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.

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Editor

Just a regular schmo with a long held fascination for Bitcoin, alt coin, cryptocurrencies, and blockchain. I am not a coder and not in finance. This blog chronicles my frustrations, mistakes, observations and *occasional* victories as I navigate the digital cash marketplace.

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