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Investments In The Bitcoinosphere - Tallying Up The Damage

Back when one bitcoin was valued at around $100 USD, I thought maybe it would be a good idea to diversify my meager holdings into some other cryptocurrencies and cryptocurrency-related investments, and maybe even try my hand at a little day (or week) trading. So, I set about doing that.

Litecoin

My first altcoin investment was in Litecoin (LTC). After all, I was mining the things, and deciding to hold on to some wasn't a hard decision.

Result: Litecoin enjoyed some explosive growth right alongside Bitcoin, so it was a good call. The price was something like $2 each at the time I was mining, it eventually rose as high as $50 and since has settled around $201). It may have been the only good bet I made, thus far, as we will shortly see.

Primecoin

I was able to successfully double my money with a Primecoin (XPM) trade when it was near the bottom of it's range. Some time afterwards, I decided to buy some more, and ever since then it has been lower, and is now at about half the value that I paid. In other words, I broke even, assuming I were to sell what I still hold at a loss. I suppose this is acceptable, though it entirely defeats the purpose of trading in the first place. If I wanted to merely hold the same value, I could have just done nothing at all. Still, there are worse things than not coming out ahead- namely, losing dough.

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Solidcoin/Microcash

In my travels to various exchanges, including BTC-E, Vircurex, Cryptsy, and Bter, I came across mcxNOW. It had a coin i'd never heard of anywhere else, Solidcoin. Apparently it was a defunct coin, but it was being converted to a new project called ”Microcash” which was a non-bitcoin based cryptocurrency that sounded pretty promising. So I threw some bitcoinage into it.

Since then it has lost over 90% of the value I paid for it. At the time it was high, based on the developer's statements about actually, you know, actively developing it. At some point he decided to push it to the way-back burner due to needing to focus on the mcxNOW exchange itself. So, this represents my biggest percentage loss in all my experimenting with other investments. It's possible that one day the project will be revived and completed, and therefore see a recovery in price, but i'm not all that optimistic at the moment. A month is like a year in the cryptocurrency lands, and it's impossible to tell if there will still be a demand for such a thing as microcash by the time he gets back to actively developing it- there may be other full implementations of the same or similar idea already released by then. Not exactly as “Solid” a bet as I would have liked.

mcxNOW feeshares

The mcxNOW cryptocurrency exchange was introducing a feature which at the time had not been done before within the crypto ecosystem, something dubbed a ”fee share”. For each share you bought and held, you'd be paid .001% of the exchange's profits, every 6 hours (ie, 4 times a day). I missed the initial offering, but was able to get a few at a low price during the second release of shares. Over time, I bought a few more, at higher prices. Eventually, these appreciated all the way up to 1.0 BTC each. If I was smart, I would have just sold then, and taken the profits, but no, I figured maybe they'd be worth more, and held. Suffice it to say, they didn't hold that value, and came back down again. Then when the major public release of the bulk of the feeshares happened, they were offered at .4 BTC each. I picked up a couple more, expecting they would go to half or a full bitcoin again, eventually. It turned out that there wasn't actually quite enough demand at .4 BTC to sell all of them. In any case, I held all the way until the operator of mcxNOW (RealSolid) suddenly announced that he was so overworked and stressed with support requests (he had no provision in his code for staff or other administrators, he was and maybe still is a one man show) that the site was going offline for at least a month while things were worked out.

This announcement of course led to a fire sale that bounced the price all the way down to .06 BTC each, if I remember correctly. I moved all my other funds off the exchange, except Solidcoin and the feeshares, and decided to just hold on, come what may. That seems to be my general strategy, because of course, “you don't take a loss until you actually sell”, so, apparently I would rather ride something completely into the ground (with some chance of a recovery) rather than play the odds the other way and just take a loss and move on.

It turned out the exchange didn't completely go away- it stayed online with a much reduced set of tradeable options, namely Mincoin, Solidcoin, and feeshares. And, eventually, to some people's surprise, the mcxNOW exchange did recently come back online more fully. This time all coins were returned except Devcoin (DVC), which was replaced with Maxcoin, the Max Keiser spinoff altcoin. As of this writing, the fees remain at .2 BTC each, which has basically been the floor since the site partially came back online. With the Max Keiser and Stacy Herbert attention that mcxNOW has been getting on Twitter, and apparently an on-air mention of the exchange on Max's show (which has yet to actually air), I would not be surprised to see the value of these feeshares climb once again. After all, for all his shortcomings and volatility, RealSolid does actually run a pretty decent trading engine. It's fast. It works. It has yet to be hacked.

Of course, ironically I say this as the exchange is actually down for several hours now- apparently with the increased load of Maxcoin users, some kind of weakness has been exposed in the Amazon server's network capacity. At least, that's what RealSolid says. I'm not sure he'd admit it if it was actually his fault, but maybe. He's kind of a tempestuous, prideful Aussie, as far as I can tell.

CEX.io

i.telegraph.co.uk_multimedia_archive_01980_markets_1980043c.jpg The name of the site sounds like sex, but it's nowhere near as fun, because this has basically been a money-loser from the get-go. I suppose that can be true of having a reliable sex partner as well, for some reason they like money, too. Anyway, I decided to throw a single BTC at this Bitcoin cloud-hashing/trading site; at the rates of the time this equalled out to 15 GH/s. Which was great, until the price fell quite a bit just a few days after that investment. Already I was in the hole, but I might as well keep it hashing, now. Eventually I cottoned on to the idea that the price was going to plummet again, after the next difficulty change of 26% or whatever ridiculous number it was. So I sold out, and waited for the drop. Eventually it came, and I bought back in for 18 GH/s, but this was too early, because it wasn't quite done dropping just yet. As it currently stands, I am down at least 30% on my original BTC, and with the diff and price changing like it has been, I will never see a ROI (Return On Investment). Instead it is looking like a LOI (Loss On Investment). This might be one case where I eventually just bite the bullet and pull out to stop loss. Very disappointing, to say the least. And I thought God lived in the clouds…

BTCJam

BTCJam.com is a peer-to-peer lending site, basically the only functioning one for Bitcoin at the moment. I started making some small contributions to high-rated borrowers' loan requests on the site to get a feel for things, and it went pretty OK. A few little hiccups, here and there- misleading loan terms that ended up being a 60 day term, rather than 30. But nothing too major.

But I soon re-realized that humans are damn unreliable creatures. First, an A+ rated borrower failed to pay on a loan that seemed a sure thing, due to health issues and medical bills. He may still come through with repayment, who knows, but I won't count on it. Another small loan fell through due to circumstances on the borrower's part, which he attempted to solve by gambling, further increasing his losses and decreasing the chance that i'll ever see the 5 bucks I lent to this internet stranger.

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At one point I got a bit greedy, and against the voice saying “Hey, wait a minute… this might not be a good idea. This could be a long con”, I re-invested in some 10% 7-day loans to a borrower for which things had seemingly been going rather well. Even as the first overdue loans began to pile up, he maintained communication about his listings, assuring it was a glitch with an international wire transfer. Eventually the “overdue loans” equalled 20 BTC, and strangely he kept up communication, saying he was close to having it all figured out and would begin repayment the next day. That next day came and went, and the next week, and some dude out there successfully bilked many, many people for the tune of many thousands of dollars. I don't hold out a lot of hope for repayment from this guy, but I find it exceedingly strange that he would bother to keep up appearances even after he had gone overdue on the remainder of his loans. Why assure people about your intentions when you can just be gone with the money? A strange thing; maybe by some miracle he will return, pay up, and have an interesting story to tell. The other thing that occurred to me was that perhaps he is dead, murdered for his BTC or cash in some far-flung eastern-European setting. I mean, have you seen Taken? Those mofos are crazy.

Total result here: more bad loans than good, in total I am at a loss. Until there is some way to actually hold people more responsible for their behavior, to have accountability for these funds, I don't suggest it, and will probably completely cease lending. Even the A+ rated borrowers will sometimes flake out, and browsing through the “notes” section, where people try to sell loans-gone-rotten at a discount, you will find many, many pages of toxic investments.

It would be great if this idea worked, but it doesn't seem to. I have heard there may be some kind of 'recovery specialist' for bitcoins, a sort of cryptobountyhunter, maybe that will be worth a look in partnership with all the other many users who have been JamScammed.

It's sad, really, this could be a great thing if people weren't assholes. Perhaps there is something to the old Shakespearean adage, “neither lender nor borrower be”2).

Other Blunders

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I bought some Worldcoin, and sold it for a 8% profit, right before it more than doubled or tripled in price. Fun times.

I mined some Mooncoin and sold it all off, shortly before it went up 5x in price. So that was great.

Selling Dogecoins at what turned out to be the bottom. Spectacular.

And a few other forgotten instances of minor loss.

Hindsight really is 20/20 though, and it seems nearly impossible at times to tell in the moment what will really take off, or what will utterly crash.

Bitcoin price goes up, so do the calculated losses

It's one thing to invest a single bitcoin and say “Okay, I am limiting my risk here to $100. Great”. It's another thing for BTC to shoot up 8-10x and suddenly you have the equivalent of a thousand dollars on the line. As the holdings increase in value, well, so does the risk, the potential losses.

If this has taught me anything, it's that instead of spending so much time and effort looking for other opportunities for investment gain, it's probably better to just be boring and HOLD. And it's sure as hell a lot safer, as long as you do that holding in a properly secured wallet.

Damn it man, i'm a miner, not a wolf

Clearly I should have just stuck with what I know, which is mining, and said screw the rest. Play to your strengths, right? Some people have extreme success with trading in and out of the altcoin markets- so those people should do that. Some people can play the US Dollar/Bitcoin trading game, and increase their BTC holdings with every market dip. Dangerous, but if you can pull it off, great, do that.

Me, I guess i'd rather just oil the cooling fans on a 7950 than worry about all the rest. While I may still play with small amounts here and there, I suspect it might end up being the same thing again; “Oh, I'll just put $100 into this thing here. What? The price of bitcoin just went to $10,000? Son of a bitch, now i'm suddenly risking $1,250?” Until that next price spike happens, maybe i'll go do something else with my life in the meantime, instead of trying to figure out how to be more profitable with BTC. Perhaps, just relax a little, and let Bitcoin do it's magic. It's not like there isn't any entertainment out there, we can watch people blow up expensive phones, these days. Or we can watch the original Bitcoin exchange implode.

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Investing | Cryptocurrency | Bitcoin | E-Currency


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