Why I Was Not Early To Crypto

I made my first Bitcoin purchase in Dec 2020.

It was a $200 transaction but well, we all have to start somewhere, right? As my knowledge and conviction in the space grew over the past half a year, I have since allocated more capital and even started DeFi farming.

Special thanks to Turtle Investor, Unintelligent Nerd and Babylonians who have reached out and were always available to help answer some of my noob pesky questions. That helped to speed up and smoothen my learning process a lot. I am definitely open to the guidance of other senpais. TIA!

If I make it, plenty of credit will go to them but if I fail, it is definitely my own fault in spite of their efforts. #wokeattitude

Maybe I am not late, but I definitely do not consider myself early to crypto.

I am definitely not deluded on hopium. As we go deeper into this bull run, it would likely take an increasingly longer amount of time for someone to 5 or 10x their capital.

The valuation is also completely different compared to even just one year ago.

I do not like to indulge in What Ifs or If Only (they can be really toxic), but I do think there are some lessons to be gleaned from this missed opportunity to be earlier in crypto.

You could call them reasons, but they might as well be excuses too. 

Inept At Executing Low Probability, High Return Trades

Fool me once, shame on you, fool me twice, ……

Crypto is not the first time I have been presented with an investment opportunity drenched in potential alpha. A decade, or even 5 years ago, I was not alert to the inevitability of Big Tech, a time when they were not so big yet.

I only invested in the likes of Facebook, Tencent and Google two to three years ago, when it was obvious they were becoming monopolies. I only managed to 2x instead of 5x or 10x my capital.

Not grabbing the bull by its horns the second time round has led me to realise that I have a blind spot towards low probability, high return opportunities.

For example, if the bet only has a 30% chance of success but provides 5x the rewards, a rational person should take the bet. I thought I would take such bets, but sadly, history has proven me wrong. In reality, I have only been comfortable with bets that had a >50% chance of success.

Maybe this is a manifestation of poverty mindset but I am quite determined to rise above it going forward, especially since I have finally built some form of a financial safety net for myself.

Speculation And Froth At Top Of Rabbit Hole

Even right now, the picture painted by mass media on the crypto space is not exactly flattering. It is filled with stories and headlines of how basement dwellers took great risks and “all-in” on one coin to accumulate a million buckeroos.

Or maybe just like yesterday, they will emphasise on how Bitcoin has dropped 30% from its ATH, omitting the fact that it is still up 350% from a year ago.

Such narratives turned me off a few years ago but well, my loss is definitely someone else’s gain!

Too Much Deference To Buffett And Munger

If you know/understand the workings in the crypto space, you will appreciate the not-so-subtle age discrimination present.

When I reach 70, I would not trust myself with my private keys, seed phrases and it’s simply not tenable to delegate/outsource all these to an assistant. I will probably have to leave crypto and go back to tradfi.

So honestly, one simply cannot blame Buffett and Munger for their lack of endorsements. The incentives are not aligned in their favour.

A few years ago, I took in their advice against crypto without reservation. Hook, line and sinker.

I failed to understand that what is not suitable for them might just be the instrument I need to propel my wealth to the moon. As they always say, the world is always moving towards the young. Ignore this at your own peril.

Lack Of Curiosity

It is nice and comfortable to hide behind the backs of legends like Warren and Charlie. But that’s absconding my own personal responsibility.

So this lack of curiosity accusation is pretty scathing, especially since I am both a millennial and an educator.

I relied on the crowd to make a judgment, lacking both an open mind and intellectual curiosity to find out more about cryptocurrencies then. I was not bothered to hear the other side of the argument before making an informed decision to pass this opportunity up.

At least until the pandemic and subsequent QE of all the national governments of the world in the past year. There is no going back. The Pandora Box is truly opened.

Too Comfortable And Lack Of Ambition

This is probably linked to the first reason/excuse.

I rationalised that I did not have to take risks in crypto a couple of years ago because I was on track to achieve Financial Security and a Lean FIRE before 40. Just by investing in a basket of US, Hong Kong and Singapore stocks that returns an annualised 10%.

And then possibly Financial Independence ($2m or thereabouts) before 50 by extrapolating my savings and returns.

I neglected to take into account that my identity could evolve over time and of course, some lifestyle inflation.

If I have a desire to reach Step 5 of the Wealth Ladder, I will require higher returns from at least a portion of my portfolio. Full stop.

Hopefully, I am not too late in making this paradigm shift. Cos who knows, maybe me writing this post is a TOP signal. =p

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Thanks for reading.

To thank the three writers (mentioned earlier) for their help as I go down the rabbit hole, I have decided to do a book giveaway in their names and of course, benefit readers of the blog at the same time.

The book that I am giving away is “Post Corona” written by Scott Galloway. It is especially apt as Prof Galloway’s November 2020 prediction that Bitcoin was going to hit $50k in 2021 made me FOMO-ed real hard. I stopped sitting on my ass and opened my Binance and Gemini accounts almost immediately. #Thankfully.

There are 3 copies to be given away and all you need to do is leave a comment on my Facebook post or write me an email (by 23 May 2021) on why you are looking forward to read this book.

Such giveaways will be done periodically so do look out for the next one!

26 May 2021 Update: 

For all those who wrote in or left a comment, the chances of winning the book was rather high, at ~30%. It was difficult to pick, so I used a random name generator to do the giveaways. 

The three winners are:

1. Jac
2. Xiaocong
3. Weibin

Congrats!

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Thoughts On Cryptocurrency And Freeganism (Dec 2017)