Bitcoin or what?

I’m actually quitting Hooli at the end of the month. I’ve made a good fortune with Bitcoin and I’ll start traveling around the world in October. But you can make it too blah blah blah

Daaa faaack my ears just heard??

Later the same week I was having lunch with some colleagues talking about… wait for it… Cryptos and the future or money (you guessed it!) and Mr. Crypt’s case come up. Someone said he owned 2-4 millions USD worth of BTC.

It was September 2017, a BTC was worth “only” 4k. It didn’t look like Mr. Crypt was there to speculate. He jumped on the bandwagon probably pretty early.

He actually believed in Bitcoin, didn’t just want to make money out of it.

I guess he still holds at least a part of that investment, which would have seen a peak of 10-20M in December 2017, but I sincerely hope he sold at least half of it.

To put it simple, this guy just went on FIRE on Bitcoins!!

What if it happened to me?

I first heard about cryptos several years ago. I guess it was 2010 more or less. Bitcoin. I thought it was a joke. Luckily, I didn’t invest in Bitcoin back in time!

Whaaaat?

No, I’m not joking: good thing I didn’t invest in Bitcoin back in time!

We’d be talking about a completely different story compared to Mr. Crypt’s one.

Back in 2010 Bitcoins were a real nerd thing. I thought they were a joke, a legend, a fictional character. Something like the Flying Spaghetti Monster, or Loch Ness Monster, or well written code documentation. Something that doesn’t make sense! It just stayed on the back of my brain for few years.

Then everything changed.

It was end of October 2013 and all of a sudden the BTC jumped from 100 to 1000 USD. A 10x gain in a month! Everybody was talking about Bitcoin! Well, not like “today’s everybody”. Something like 1/100th of today’s everybody, which was “everybody” (most of the geeks) back in 2013!

I remember that December 2013, I was already working at Hooli. There were somebody in the company trying to evangelize others about this amazing technology and why everybody should use it and how this is going to destroy the future of FIAT currencies. It was not Mr. Crypt, but I don’t actually remember who he was.

I was still skeptical though. I told myself “yeah, this guy just realized his investment produced a 10x or even a 100x or 1000x (depending when he bought) and now is looking to gamble with the next person in this Ponzi scheme“. There were not many exchanges back then. Maybe just Mt. Gox. It was easier to sell coins directly to trusted people for cash.

I remember few days later someone saying “guys, let’s see the end of this joke all together“. Mt. Gox was hacked, trust was lost, everybody sold. I monitored real time BTC price and watched the house of cards falling on livestream. Sipping my cap of tea with a big “told ya” expression on my face 🙂

BTC quickly dropped 50% and then slowly lost another 50% during the entire 2014 settling back at 200-250 USD. Not dead though. At the beginning of 2015 the BTC stopped losing value and entered a 9 months stagnation that ended in October of that year.

That’s when you should have bought a shitload of Bitcoins! In 2 years you’d walk away with 100x!!

I don’t know why like to think of ourselves being so smart. Like superheroes that buy at the bottom and sell at the top!

Let’s be realistic, here’s what could have happened had I invested 100$ when one Bitcoin was worth a single dollar (Feb 2011):

  • July 2011: “OMG the Bitcoin is not worth 10 dollarzz sell sell!! Coooool I invested 100$ and I made a thoooousaaaandzzz! Hahaha!!
  • December 2011, first heart attack: “ouch… in July it reached 31$, now a BTC is worth 2$. Better if I sell, I’ve doubled my initial investment anyway in less than a year (but I lost the opportunity to leave with 3k sheet sheet sheet!!)
  • April 2013, second major heart attack, and panic attack: “aaaargh what the f**k why BTC lost 71% tonight?? From 266$ to 76$. Sell everything! It’s still 7.6k USD (minus fees, minus 2-3 years of life expectancy)
  • December 2013, third (probably fatal this time) heart attack: “BTC dropped 50% again… What does it mean Mt.Gox was hacked? what does it mean MY ACCOUNT was hacked??” or if I was lucky enough “Aaaargh Mt.Gox was hacked! Bitcoins are not safe!! Let’s sell e-v-e-r-y-t-h-i-n-g and run away with this life changing amount of 50k USD!
  • December 2014, anxiety, stress, regrets “why why why?? Why Bitcoin goes down every-faaacking-day?? I’m turbo angry let’s get out of this sheet before the world is over! 25k USD, better than nothing”… but at the price of several heart attacks and a slow death filled with regrets of having missed the 1k mark twice (Nov 30th 2013 and Jan 6th 2014)
  • September 2015, anger, frustration, sad acceptance and ragequit: “… it’s dead. Full stop. It will never get back. Let’s sell this boring dead investment and run away. 20k. I should have sold in January. I’m losing my time here

Yeah RIP, but had you made it to October 2015 you’d be millionaire by now! It’s a fact! 🙂

In the rare case I reached October 2015 alive and still invested, then the BTC started the easy way up to 20k USD (and my investment would have sent me on FIRE)!

Well… maybe.

Or else:

  • January 2016: just crossed the 1k mark again for the third time and suddenly dropped 30%. furious ragequit! (cashing 78k though)
  • May 2017: 2k per Bitcoin? Sell sell!! (cashing 200k)
  • September 2nd 2017: 5k?? Seeeeeell!! (cashing 500k)
  • September 12th 2017: Ouch, 2.9k… let’s not play with fire. Sell and regret having thrashed 210k in 10 days. Damn loss aversion!!

I had to be able to resist until November 28th to hit the 10k mark and sell for a Million… and regret having left another Million on the plate when in December 17th Bitcoin reached 20k USD which would have probably made me jumping back on it (buying only 50 BTC, half the original 100, with that Million) at the top and quickly lose 50% in a month, ragequitting with 500k on January 17th (Bitcoin dropped below 10k) and spent the rest of my life regretting it.

…And that’s the best case scenario.

What also could have happened? One of these:

  • My PC could have been stolen
  • My PC could have broken
  • I could have lost my wallet key
  • I could have been victim of hackers kidnapping me or my wife and asking for my entire wallet. They tracked my IP because I forgot just once to perform BTC operations on incognito window behind a proxy/TOR
  • I could have been victim of my exchange being hacked and lost all of my money
  • I could have chose as a private key a hash of an easy passphrase
  • I could have been trading on Bitfinex and now hold a lot of not backed Tethers
  • I could have decided to lend my BTC on Bitconnect and cash easy 1% per day!! Yes, it’s definitely not a scam!!

Yeah, definitely not a scam!

Except that:

So far, I’m glad I didn’t gamble with cryptos.

The only good thing that I could have brought home would be a bunch of life lessons:

  • don’t invest emotionally
  • don’t try to time the market
  • be fearful when others are greedy and vice versa
  • that’s how your heart reacts when you lose 50% overnight (which doesn’t happen so frequently with stocks so I didn’t experience it yet)

All of that being said, I’m still on the fence. Still interested. Still curious. Still refreshing coinmarketcap every day.

There’s a bright side of this story, which I’ll tell you on next post 🙂

3 comments

  1. Great post. Can’t wait to read Part 2! 🙂
    Still punching me in the face for not buying in 2015 when I really contemplated putting money into it. I think I would have ‘hodled’ until now.
    But remember, just ‘invest’ play-money you don’t mind losing. It might be mental accountability, but I think it helps. It also helps if you believe in the technology behind (altocoins anyone?).

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