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Hey friends ??
I wanna tell you a story ??
When I first started exploring the world of cryptocurrency I knew one thing for certain... I am about to make a lot of mistakes ?? You know, we hear stories about people who got in early and made huge gains on a bet that this thing would go somewhere. Those who bought Bitcoin or Ethereum in the early days and held until recently multiplied their gains by hundreds or even thousands of percentage points... but what about the people didn't HODL? What about the people who spent it? I mean it is crypto currency after all... ??
Most people know about the guy who bought two pizzas for 10,000 Bitcoin (now worth hundreds of millions of dollars). In fact, if schadenfreude is your thing, you can even track the value of those pizzas in real time via the Bitcoin Pizza Index ?? You can't make this stuff up...
But the thing to remember is: he used Bitcoin as it was intended.
In 2010, this whole cryptocurrency thing was a still fresh idea, birthed from the whitepaper of a pseudonomous visionary. Bitcoin: a peer-to-peer electronic cash system. Digital money with no intermediaries to take a cut or apply arbitrary censorship, fraud-proofing built in, and a hard cap to prevent runaway inflation ??
Peer-to-peer ??
Electronic ??
Cash ??
Laszlo Hanyecz; that's the name of Bitcoin Pizza guy, and in a 2018 interview with Coin Telegraph, he said he did not regret his decision ?? Given that over the last several years Bitcoin has veered dramatically away from its creator's original intended use, towards becoming (what some might argue is a better use case) a de facto digital gold, it was not really something one could have predicted in 2010, and as such, it would be very unhealthy to dwell on that decision ??
This series isn't really about Laszlo Hanyecz—but like Einstein said it's all relative—because Laszlo wanted to experience a little piece of the future and so he made a decision that was not financially beneficial, but which provided infinite meaning in its significance. He was spending peer-to-peer electronic cash ?? This is a very powerful sentiment for a technophile, a futurist, like he and I both are: giddy enthusiasm at the idea of progress, at the experience of technology that pushes the bounds of what is and what can be ??
Perhaps I'm just saying all this to soften blow of the many foolish and expensive mistakes I've made since I began dabbling in cryptocurrency... ??
Perhaps. But my practice of mindfulness has helped me realize that all things are impermanent and that like Laszlo, I won't regret trading potential gains for the chance to experience the future today ????? Besides, if I can learn from my mistakes and teach you too, well that must have some value, right?
So let's get to it. My first Crypto Misadventure...
Admittedly, I have a tendency to to get overly excited and jump headfirst into things ?? It's my understanding this is a trait common in the successful—though a wealthy pedigree won't hurt either ??
I bought my first cryptocurrency back in February of 2021. I guess you could say I FOMO'd in. Every crypto was climbing higher and higher and I knew that whether or not the next decade would be volatile, I wanted to be along for the ride?? Back then I did not predict just how obsessed I would become with the entire idea of blockchain and decentralization.
I started reading how-to posts and watching youtubes. Those of you who've read my Rec'd series will know that I've come to the conclusion that there is more bad information out there than good ?? So you really have to weed through it.
One of the first things I learned is that you don't want to hold your cryptocurrency on the exchange where you bought it, because it's very common to get rugged which is to say to become the victim of a rug-pull scam, where the people behind a cryptocurrency project, exit quickly and take everything right out from under you ??
Not your keys, not your coins they said. Don't let them have access to your wallet's private keys, nor take custody of your cryptocurrency ?? It all felt a little money under the mattress for me, but I deferred to prevailing wisdom.
Unfortunately I still had a lot to learn ??
I downloaded a wallet called Exodus. Beautifully designed software with haptic feedback, striking skeuomorphic details, and live pricing indicators. I transferred in some Ethereum and some Bitcoin. The exchange I used, Newton covered the fees, so I was still oblivious to what was yet to come ??
You see, in a decentralized system, you have to ask yourself an important question: "who pays for the labour?" ??
Afterall, cryptocurrency runs on massive, always-up-to-date, distributed ledger, and confirming that the information on the LEDGER is accurate is a form of work ?? If you're last, you can always take a detour over to read my post Stake of the Cake.
Different blockchains use different methodologies for how to pay the workers (validators/miners) but they all involve some form of transaction fee. And they are notoriously inconsistent in their pricing ??
So as I was saying I had my crypto in my wallet and I was ready for whatever comes next... but like... what comes next? I guess I was supposed to HODL and just forget about the Bitcoin and Ether in my wallet for like 10 years... but that is sooooo not me ??
I soon discovered DeFi—Decentralized Finance—and I wanted to participate ?? I found out I could swap my Ethereum for any number of other coins including some that seemed to be climbing very rapidly. So I went to give this a try and that's when I discovered that EXODUS is not part of the Wallet Connect or Web3 ecosystem, so I couldn't use it with apps like Uniswap ??
That's when I discovered Coinbase Wallet. It's free, it has wallet connect, it's from a reputable company; what's not to like, right? So I did what I thought (until fairly recently) was the right thing and I sent myself 0.011494ETH (US$26.44 at the time of writing) from one wallet to the other. That transaction cost 0.0019425 ETH ($4.47) ?? My stomach sank. I felt so dumb...
And I never did anything so stupid again.
The End.
?? Not so much.
With money in my wallet and the ability to connect to dApps, I was ready to sign every smart contract that came my way (DON'T DO THIS BTW). Unfortunately what I quickly learned is that my $4.47 transaction was actually quite cheap compared to complex transactions like swaps, deposits, and staking. Every interaction had be paid for and at the current price, a multi step process could cost $40, $50, $60 or even more at that time ??
Too rich for my blood, I thought.
Then I discovered Index Coop. They make a bunch of really innovative products like the DeFi Pulse Index (DPI). This is just like what I focus on in my tradFi investing (ETFs/Index Funds). I had been going about this all wrong, I thought. I need to invest to "get rich slow" ?? At least to hedge against the chaos I was sure I would still be enduring with my experiments.
But where could I buy it? I couldn't afford to swap for it.
Looking around I found that there were actually some wallets that had the ability to buy DPI built right in. One such wallet is Rainbow... Do not download Rainbow;I won't even link to it. This app is so broken, that it was nightmare to do anything with. And I spent more time frustrated than having fun ??
Oh and by the way, I spent another $4.52 sending Ether from COINBASE Wallet to Rainbow Wallet ???>?
After failing multiple transactions in Rainbow due to the apps inability to execute any transaction at all, I panicked and sent my Ethereum back to Newton where I held it for a minute while I tried to ground myself before making any more mistakes ???>?
For the next little while, all of my interactions with crypto were custodied, either in Nicehash, in Newton, or in Cake. I needed to dive in to the details and learn more before I spent any more money on this. It was back to the drawing board ?????
In May, I finally got another Wallet. I decided to try Trust Wallet which is made by the world's most popular crypto platform, Binance. I had seen comments online that Trust is extremely user friendly. I now suspect those comments were from bots... ??
I have been doing a lot of experiments in DeFi which of course involve dApps, and I've found that the Wallet Connect implementation on Trust fails constantly. Furthermore, the gas estimations (transaction fees) are wildly off and so I made around a quite a few transactions, some of which stalled, where I spent $4-10 per transaction ?? I was just about to pay another fee to transfer myself money when I discovered the mistake I'd been making all along...
I could import my wallet with all my funds into another wallet. That's why they say to protect your private keys, because you can literally put your wallet into another wallet if you have the cryptographic keys. So I put my wallet into Metamask, the most popular Web-based Ethereum wallet, and while the setup wasn't 100% straightforward, I've had no unpleasant surprises as of yet ??
And I can't wait to tell you what cool experiments I've been able to do now that I understand more about the wallet and its role in DeFi ??
I could be full of regrets thinking about the money I wasted, after-all at least Laszlo got some pizza ?? I won't though, because what's done is done, and it makes for a funny story, and teachable lesson, so not all is lost.
And you know, trial and error is a big part of learning. I know more about cryptocurrency now than a lot people out there, and for me it's just the tip of the iceberg. I've experienced the possibilities and I've had a taste of the future, and I want more ??
So I guess this isn't last Crypto Misadventure...
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Image creadit: Bankrupt by Frey Wazza from the Noun Project
