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Future of Money

Crypto Is a Beautiful, Tumultuous Rollercoaster Ride

A bunch of VICE friends weigh in on the highs and lows.

by Simon Morgans
26 March 2018, 12:31am

Illustration by Ben Thomson

This article is supported by Xinja, who are building the first Australian 100 percent digital bank designed for mobile. In this series, we look at our relationship to money.

When crypto burst onto the headlines in the second half of last year, a lot of people didn’t get it. For years it was associated with Silk Road and the dark web, making it seem like an investment portfolio for the morally unscrupulous.

But the neckbeards and Dread Pirate Roberts’ gang were onto something. Its price started to rise. Crypto had a good year, outgrowing its dubious reputation and breaking into the mainstream. We all know how much money we could have made.

In the investment theme park, crypto is the rollercoaster that hangs everybody upside down at 200 kilometres an hour while the stock market is the smooth-sailing ferris wheel. The US stock market made headlines last month after losing four and half percent of its value in a day. Crypto currencies will routinely do this in an hour and nobody bats an eyelid.

This eye-watering volatility brings its riches and ruin—as well as a band of followers from the obsessed to more casual investors. Say what you will about the crypto community, they’re nothing if not passionate. They’re either remaking the world of finance and unleashing the power of decentralised currency, or they're burning money in a ponzi scheme fad. Depends on who you ask. Whatever becomes of cryptocurrency, it has enlivened the imaginations of its committed adherents and grabbed the fancy of nerds across the world.

We spoke to a bunch of everyday crypto investors about their experiences riding the rollercoaster.

Paul

I got into crypto after I met someone at work who was converting his earnings into Bitcoin so he could buy a car. That night I watched a movie on Netflix called Banking on Bitcoin. I then did what I thought was my fair share of Bitcoin research, as well as looking into other cryptocurrencies too, and bought in for $500. This is when one Bitcoin was going for about $6,000. Before that I’d owned shares, but never really traded them. After getting into crypto I see how the stock market could be fun, but it's very slow.

Crypto is enabling a global transfer of wealth from the top 0.5 percent back to the rest of us. Blockchain technology can be applied to make many industries more efficient and to disrupt the way things are done. It’s new and the volatility makes it interesting. I’ve seen returns of 10x a couple of times off buying ICOs but I’ve also made a couple of bad investments. I’ve seen it go as high as 1.7 times my initial investment and as low as -30 percent briefly. All in the space of a few months.

The biggest lesson I’ve learnt is doing as much research as possible. Even when you think you’ve researched enough, double down. There’s a lot of fear, uncertainty, and doubt in the space created by shitty news sources with one thing in mind—manipulating the market to make a profit off people who haven’t done their research. You’ll get burnt if you take everything at face value. Also have a checklist before throwing your money into ICOs. Does the project have a working product? Does the country where it’s based have supportive regulation? Also make sure you know who the developers are and what their history is like.

Once mass adoption occurs—most experts are saying 2018 is the year for mass adoption—we will see another rapid transfer of wealth. When you compare it to the internet, it’s about 1998 right now in the crypto world. Because of how connected we are through the internet, the rate at which mass adoption will occur will be much faster than that of the web.

Hannah

I first heard about crypto from someone at work and kind of dived in because they seemed trustworthy. In the scheme of things I was very late to the game, but I went home and signed up for an exchange account before suffering the worst FOMO of my life waiting to be verified, and then for BPAY to transfer money.

I put about $500 in an made heaps on it over night. I then just kept putting $500 increments on, mainly on Ripple, and in January I had made around $3, 000 profit in just a few weeks. It was a real high.

I put even more on when Ripple (XRP) reached around $4 thinking I was set for life. Then the crash came and I lost it all. It's not as fun anymore so I don't really check it, but I think I'm sitting on around a $400 loss from my initial investment. I do genuinely think that it will rise again so I'm leaving my money in there and hope to see it creep back up in the next few months. If it doesn't, I'll have been so long without that money I'll have forgotten I ever had it. I hope.

Darcy

Like most people, I first heard about crypto in relation to the Silk Road about five or six years ago. It struck me as an interesting concept at the time but not something that I seriously believed would change the world. I started toying with idea of investing about a year and a half ago after I had somewhat successfully invested in the share market and gained a bit of confidence.

When crypto prices started to go through the roof around the middle of last year, I rashly decided it was time to invest and sold some of my shares to put into crypto instead. I decided to diversify my portfolio by investing in three coins rather than one, as I knew every coin had the potential to dramatically rise and fall, and in record time. So I figured having my money spread across three coins was safer than one.

I invested $1,000. One of my coins went down in value right after purchasing it. I panicked and sold it for about 60 percent of its original value. One of my other coins (the coin I had put the most money on) didn’t do much in the first few months but eventually jumped to about four times its original value and I sold it.

But the coin that I had invested very little in and had bought as a wild card became the true success story. It grew steadily in the months after I had bought it, but after the New Year it suddenly leapt up after some positive press came out about it. The $150 I had invested grew approximately 42 times in value, and I happily sold the lot—making about $6,000 profit.

Luck is what I put down to the profit I’ve gained from this experience. You can buy into the hype surrounding cryptos as much as you want, but at the end of the day you have to equate it to gambling.

I went into investing hoping to make money, but expecting to lose it all—and I tried to keep to that mindset when watching the highs and lows of crypto market. But, like gambling, it becomes hard for it not to affect you daily life, as you find yourself constantly asking “what if’s” like “what if I should/bought at this market high/low?”.

For me, it worked out well in the end, but I would be lying if I didn’t say I felt relief after selling it all. Now I don’t have to stress about it anymore.

Ben

I first heard about Bitcoin when it was tied to all the Silk Road stuff and thought it was some kind of human trafficking thing. I put in $200 but then got addicted and spent about $2,000 over a couple of weeks, then convinced my girlfriend to put in $600 as well.

I think the psychology of the marketplace is fascinating. The only way to make money is to do the opposite of what your gut is telling you about the inherent instincts of value. To make a profit, you need to buy when something has poor value and hope it rises, but it may also just stay worthless forever. Plus you need to sell when perceived value is high and then lie awake all night wondering if you sold too early, like the people who sold all their Bitcoin in 2011.

Blockchain is probably the future, but it's not really the present, so everything is mostly speculative. I still have no idea if it's actually a bubble or not.

This article is supported by Xinja, who are building the first Australian 100 percent digital bank designed for mobile. You can join the waitlist here.

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Bitcoin
Silk Road
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crypto