Category: Buying

The Price of Procrastination, Payoff of Patience

I have a confession to make, and I’ve felt guilty about it for over 2 years. Only recent developments have alleviated this guilt. Allow me to explain.

In early 2018, a friend started asking me about Bitcoin. I told him everything I knew and he was very receptive to the concept of decentralized finance. He asked if I would help him set up an account to buy Bitcoin and of course I agreed. We met a few days later and I guided him through the process of setting up a Kraken account. The next step was for him to allocate funds to his account. This involves a trip to the bank to wire funds, then a holding period to ensure the funds transferred successfully. He decided he wanted to start with $2,000 which was a lot for him at the time.

A few days later he told me his funds transferred successfully and he’s ready to make the purchase but his schedule is a little crazy so he’s not sure when I could come over.

Anyone who recalls the history of crypto prices in early 2018 knows it was very volatile – crashing down from the highs of Christmas 2017 at $20,000, prices fluctuated thousands of dollars a day.

A week lapsed since my friend’s commitment to purchase, and in that week, Bitcoin’s price plummeted to $5,000. I called him and told him this is the time to buy – his money would go far. He was excited and said he’d call me back with a good time for me to come over and help him make the purchase. Days passed and he didn’t call. I called him again and told him the prices can jump quickly and he may miss a good opportunity to get the best price for his purchase. He thanked me for keeping him in the loop but still wasn’t ready for me to come over.

Over 10 days later, he finally invited me over to help him buy his Bitcoin. Unfortunately the price doubled to $10,000. I struggled with the ethics of letting him buy at (what I considered at the time) a high price versus waiting for the price to fall again and then attempting to coordinate a time with him that coincided with a price fall. I’m embarrassed to admit I took the easy way out and let him spend his $2,000 on Bitcoin at $10,000. He owned 1/5 of a Bitcoin and was elated, but it haunted me knowing that he could have owned almost 1/2 of a Bitcoin if he would have not waited, or if I had the fortitude to tell him to wait for another price correction.

Months later the price crashed to $3,000 and held at that price for a long time. He could have had 2/3 of a Bitcoin if I talked him out of buying when he was ready but the price was $10,000.

Of course I didn’t have a crystal ball. I had no way of knowing the price would crash to $3,000 – it could have bounced back to $20,000 or higher. I felt responsible for not guiding him the way I would have guided myself, but he being oblivious to the price differential was a weak comfort I clung to while prices remained well under $10,000 for over two years.

During the fall of 2020, Bitcoin prices suddenly started climbing back to $10,000, then over $10,000, then toward $20,000 and I finally felt relief that my friend’s investment finally paid off. His $2,000 investment more than doubled. Presently the price is close to $40,000 yielding him a quadruple payoff on his investment.

The moral of the story is this: When someone you trust tells you to make your purchase NOW, it’s a good idea to stop what you’re doing and follow their advice. But the fact that this friend was otherwise disengaged from trading crypto, protected him from the urge to sell at a loss and miss the opportunity to benefit from a long term HODL.

Eating Crypto Crow

I’m reminiscing on a post I wrote in the fall of 2017 savoring the gains I made buying my Bitcoin at $3,900. In hindsight it seems arrogant, so I feel compelled to disclose that in the winter of 2018 I bought another Bitcoin but at closer to $12,000.

If you follow crypto prices, you’ll sympathize how I saw that $12,000 as a huge “dip” from the December 2017 high of almost $20,000. You’ll also recognize that this wasn’t a dip at all, but a downward slide that hasn’t yet recovered. In spring 2018, prices fell to a little under $6,000 – HALF of what I paid. Currently, Bitcoin is around $9,000, which puts my second purchase at a significant loss.

Do I regret buying that second Bitcoin? I do wish I waited to see how far it would drop before I committed. I still would have spent $12,000 but I would have gotten 2 instead of just 1. In my defense, during the pre-Christmas valuation climb, prices increased so rapidly I was conditioned to believe if you wait, you lose out. I have since un-conditioned myself from that belief.

Some credible financial analysts predict Bitcoin’s value will drop to zero (“MIT“, and “Former PayPal CEO Bill Harris“). Other equally credible financial analysts predict Bitcoin is on the precipice of skyrocketing – doubling or tripling the value of my second bitcoin (“Hedge Fund Manager John Pfeffer” and “Comcast VC Bullish on BTC”).

Obviously I hope the optimists are right. Only time will tell if the crow I’m eating today the last meal before my profit dreams die, or but a garnish on a delicious platter of future profits. Whichever direction it goes, I’ll post about it.

 

Investaweb Quotes Me as a Bitcoin Expert

On December 14, the Website Investaweb.com quoted me in an article “20+ Experts about Bitcoin: Should You Buy into the Hype? (Part 1)“. I’m the second expert in their list of experts. I was interviewed in October for this article and typically financial articles go to press immediately. I didn’t realize there would be so much time between being interviewed and being published, so the prices I discuss don’t make sense. I didn’t see the article until January 29 so the prices really didn’t make sense. But I’m still tickled to be quoted as an expert.

Baby Coin Fever

Now that the major coins are priced in the hundreds, thousands, and teen-thousands, there’s a lot of excitement about the “baby coins” – cryptocurrencies that are under $10 and often under $1. Currently there are almost 2000 baby coins, and that number is growing exponentially. I’ve been following four specific baby coins: Stellar (XLM), Tronix (TRX), Cardano (ADA), and Po.et (POE).

Since these coins are so cheap, it’s thrilling to be able to buy a lot of them, and anticipate they appreciate by factors of thousands. The challenge is that few of these baby coins are traded on the main exchanges (Coinbase or Kraken) or if they are on a main exchange, you can’t buy them for USD, only for Bitcoin. If you’ve read my previous posts, you’ll know I’m not interested in using my Bitcoin because I believe it will continue to appreciate – some forecast to $40,000, $60,000, $100,000 or even $1 million. Last spring people laughed when Bitcoin was forecast to reach $5,000 by December 2017, and it surpassed $5K by October.

I (stupidly) bought a quarter Bitcoin (at its peak price – read all about my lapse in good judgement here) to make whole my beloved Bitcoin that reduced to 0.995 when I moved it from Kraken into a hardware wallet.

To purchase baby coins, you need to use an exchange that trades more obscure coins. Some of those exchanges have bad reputations – they let you deposit but won’t let you withdraw, essentially holding your funds and/or coins captive. Not to stereotype, but this complaint is common for many Russian exchanges. One exchange that seems to have a decent reputation is Binance.

Signing up for Binance was simple – provide an email address and password. They email a confirmation message to you, you confirm through the email, and you’re in. Binance has a fun CAPCHA method – you use a slider to fit a puzzle piece into its empty space. Once in Binance, the user interface isn’t as friendly as Kraken (and I found Kraken confusing at first).

Binance does not support fiat currency (i.e. won’t let you link a bank account to deposit fiat currency). You need to already have cryptocurrency from another exchange (like Kraken) to trade crypto-to-crypto. I don’t want to further fracture my beloved Bitcoin, but I am willing to sacrifice one Ethereum for a baby-coin buying spree.

Having transferred coins from Kraken to my hardware wallet, I had some comfort level of sending a coin from Kraken to Binance. I logged into Kraken, clicked the FUNDING tab, clicked the WITHDRAW tab, the clicked ETHER where it asked me to set up a destination wallet. I toggled over to Binance to find the Ethereum wallet address for my Binance account. You scroll through the LONG list of coins until you see ETH. Then you click on the DEPOSIT button on the far right of the coin’s row. This brings ETH Deposit Address field WHICH WAS BLANK.  I googled “how to send ETH to Binance” and it basically told me to do what I already did. After a few more tries, an address code appeared in the field. I still have no idea what I did to make it appear. When I figure it out, I will write an entry about how to do it because I can’t be the only person perplexed by this process.

I copied the address from Binance into Kraken and saved. Kraken sent me a confirmation email to ensure I did indeed set up an Ethereum wallet to send coins to. I confirmed it, and was able to send 1 whole Ether (which actually ends up being 0.995 ETH because Kraken takes a 0.05 commission).

The blogs and YouTubers all claim that Ether is pretty fast to transfer into Binance. I beg to differ. FOURTY MINUTES passed before my transfer was even ACKNOWLEDGED by Binance. Note I said “acknowledged” not “confirmed”. It took 57 minutes for Kraken to recognize the transfer a success, but Binance still had not confirmed the transfer. I kept checking Binance’s “Deposit History” page and eventually noticed a weird number changing. Forty minutes into waiting for the transfer to confirm, I the message noticed “32/30 Confirming”.  Fifteen minutes later the message was “83/30 Confirming”. Five minutes later it was “95/30 Confirming”. I really hoped it only goes up to 100/30. Two minutes later it showed “Deposit Completed”. An HOUR AND FIFTEEN MINUTES lapsed to successfully transfer the Ether.

At first I clicked the EXCHANGE button on Ethereum’s row next the “DEPOSIT” and “WITHRAWAL” buttons, but that only gave the option of trading ETH for BTC or USD, not trade ETH for a baby coin. So I clicked on the “Exchange” link at the top left of the screen. This gave me the option to choose BASIC or ADVANCED. When given the option, I always default to BASIC.

The BASIC screen looks not very basic to me. It’s a lively screen of graphs, charts, tables and other colorful informatics. The far left of the screen lets you choose BTC, ETH, BNB, USDT and lists a ton of what look like baby coins. I clicked on ETH and the baby coins display their trade ration to ETH. Mercifully it provides a “search” field so you don’t have to scroll through the multitudes of coin offerings.

My first search was XLM which is trading for 0.00097550 ETH. Then I found TRX trades for 0.000115 ETH. ADA trades at 0.00131 ETH. And POE trades at 0.000125 ETH.

Binance has a cool feature that lets you trade 25%, 50%, 75%, or 100% of whatever you’re funded with. In my case, it was the 0.995 ETH. I believed that saved me the ass-ache of calculating 0.995 ETH into quarters. Since I wanted to buy 4 baby coins, I chose to use 25% for each. The graphs showed the prices rising rapidly for all 4 of them, so I just clicked BUY one after the other. I didn’t know if any of my buy requests succeeded, I kept clicking the coins I wanted a pushing the BUY button. Then I clicked the ORDERS link at the top of the page to see which transactions completed successfully.

I clicked ORDERS then TRADE HISTORY and saw that my requests were “processed”, but I couldn’t tell if that meant the purchases were successful. I clicked on ORDERS then OPEN ORDERS and saw I had no open orders which I took as a good sign. Then I clicked on ORDERS > ORDER HISTORY and that showed all of my orders had a status of “Filled” which was comforting. I really like the idea of having no leftover funds to deal with.

I clicked back onto the FUNDS link at the top right of the screen to see if my balances appear for XLM, TRX, ADA, and POE. It shows I have over 2,104.893 TRX; 795.204 POE; 185.814 XLM; 107.892 ADA. But it also shows I have 0. 31547862 ETH! I thought I spent all of my ETH buying 25% of these 4 baby coins. It appears I don’t actually understand Binance’s trading platform.

It took about an hour of thinking before I realized the “25%” option didn’t spit my 0.995 ETH into quarters. Only my first trade was 25% of 0.995 ETH. My next trade was 25% of the remaining 75% of my 0.995 ETH and the trade after that was 25% of the remainder of the previous trade, etc. So each trade was for less ETH than the last. So I guess I really do have to do the math myself and decide how much Ether to spend on the remaining 3 coins. I don’t have the mathematical fortitude to calculate the differences to make an even distribution. I divided my remaining 0.31547862 ETH into thirds to allocate to POE, XLM, and ADA. That means 0.10515954 of an Ether for each.

In the trading interface there is no way to input the amount of ETH you want to spend, you can only input the amount of a coin you want to buy. So I typed in some random numbers and watched the amount of ETH it would cost until it got close to 0.10515954. When I used the rest of my ETH to buy the balance of my baby coins, I clicked back over to FUNDS >DEPOSITS WITHDRAWALS to see my balances. As I suspected, the amount of TRX didn’t change because I already bought 25% of my ETH. The balance of XLM was up, and ADA was up, but it still showed I had 0.10718 of Ether left! I clicked on ORDERS > OPEN ORDERS and saw that my POE purchase is still pending. I clicked back to FUNDS > DEPOSITS WITHDRAWALS and confirmed that my amount of POE did not increase by 813. I’m wondering if I should cancel it and try again or just leave it. What I find curious is Binance has warnings about XLM and ADA trading being heavy and possibly delayed, but those transactions cleared immediately. My poor POE is stuck in purgatory. I check the trading platform again and notice that POE is trading at 0.0014 now, and my purchase was for 0.0013. I tried to cancel the order at least a dozen times so I could raise the buy price, but every attempt to cancel the transaction failed. Then Binance went offline for “system upgrades”. Part of me believes I broke Binance with my constant refreshing. I need to step away from the screen. I hope the price dips so the purchase can clear.

It’s exciting to imagine getting in on the ground floor of what could be the next big coin. While I wait for my POE transaction to complete, I need to finally set up my Ledger Nano S hardware wallet to store these Baby Coins safely off the Internet.

A Bitter Story About A Quarter Bitcoin

I’m embarrassed to admit how much my fractured Bitcoin impacted my psyche – especially as Bitcoin approached $20,000 in early December. When my Bitcoin was whole, I knew how much I had: whatever its valuation was, that’s what I was holding. Now I had to calculate the current price by 0.995 and it disturbed me beyond reason. A well-adjusted person would just round-up and live their life. I’m just not calibrated like that.

As soon as I received a Christmas bonus, I wired it to my Kraken account. At almost $20K, I couldn’t buy a whole Bitcoin, but I could buy a fraction to make it whole once more.

The rational part of my brain said “Use this $5K to buy Ripple – it’s almost a dollar and seems to be increasing a dime a day”. Another part of my brain said “Didn’t you read Ethereum is under-valued? It’s still around $500 – you could buy 10 of them! And if it does go up, you’ll enjoy 10X the profits”.

But the lizard part of my brain said “MAKE MY BITCOIN WHOLE AGAIN”. So I spent $ $4,688.40 USD on 0.25 BTC, which I figured should be enough to preserve its wholeness even if I transfer it a few more times.

Then I felt guilty and used the remaining $298.60 to buy 391 Ripple for $0.76 each.

Not 2 weeks later, Bitcoin fell to $14K, and Ripple doubled to $1.25.

Why oh why will I never learn. It was that same voice that insisted I buy Bitcoin in December 2016 when it was $700 (which I regrettably ignored) that said to buy Ripple instead of Bitcoin with my Christmas bonus. If I listened the first time, that $700 would have grown 20X IN ONE YEAR. And if I listened to that voice regarding my Christmas bonus, and invested the $5K in Ripple, it would have doubled WITHIN A FORTNIGHT. But I followed my emotions and ignored my senses.

When Ripple reached $3, it was small comfort knowing my $298 was now worth almost $1,000, because the masochist in me also calculated the $5,000 I didn’t invest in Ripple could have bought me another whole Bitcoin. Did I mention Ethereum ended up doubling in value too? So that $5000 could have been $10,000 by now.

I need to teach that sensible voice in my head to punch me when I ignore it.

Does anyone else have a bitter Bitcoin story they’d like to share?

Buying a Hardware Wallet

The excruciating (but mercifully temporary) inability to log into my cryptocurrency exchange illuminated my need for a hardware wallet to safely store my beloved bitcoin and alt coins. Phone-based wallets exist, but considering the sketchy places I’ve trolled on my phone, it seems a security risk. The safest place to store cryptocurrency is OFFLINE, and that means an unplugged hardware wallet.

A hardware wallet is basically a flash drive. But unlike cheap USB sticks handed out freely at tradeshows and conferences, hardware wallets are more durable and most have additional security features.  The most celebrated hardware wallets by nerds in the know are Trezor, Keepkey, and Ledger Nano S.

These three wallets don’t have an operating system, which means they can’t harbor malware. Apparently, they are safe to use even on a computer that DOES have malware. That’s especially important because you may not even know you have malware.

These three wallets have a Liquid Crystal Display screen which also improves security and makes them easier to use. Apparently wallets without LCD screens rely on inputting information into your computer which is sent to the wallet. If your computer is compromised with malware, the information could be stolen and never make it into your wallet.

Physical buttons on the wallet also let you securely navigate the interface – that means, to make selections and enter passwords. Apparently this is a big security bonus because someone who may be controlling your computer remotely is not able to control physical buttons, and therefore cannot control your hardware wallet (i.e. steal from it). From what I read, it appears the Ledger Nano S and Trezor have physical buttons but the Keepkey does not.

Something to note is NOT ALL WALLETS ACCEPT ALL CRYPTOCURRENCIES. And if you’ve read my earliest posts, you’ll know I have a somewhat diverse portfolio. KeepKey won’t support my Bitcoin Cash, ZCash, Ripple or Monero. Trezor won’t support my Ripple or Monero.  Ledger Nano S is the only wallet supporting Ripple but won’t support Monero (what’s up with no wallets supporting Monero??).

KeepKey not supporting 4 of my cryptocurrencies and lacking physical buttons eliminated it as a possibility. That leaves Trezor and Ledger Nano S.

Ledger Nano S appears to support all my cryptocurrencies except Monero. Bloggers enthuse about Ledger Nano S’s sleek design but I don’t plan to display it. In fact, I plan to hide it.

I did read something about Nano S only holding 3 currencies at a time, which is confusing. The more I read, the more confused I get. Apparently you can load a currency onto Nano S, then erase it and load another, then erase it, until all of your currencies are loaded but only a few can remain on the stick. I also read that the value doesn’t actually RESIDE on the wallet device, which is also hard to comprehend. The idea of ERASING my digital currency freaks me out. I guess I’ll have to buy a Nano S and try it to see for myself. Maybe I really do need to buy a Trezor wallet too so I don’t have to erase anything from the Nano S.

Bloggers encourage purchasing hardware wallets from Amazon.com and rarely discuss buying from the manufacturer’s Website. I suspect Amazon covertly sponsors many blogs.  The trouble with Amazon is the wide price variance for identical products. And many of the vendors have bad ratings, or no ratings, or sell other non-crypto and even non-tech items, which seems unseemly. If I’m buying a device to protect assets worth thousands (maybe hundreds of thousands?) of dollars, I need to believe I’m buying something legitimate.

On Amazon, the Trezor wallet price varies from $99 to $145 – sometimes from the same vendor!  A black version is $99, a white version is $94.99 and a grey version is $145. I can’t imagine anyone would care enough about the color of something so few people would see.  Upon closer inspection it seems like the grey one with the higher price comes with the USB cable, box, and instruction manual, which could account for the $44 difference.

Some vendors accurately identify the Trezor Wallet’s manufacturer as Satoshi Labs. But one vendor says it’s manufactured by Mom Made Foods. WTF?? I need more confidence in my purveyor of crypto security than that. According to many bloggers, you MUST check if your hardware wallet arrives FACTORY SEALED to ensure someone didn’t compromise it. If it doesn’t come factory sealed, you should send it back and get a refund. Also, don’t buy a used wallet.

Amazon has fewer vendors of the Ledger Nano S, but still a wide and confusing mix of prices and product offerings. Some bundle the wallet with a bunch of (seemingly unnecessary) accessories like a carrying case, lanyard, USB cable, Micro USB adapter, and even a ball point pen for almost $150. Some offer just the Ledger Nano S (no cable, no manual) for as low as $72. Personally, I want a manual, and I’m willing to pay extra for it, but I don’t want to buy a bunch of stuff I don’t need. Unfortunately, I don’t know what is necessary and what is superfluous. I’m also concerned that some of the accessories may be after-market and not as durable as the wallet. I don’t want a cable to fail when I’m transferring my digital currency.

It’s not that I don’t trust vendors on Amazon, I don’t trust people in general and prefer to buy directly from the manufacturer. I’m confident the wallet manufacturers will sell what I need: If I need a cable, they will provide an approved cable. If I need a manual, they will provide a manual.

Although I prefer buying directly from the manufacturer, both Trezor and Ledger are overseas and priced in Euros. They both accept payment in Bitcoin which, ironically, I won’t spend because its value keeps appreciating. If Bitcoin’s value was more static, I would enjoy avoiding my credit card’s infuriating foreign currency transaction fees.

In addition to Bitcoin, Trezor’s Website accepts credit cards, while Ledger’s Website accepts credit cards and PayPal.  Both Websites warn their prices do not include taxes and duties. I loathe imagining the hassle of coordinating my  schedule with the delivery guy to write a check for the import tariff. I also wasn’t sure where I put my seldom-used checkbook. Buying from Amazon would be so much more convenient. But that nagging voice in my head (which I’ve regretted ignoring in the past) won me over.  My distrust of online merchants supersedes my lust for convenience.

I decided to buy only one to see how nightmarish the overseas delivery would be. I chose Ledger because it gave 2 non-Bitcoin payment options, and the Ledger Nano S is compatible with 7 of my 8 cryptocurrencies. I wanted to see if I could in fact store them all together on the one stick or if there really was a 3 currency limit. If I could store them all, I wouldn’t need to buy another wallet. If it truly did limit to only 3 currencies, I would store my Ripple, Bitcoin, and Bitcoin Cash onto the Ledger S, and I would buy the Trezor wallet to store my Ethereum, Dash, Litecoin, and ZCash.

I first tried using my credit card on the Ledger site, but the online overseas transaction triggered a security block. So I tried the PayPal option (using the same blocked credit card) and it succeeded. This seemed illogical but I was glad it worked. A confirmation email claimed I would receive my Ledger Nano S in 3 days.  Of course these 3 days fell within the Thanksgiving holiday, complicating calculations of its expected arrival (i.e. when to work at home).  The following Monday I was shocked to see it arrived without any attempt to collect taxes, tariffs or duties. I felt stupid for expecting aggravations.

That night I bought the Trezor wallet from the Trezor Website. The Trezor Website doesn’t accept PayPal, so I first called my credit card company for permission to use my card for an online overseas transaction. The transaction worked, and a confirmation email said to expect my Trezor wallet to arrive in 3 to 5 business days by DHL. I’ve never had a good experience receiving shipments from DHL but I hoped for the best, given the success of my Ledger Nano S purchase.

Four days later, a DHL email announced my package’s scheduled arrival by end of day. I was already at work and considered going home to await the delivery, expecting to write a customs/duty check. When I got home I was shocked to see the package arrived without a request for customs or duty. So it seems if you’re in the continental US purchasing from the Ledger or Trezor Website, you can ignore the stern warning about taxes/tariffs/duties.

Now I’ve got to unpack these wallets. I hope setting them up is as effortless as buying and receiving them.

Barron’s Reads My Blog?

The highly respected weekly financial newspaper Barron’s published a great article “Bitcoin Storms Wall Street” by Avi Salzman on Dec 2, 2017.

This exhaustive, analytical, and well researched article quotes hedge fund managers, derivatives experts, Goldman Sachs analysts and appears to paraphrase one of my blog posts.

The 39th paragraph of this Barron’s article discusses the risks of trading cash-settled Bitcoin futures and uses the SAME ANALOGY I USED COMPARING BITCOIN TO FRIENDSTER! I would like to point out I published my blog post on November 28 (5 days BEFORE the Barron’s article published).

Here’s what I published on Nov 28, 2017: “Bitcoin may have been the first, but it may not be the long term winner.  Do you wish you invested in Facebook? Its IPO was around $32 and today it’s $180. You could have quintupled your money. But before Facebook was MySpace. And before MySpace was Friendster. Friendster was first – do you remember Friendster? Exactly. If you put your money on Friendster, you would have lost. Maybe Bitcoin is Friendster or MySpace. Maybe an altcoin will be the next gold standard and Bitcoin will be the next generation’s punchline.”

Here’s what Barrons published Dec 2, 2017: “A danger is that Bitcoin could end up being the Friendster of the crypto world, while the Facebook – the real winner – may still be in development somewhere.”

Does Avi Salzman read my blog? I am flattered (but a credit or even a heads up would have been nice). If anyone finds other articles that closely resemble what I wrote, please let me know, I find these things gratifying.

The Price of Impulsiveness

It took me 4 years to finally buy into Bitcoin. During this time, I learned about alt coins. Alt coins were hundreds of dollars at the most – much more palatable for my budget than the almost $4,000 Bitcoin I finally bought.  The day I bought my 1 Bitcoin, I bought a bunch of alt coins. I didn’t want to procrastinate and get priced out of them the way I almost got priced out of buying Bitcoin. (Read my Bitcoin-buying procrastination sob story here.) I learned the hard way that “panic buying” is not a good strategy. Some of my alt coins appreciated, some held at their purchase price, but some nosedived.

I really thought I did my homework. I wanted to diversify my crypto-portfoio to reap as many gains as possible. I used the money that wasn’t sufficient to buy a second Bitcoin to buy the alt coins Bitcoin Cash, Monero, Dash, Ethereum, Litecoin, ZCash, and Ripple.

Bitcoin Cash was created on August 1, 2017 as an offshoot of Bitcoin to make transactions faster. Anyone with Bitcoin on August 1, 2017 suddenly also owned Bitcoin AND Bitcoin Cash. (You can read why I did not own Bitcoin on August 1 here.)  I assumed the swift climb of Bitcoin’s valuation would happen to its twin Bitcoin Cash. Within 2 weeks its price bounced erratically between $200 and $400. In late August it shot up to almost $800. The first 2 weeks of September it was in the $500’s. I bought in mid-September, believing it would continue to climb. What a mistake. Within a week, Bitcoin Cash declined dramatically. It turns out I bought at the top and it may never reach that price again. For all of October it was worth about 60% what I paid for it. The lesson here is to not buy something that’s only a few months old. There’s not enough data to make an informed decision. And don’t buy something that everyone else got for free. Fortunately I only bought 1. Now that it’s November, Bitcoin Cash is valued $50 MORE than what I paid for it. So I have to amend my “lesson learned” to “hold your nose and hope for the best”.

Monero seemed like the next big thing: quick transaction processing and true anonymity (Bitcoin only provides pseudoanonymity).  In 2016, Monero saw incredible gains. I wanted to ride the swift and steep rise I missed with Bitcoin. Monero’s price peaked in early September at almost $150. I bought it a week or so later on the downswing at just under $100. In my enthusiasm, I bought a bunch of Monero. Now it’s holding at around $88, still less than what I paid. I wish I only bought 1, or waited until its price flattened.

Dash seemed promising too. It is another truly anonymous alt coin. I followed its climb to $387 in August and figured it looked like Bitcoin-like opportunity to ride the upswing to double-digit gains. It turns out that August price was the peak. I bought at less than its peak price, but its valuation has since declined. I’m losing about $30 a piece on Dash. If I looked at its performance curve before buying, I would have followed its inclination a little more before committing.

Ethereum enjoyed the most news coverage of all alt coins. Its blockchain is the foundation of “smart contracts” which promises to revolutionize government issued ID, legal contracts, and supply chain tracking. In 2016 Ethereum traded for around $10. In the summer of 2017, it skyrocketed to $371, then fell to $150 in mid-July, then climbed again to $386 September 1, then dipped to $250 in mid-September. I bought on the upswing at just under $300. It’s been bouncing around the low $300’s. I’m glad I didn’t buy at a spike, but I wished I would have waited to buy in at a dip. I’m not losing but my impatience did miss on some great potential gains.

Litecoin was developed by the eggheads at MIT, so I figured they knew how to build a robust, revolutionary digital currency. Litecoin wasn’t expensive and I splurged on a handful of them. To date, the price hasn’t changed much. I’m glad it’s not losing value, but I’m disappointed it’s not appreciating either. I didn’t have to enter the market when I did, and I could have used my funds to buy something that was appreciating, like ZCash.

ZCash offers privacy and selective transparency in some transactions. It claims to provide extra security compared to other digital cash. All I know is it’s the only Alt Coin that was a good buy at the time. In the spring it was under $100 but I bought in the fall for under $200. To date ZCash gained about $30 each.  I wish I bought twice as many as I did.

Ripple has been a fun experiment. Ripple’s stated goal is to see “big companies lose their control over the flow of other people’s money just as they’ve lost control over the flow of information.” I personally would enjoy witnessing the demise of big banks that constantly rip me off with countless fees. Ironically, Ripple is backed by Google, a big company itself. At 18-cents each, I bought a shit load of Ripple and felt like a kingpin. When its price soared 10 cents, I reveled in my genius. It has since fallen back to my original purchase price. I’ve stopped reveling.

Enthusiasm and FOMO drove my alt coin purchases. I should have exercised restraint and bought based on fact and reason instead of emotion. I expect over time most or all of these currencies will appreciate, but I could have made my money work harder. Next time I have funds to play the crypto market, I’ll be smarter and hopefully see stronger returns.

What alt coins have you invested or dabbled in? Share what you would have done differently with the clarity of hindsight.

The Price of Procrastination (But Alas…)

Procrastination hurt me in my Bitcoin purchase. I wanted to buy in at $44. I meant to buy in at $500, then at $700. I tried to buy in at $2,000, and I ended up buying in at $3,909.

The first time I heard about Bitcoin it was $44. Research indicates that must have been January/February of 2013. I probably read about it in a waiting room’s Wired magazine. I remember thinking “I should buy 10 Bitcoins”. But at that time, $440 was a lot (my spouse and I had 2 babies and were recovering from the Great Recession). I don’t know why I came up with “10” and not “1” or “5” which would have been more economically reasonable at the time.

Also, back then I wasn’t sure WHAT I would be purchasing if I bought Bitcoin. I assumed I would get a physical object like a casino chip. I also wasn’t clear on WHERE or HOW to buy. I think I googled it and saw there were informal peer-to-peer networks but I wasn’t thrilled about meeting a stranger and handing over hard earned dollars for something I couldn’t validate to be legitimate. There’s something unsettling about spending money on a coded series of numbers that you can’t hold in your hand. So I did nothing. And Bitcoin became more valuable. And I hated that I didn’t buy any.

In 2014, the biggest Bitcoin exchange was Mt. Gox, and it got hacked. All Bitcoins at that exchange were lost.  I felt an odd sense of relief at this news. I was sure that if I had bought Bitcoin, I would have bought them through the biggest exchange. By NOT buying Bitcoin, I prevented myself from losing my $440 worth of Bitcoin. I was smart to procrastinate – or so I thought at the time. Here’s a fun fact: I finally bought in at $3,909.  So even if I did lose all 10 coins in 2014, and purchased them again at the 2014 price, I still would have been far better off. But alas…

In 2015 Bitcoin was $300 – $400, and I thought our family business should start accepting Bitcoin payments. I planned to write a press release about it. It was really a publicity stunt to differentiate us from competitors, but I figured before issuing this press release, we should actually have an account to accept Bitcoins in case someone wants to exercise that option. As you can guess, I never got around to creating an account to accept Bitcoin, so I never wrote that press release. I’m sure I would have bought some Bitcoins at $300 or $400 (probably 10 since that’s my preferred number) and they would have appreciated ten-fold. But alas…

Around 2015-2016, I started following Twitter accounts @CoinDesk, @Cointelegraph, and @WorldCoinIndex to study valuation fluctuation trends. I also became familiar with altcoins like Ethereum, Litecoin, and Monero.

During the summer of 2016 amid the Hillary/Trump presidential campaigns, I felt a strong urge to invest in Bitcoin. I still wasn’t sure how to do it, but I saw there was a “Bitcoin Center” a few miles from me that offered information sessions and a “Bitcoin ATM”. I meant to attend an info session but didn’t. I liked the idea of an ATM but I wasn’t sure what it gave you. It would have taken little effort to travel the few miles to go check it out, but I did not. And the price of Bitcoin continued to climb.

After the surprising win of Donald Trump, the voice in my head screamed BUY BITCOIN NOW. The price was around $600 or $700. I was still fixated on buying 10 Bitcoins, and I had $7,000 available, but I was conflicted: I wasn’t broke like in 2013, but $7,000 is a lot of money if it turns out to be a bad investment. How would I tell my kids they can’t take gymnastics lessons anymore because I poorly invested our discretionary funds?  My spouse wasn’t following this market and maybe wouldn’t object to this investment, but I sure as hell would hear about it for the rest of my life if this lark of mine went wrong.

One morning about a week before Trump’s inauguration, I woke up determined to withdraw $7,000 cash and buy 10 Bitcoins from that Bitcoin ATM. But then I had to join a last minute conference call, and then I wanted lunch, and then it was cold out and  I had second thoughts about the 5% ATM fee because I’d have to take out MORE than $7,000 and that seemed excessive,  etc. etc. etc. So I didn’t do it.

After Trump’s inauguration, Bitcoin jumped from $800 to $1,000, then climbed to $1,200. Week after week I watched in horror as the valuation continued to rise. “When it gets back to $1,000 I’ll buy 10,” I said to myself. It never went back to $1,000. In May it reached $2,000. I couldn’t believe how quickly it rose. I hated that I didn’t buy at $700 or $800. I would have more than doubled my money in less than 6 months. Now I’m late to the party and need to spend more to get less.

In June I committed to buy at $2,000, bitter about not using the Bitcoin ATM to buy in at $700. The 5% fee on $7,000 would have been only $350, which is a rounding error on the gains I could have made. But that was the past and this was the present. I was ready to buy Bitcoin THAT DAY in early June. I chose Coinbase for this transaction. I made a user name and password and was ready to go to my bank and finally get this transaction over with. It was then I learned buying your first Bitcoin online takes more than one day. I wrote about this fruitless experience in the post My First Bitcoin. To make a long story short, I was not able to buy in June at $2,000. I wasted a lot of time on Coinbase until I finally moved to a different platform (click here to read this sad tale). I finally bought my Bitcoin at $3,909.

Let’s do some fun calculations. At $3,909 I could have purchased almost 89 Bitcoins when they were $44. I could have just about purchased my 10 Bitcoins when they were $400 each. I could have purchased almost 2 Bitcoins just a few weeks sooner when they were $2,000 each. But I procrastinated and ended up buying 1 Bitcoin for $3,909. If I could kick my own ass I totally would.

Since purchasing, my solitary Bitcoin has increased almost 85% in value. Some analysts predict Bitcoin could reach $100,000. Some analysts predict it’s a bubble ready to burst. Obviously I’m hoping for the former to be true. But if the latter happens, I know I’ve spent the same amount of money on less interesting things, and at least I experienced a part of financial history first hand. I also learned that procrastination is expensive, and I should listen to that voice in my head when it’s screaming to do something.

Let me know about your Bitcoin buying adventures in the comments section. Are you kicking yourself for procrastinating? Or were you able to get in at a good price and ride the upswing?

The Day I Bought My First Bitcoin

I bought one Bitcoin on September 19, 2017 for $3,909. This purchase was approximately 4 years in the making. For those who haven’t yet bought Bitcoin or altcoins, I’m reporting my experiences to help you avoid the problems and frustrations I encountered. Much of it was self-inflicted. Some of it was bureaucratic.

By the time I finally acted on my intention to buy Bitcoin, the price increased X100. During the summer of 2017, I trolled the Internet researching the best platform to buy, and decided on Coinbase. This was my first mistake. To be fair, it seems that people who signed onto Coinbase between 2012 and mid-2016 are happy with the platform. But those of us who signed on mid-2016 and later had a terrible experience.

In the spring of 2017, Bitcoin climbed from $800 to $1,300. I could see the steady rise in valuation and I wanted in. When Bitcoin reached $2,000 at the beginning of June, I signed up for a Coinbase account. I was wanted to buy immediately. That day I learned there is no “immediately” when you are buying for the first time.

In hindsight, all crypto platforms I’ve encountered (in the US) require a “validation” process, which basically means you prove you are who you say you are before you are allowed to buy or sell. Basically, without this ability, having a Coinbase account is pointless. On Coinbase, getting “validated” takes A LOT of time. In fact, 5 months after signing up, Coinbase STILL hasn’t “validated” me. And during that time, the price more than doubled. I tried reaching Coinbase’s customer service and learned they don’t have customer service. They only provide canned FAQ answers and “chat bots” but no live humans to call or email. A heroic amount of digging uncovered a customer service email address. I sent many requests inquiring about my status and how to expedite the process: Provide more information? Clarify something? I never received a response.

I’m embarrassed to say it took 3 and a half months before I moved on to a different platform. Archived Reddit chat rooms indicated Kraken as a decent platform, so I signed up for Kraken and discovered Kraken has 5 “Tiers” of validation.

The first is “Tier 0” which means you activated your account, and you can look around but not buy, sell, or trade. If I recall correctly, you click on a link that’s emailed to you. It only takes a few minutes.

The second is “Tier 1” which means you can trade Bitcoin you already have, but you can’t buy anything with real money (or “fiat currency” as they call it). You provide your full name, country of residence, birth date, and phone number. You can reach “Tier 1” certification within a few hours, but for someone buying their first Bitcoin, this Tier is useless.

So you move on to “Tier 2” which gives you a little more functionality but still restricts a US resident from buying their first Bitcoin. You are asked to upload a scan or photo of the front and back of a government-issued photo ID, like a driver’s license. It also asks that you upload a scan or photo of a bank statement or credit card statement with your full name and address on it. It also asks you to take a selfie holding your government-issued photo ID and a sign with a statement declaring “Only for trading digital currency on www.kraken.com” with the date and your signature. It felt like a posing for a “proof of life” note in a hostage situation. I uploaded it all and waited for confirmation. After a few days of no change in status, I became concerned and looked for a customer support outlet. Of course there was no phone number but there was an email address. Remembering my bad experience with Coinbase, I reluctantly emailed Kraken customer service and I was shocked to receive an answer a few hours later that day – signed by a person’s name. He said my application was working through the system but it all looked fine. I thanked him for the speedy response, and received a response saying “you’re welcome” which was not necessary but nice.

I think a week passed before I received the email indicating my ID was accepted and I was “Tier 2” validated. In the mean time, Bitcoin price rose 10%.

I moved on to “Tier 3” which lets a US citizen link a bank account to a Kraken account. I was eager to complete this phase because Bitcoin value was rising quickly. Unfortunately, linking your Kraken account to your bank account takes almost a week.

First of all, you need to know your bank’s wire routing number WHICH IS NOT THE SAME as the routing number on your checks. Finding the right person at your bank who understands what you’re asking for is a process that may take an hour or more. Once you get this information, you populate it into your Kraken account. Then you have to decide EXACTLY HOW MUCH money you plan to wire from that bank account into your Kraken account. I found this nerve wracking since Bitcoin prices were rising daily. I ended up wiring enough to buy 2 Bitcoins at the time.

When you identify the amount of money you plan to wire, Kraken sends you special instructions that you MUST PRINT OUT AND TAKE TO THE BANK. You need the special instructions to wire the money into your Kraken account successfully. If you make a mistake, your money can be stuck in limbo for who knows how long.

I printed my instructions and went to the bank. My bank charged $35 for the wire. The funds’ destination address on my print out didn’t match what was in my bank’s system and I was concerned my money would end up in purgatory. The bank employee assured me their system was correct which gave me no comfort. I logged into my Kraken account every day for the next few days and saw my wire transfer “pending”. I wired the money on a Friday and the following Thursday the wire cleared and appeared in my Kraken account. Apparently, funding your account the first time takes the longest and subsequent wires will clear faster.

That day Bitcoin was $3,909. I wanted to buy 2 (one for each of my kids) the amount I wired was just short of the $7,818 I needed. So I bought only 1 Bitcoin and had about $3,500 left in my Kraken account. I was glad I finally bought my Bitcoin, but disappointed I procrastinated for so long that I could only afford to buy 1. With my remaining $3,500, I bought some altcoins and I’ll tell you about that adventure in a separate post.

Kraken also has a “Tier 4” which is just like Tier 3 but gives you higher spending limits. This is for ballers, not civilians like me. There’s a whole menu of “leveraged options” and “stop limits” that I’m quite confident I will never use.

So, the moral of my story is if you’re THINKING of buying Bitcoin (or any cryptocurrency), you should set up your account NOW because it’s a very time consuming process. It might be a good idea to sign up for a few exchanges simultaneously so you don’t lose time if you find one platform is not good.  When trying to choose which service to commit to, test out its customer service. If they aren’t responsive when you test them, they won’t be better when you actually need them. When you decide on a platform, fund your account before you’re ready to buy. Wire a small amount to make sure you’re doing it right. When that arrives successfully, wire more money – enough to make a purchase so you’ll be ready when the price is right.

I wish I had the benefit of someone’s experience before I muddled my way through the process. Let me know about your first Bitcoin purchase in the comments section. I’m also happy to answer questions to help you get through the buy in process.