Bitcoin: How could you do this to me?

Personal story incoming…

I discovered Bitcoin in mid-2013 after it spiked from the Cyprus crisis news. I didn’t buy-in at that time as I was still a bit skeptical, but I continually kept tabs on its progress going forward. Towards the end of 2013, I did take the plunge and bought some when Baidu announced that they were going to accept Bitcoin. To me, this signaled legitimacy, and it was the catalyst needed to get me on board.

Through countless hours of investigation, I became a huge fan of Bitcoin and what it could do for the world. As a believer in the Austrian School of Economics and sound money in general, the idea that we could have a form of money limited in quantity and issued at a predetermined pace without being controlled by a governmental entity appealed to me immensely. To me, Bitcoin was the fair form of money that the poverty-ridden citizens of the world really needed. They would finally be able to opt-out from mismanaged currencies and improve their financial situations through the savings and usage of a legitimate one. This minimal-costing, instant-settling network had all the right characteristics to become a worldwide currency and really change lives for the better.

I saw Bitcoin as having the potential to be the best thing to ever happen to the world and I wanted to see it succeed more than anything. I told everybody I knew about it, and a few people listened to my advice and purchased some. Unfortunately for the first few that did, they had to wait a couple years before their gains were realized as they bought after the 2013 peak. They weren’t too mad at me though, because I had also done the same. Fortunately for me, my initial purchases came during 2013’s end-of-year run-up and I sold once I learned that Baidu was no longer accepting it; and when the price stopped skyrocketing. My confidence faded, so I got out and paid a small capital gains tax to the IRS.

Shortly afterwards, my confidence came back. It wasn’t like the network was nonfunctional or going away; it just seemed as if the price got ahead of itself. I still believed in Bitcoin’s long-term fundamentals, so I bought back in and endured the pain of a multi-year long bear market which saw Bitcoin sitting in the $200-$300 basement for what felt like a decade. During those dark days, I painfully browsed the news and watched the price on a more than daily basis. I also encouraged others to buy at these bargain basement prices, but with sentiment so low, a very fresh Mt.Gox hack, and people thinking “Bitcoin is only used for drugs,” there was only one person that took my advice at the time.

During the entirety of the bear market, I never lost faith in Bitcoin. I never sold a significant stake nor did I convert anything substantial into altcoins. Bitcoin’s unique characteristics and potential were not lost on me, so I clenched my teeth, put my head down, and stuck with it. I told myself, some day, it would regain its luster.

As the original Blockchain network, and the one that spawned an entire industry out of it, Bitcoin, in my mind, was the coin that would be most valuable over the long term. To me, altcoins were just pointless copycats and they offered nothing exceptional over Bitcoin. They didn’t have Bitcoin’s gigantic network effect, and it seemed implausible that they ever would. If they weren’t going to become a currency used in everyday commerce, they weren’t valuable as an investment. Thus, I never had any interest in them.

Then along came 2017. Bitcoin had broken out of its bear market during 2015 and had been rising at a slow and steady pace ever since. At the start of 2017, the price sat at $1,000, spiked upwards, and then dropped on news that the People’s Bank of China was shutting down the Chinese exchanges. After this “China banning Bitcoin!” correction, the price rose and broke through 2013’s all-time high just as the Winklevoss ETF decision came near. When the ETF was denied, the same type of pain I felt from the $200-$300 price gulag came back. It was awful. For a few days, my mood was terrible and I had no idea what I should do regarding my investment.

To make matters worse, the scaling debate really started getting to me. It was obvious that Bitcoin was going to have a capacity problem and it worried me that the community was so divided over the issue. I started to lose some faith, and since I was scared it would drop substantially after the ETF decline, I sold a significant stake as it began to fall (An amount significant to me at least — I’m not Roger Ver). Much to my surprise, it began to rise almost immediately after I had sold out. Even more surprising, altcoins such as Dash and Ethereum were rising at much more rapid pace than Bitcoin.

From 2015 to 2017, I watched Bitcoin’s patterns and breakout price-points very closely; and a clear pattern emerged. When previous highs were cleared, Bitcoin would spike dramatically and establish a new high before correcting slightly above the prior breakout price point. So once Bitcoin approached the previous all-time high after I sold part of my stake, I bought back in with a price of Bitcoin a few hundred dollars higher than what I had sold out at. This would mark the beginning of my many mistakes and aggravations in trading Bitcoin and cryptocurrencies over the remainder of the year.

After I bought back in, I started to get an itchy trigger finger on the altcoins. I couldn’t believe my eyes. The alts were all going exponential while Bitcoin was rising slowly. I resisted the urge for some time, but once Ethereum really started to move, I converted a stake into it, and that was one of my very few successful trades out of Bitcoin. With all the Ethereum hype, and because it did offer something unique with its smart contracts, I felt it actually had some investment value. So I considered it, and bought some as a hedge on my Bitcoin bet.

But I didn’t stick with it for very long. I thought it was overvalued and overhyped, and the main reason it grew so large so fast was because it was the first legitimate alternative to Bitcoin and because all of those other overvalued ICO coins were launched off its platform and required Ethereum to do so. For those reasons, I didn’t hold it for very long and I ended up trading back into Bitcoin while Bitcoin shot upwards to $3,000.

After Bitcoin corrected from $3,000, it started drifting downwards and each high was lower than the last. This was significant because I had just bought Victor Sperandeo’s trading book, Methods of a Wall Street Master, and from it I learned that this type of chart pattern usually signaled a reversal in a bull market. Bitcoin’s very ugly chart, coupled with altcoins already starting to correct, caused me some worry. I thought this down-trending pattern was the market’s way of telling the “powers that be” to scale already, and since they weren’t, it was going to drop. As a result, I cashed out my entire stake around $2,400. I was convinced this correction was going to happen and I didn’t want to miss out on any gains. I wanted to put what I learned from Methods of a Wall Street Master to use. Besides, even if I ended up being wrong, I could just buy back in at a small loss.

And that’s exactly what happened… The New York Agreement was forged, and Bitcoin Cash was coming to market. One way or another, Bitcoin’s scaling problem would be resolved. Unsurprisingly, after the resolution became known, Bitcoin blasted off. I could sense a breakout coming and I wanted the Bitcoin Cash from the hard fork, so shortly before the fork, I bought back in around $2,800. Once again, another mistake and aggravation in trading Bitcoin and cryptocurrencies. A mistake that was relatively minor compared to what happened next.

After I got back into the game, I really wanted to maximize my gains so I challenged myself to outpace Bitcoin by trading altcoins. What a fucking disaster that was. I lost about 1/3 to 1/2 of my Bitcoin stake from this little escapade. It was extremely aggravating because I knew how I should trade in theory; but in practice, I kept making mistake after mistake and hating myself after each and every one. I can’t even count how many sleepless nights I had because of this.

To make matters worse, I saw the scaling method of Segwit + Lightning to be vastly inferior compared to a simple blocksize increase. Keeping the blocksize at 1MB seemed ridiculous to me, and I expected the Bitcoin Cash chain to eat its lunch. So when Bitcoin Cash started rising during the first time, I converted most of my holdings into it. Unfortunately, it didn’t stick, and the selling pressure brought it down to the $300-$400 range. And yes, it felt like Bitcoin at $200-$300 all over again…

Meanwhile, with my remaining Bitcoin holdings, I began to trade into altcoins. I had a few small gains and a few small losses, but things took a turn for the worse after the Equifax data breach. While I was out for drinks with some friends on the day this became public knowledge, I had the bright idea to buy Vinny Lingham’s, identity-based, Civic coin; thinking it would rise dramatically upon the news. In my stupor, I decided to convert nearly everything I had into it (aside from my Bitcoin Cash holdings). I thought it would at least double in value, and I’d be sitting pretty.

Instead, I sat ugly. Rather than rising in value, it drifted down and down and down. I couldn’t believe how low it was going, and I kept telling myself I would convert it back into Bitcoin after it had its “inevitable” spike up. Well, that spike never came, and as a result, I experienced one of the most painful and costly lessons of my life. It was one of the stupidest decisions I had ever made, and after this experience, I decided never to trade again. I would only invest in what I believed to be best for the long-term.

While this was taking place, I was writing my Bitcoin (Cash): Investment Thesis. I truly believed in what Bitcoin Cash was about, and I wanted to make my own contribution in support of it. As I previously mentioned, legacy Bitcoin’s scaling path seemed absolutely insane, and it didn’t seem plausible that Bitcoin could impact the world in the way I wrote about in my second paragraph. Bitcoin Cash was the coin that could reach that potential, and I wanted to do my part in accelerating its adoption. I wanted to see Bitcoin Cash become the usable currency and payment system that Satoshi had created for us.

Once Segwit2x fell through, it was very obvious that Bitcoin was going to be plagued with incredibly high fees and transaction backlogs for the rest of its life. The network was going to become even shittier, so once the price dropped after the Segwit2x cancellation and Bitcoin Cash started to rise, this signaled time to get out of Bitcoin entirely. I then converted my remaining Bitcoin into Bitcoin Cash, and excitedly watched it outpace Bitcoin.

But Bitcoin Cash’s rally stalled out and Bitcoin went ballistic. I guess it shouldn’t have been a surprise though. The market hasn’t quite yet seemed to care that Bitcoin is plagued with high fees and transaction backlogs, so why would it right before Bitcoin futures launched? After all, Bitcoin has incredible upwards momentum and people now entering the game are not buying it because they believe in what Bitcoin can do for the world. They’re buying in because they want to ride the wave and make money off of it. All they know is Bitcoin is making people tons of money, and they want to be one of them. They’re simply speculating on its value, and well, since that’s all Bitcoin is really useful for anymore, why the hell not?

As you can probably tell, this aggravates me. It aggravates me because this was not the Bitcoin I signed up for. This is not the Bitcoin I heard Andreas Antonopolous describe to the Canadian Senate back in 2014. This is not the Bitcoin that can change the world for the better. This is speculation of value Bitcoin, not Bitcoin as a global currency and payment system; and to me, this version of Bitcoin is truly a joke. If these fees and transaction backlogs were a part of Bitcoin during its early years, I GUARANTEE it would have never come off the ground. There is no way anybody would use or find value in the network. But since it was great for so long, and because it has off-the-charts price-rising momentum, its flaws and worthlessness as a currency and payment system have been ignored.

Had I ignored them too, my financial situation would be over 3x better at this moment; and that’s fucking maddening. It obviously pisses me off for these financial reasons, but it also pisses me off because I never wanted to invest in anything other than Bitcoin in the first place. I was the biggest Bitcoin fan there was, and the thought of investing in another cryptocurrency was alien to me. My obsession was Bitcoin, and I had no intention of ever deviating away from it. Bitcoin was the revolution starter, not something else.

Now, I can’t even recommend it to the large number of people that associate me with Bitcoin (I recommend Bitcoin Cash instead). I have to explain to them how it’s been mismanaged and how fees are through-the-roof when they shouldn’t be. It’s incredibly annoying to have been a loyal pitchman for so long, only to be forced to steer others elsewhere because a simple upgrade turned into a political battle and power grab. It is especially annoying because now that Bitcoin has gone exponential, everybody I told to invest into it is now talking to me about it; and I’m talking EVERYONE. People I haven’t talked to for years are bringing it up, and I can’t seem to escape it anywhere. The TV, internet, family, friends from all walks of life, the gym, all the way to random people at the bar. It’s everywhere. There’s constant chatter and this chatter tells me the moment is finally here. Mainstream consciousness — which I always thought would include adoption — has arrived.

And here I am, the biggest Bitcoin fan in the world sitting on the sidelines while it’s going parabolic. The moment I had been waiting for since 2013 has finally arrived, and I’m feeling the exact opposite of how I would have expected. Instead of euphoria I feel regret, anger, disbelief, worry for those investing now, and totally stupid for not realizing the inevitability of the parabola completing itself. This moment was always going to happen, and now that I’ve vented and accepted reality, I am totally content with what has transpired.

That’s because in the grand scheme of things, it’s a good thing Bitcoin breached $10,000 and beyond. As a result of this exponential price rise, a massive increase in public consciousness has taken hold, and this has essentially legitimized the asset class. A $250+ Billion market is not something that can be laughed at; this kind of money forces people to take it seriously. It’s just unfortunate and almost unbelievable that it has accomplished this while it’s usefulness as a medium of exchange has been removed.

The other reason why it’s a good thing that it rose this high is because we now know where the useful, upgraded version of Bitcoin can go from here. Legacy Bitcoin has paved the way to $10,000+ and it’s not a stretch to think that a better form of Bitcoin could eventually take some of those investment dollars away from it. Especially when current buyers are really just following the herd and chasing the gains. They don’t have loyalty to Bitcoin, so why wouldn’t they chase gains elsewhere? Should sentiment swing over to Bitcoin Cash and Bitcoin’s uselessness become realized in mass — which it is much more apt to do now that it has the public’s attention — Bitcoin Cash could easily reach legacy Bitcoin’s current price levels and beyond.

Regardless, at the moment, it hurts and it hurts bad. Over the long-term though, I’m not worried. A version of Bitcoin that consistently has transaction backlogs, high fees, and businesses abandoning its use will not be able to compete with a version of Bitcoin that 1. Has no transaction backlogs 2. Is cheaper to use than any existing money-transferring methods 3. Can be utilized as a payment system 4. Invites business use and adoption 5. Allows for micropayments over the internet 6. Doesn’t price out people from using it 7. Is easy to switch from developing off of Bitcoin to it 8. Has transaction capacity increases built into the cake 9. Has Yours.org to demonstrate its superiority and 10. because it has a vision and goal of bringing it to everybody in the world. (Plus, it has nChain’s support. Don’t underestimate them)

2017 may be Bitcoin’s year, but the future of the crypto revolution lies in Bitcoin Cash; and even though I currently feel like a victim from paying too close attention to the scene, I’m confident my attention to detail will eventually pay off, and when it does, that feeling of victimization will turn into the glorious feeling of vindication.

Thanks for reading.

Bitcoin Optimist