How not to fail at Crypto (like I did)

First, let me start by saying that I am not looking for any sympathy by sharing my story. I’m hoping to warn others of the risks and hope to help them avoid some of the pitfalls involved by sharing my experiences. If you don’t feel like spending the time to read through this and want to jump to the lessons learned, just scroll down to the TLDR; section.

I am a professional developer with over 25 years of experience including my first foray into crypto over 3 years ago with the (now defunct) Silkcoin wallet as part of the community lead bid to revive the failing coin after the original devs abandoned it and left tons of people holding the proverbial bag. During that time we introduced several new “in wallet” features including real-time exchange pricing and graphs showing order depth and even provided currency conversion based on the latest prices so owners could see the real world value of their investments. These features were very well received by the community and helped us gain tremendous momentum. We wanted to reward all of the community members who stuck with us through the rough times by introducing a new coin (DarkSilk) based on, at least for the time, newer technology and allowing current Silkcoin owners to exchange their old coins and get a fresh start.

During this same time period I was introduced to Ethereum and spent some time reading through the white papers, but it seemed so different from existing crypto currency that I kind of blew if off. After all, why would someone want to pay just to be able to have block chain transactions and “smart contracts”? Ether was not available for sale at the time, and I thought that the pre-ICO valuations of $1 seemed a bit high for something that was not meant to be an actual currency. In my mind, it was a much better move to put $1000 into a GAW Miners Scrypt ASIC rig because who wouldn’t want to own a piece of hardware that made money out of thin air?!? Looking back, it gives me a better sense of what Laszlo felt like after paying 10,000 Bitcoins for $25 worth of pizza in 2010.

Fast forward about 12 months. As we were finalizing the DarkSilk project, I moved all of my Silkcoins (almost 1.5 million of the 42 million in circulation) to Cryptsy to take advantage of the price fluctuations and increase my holdings. I’ll pause here for a moment so you can catch your breath after you stop laughing… Needless to say, that didn’t work out as planned because Cryptsy ended up insolvent when the owners froze everyone’s wallets and, according to the New York Times, fled the country to China. Sure there is a class action law suit against Cryptsy, but the money recovered, if any, will be based on fair market valuation prices as of November 2016, so maybe I’ll get a coffee out it when all is said and done. And I’m not talking about a Starbuck’s coffee; it will be a small, black Dunkin’ Doughnuts coffee if I’m lucky; good thing they offer free cream and sugar!

Speaking of sketchy exchanges, Poloniex is looking like its shaping up to be the next Mt.Gox/Cryptsy 2.0. I’ve lost dozens of Ether on Poloniex because apparently they have an unpublished policy that if you try to move too much money from your account, even if you are under your daily limit, they will put a hold on the transaction that requires “Manual Approval”, so your coins get stuck in a perpetual “Awaiting Approval” status. Open a support ticket and all you get is the automated email saying that someone will resolve your issue as quickly as possible. Beyond that first email, you never hear another word. If you have a few hours to waste, you can try calling their corporate office (number is not easy to find, and if you want it msg me), but I have yet to speak to a living, breathing person.

So yea, I’ve obviously lost tens of thousands of dollars in the Crypto world, but it’s not all bad. After all of that, I got out of the Crypto scene for a while and only recently decided to jump back in with both feet. That’s when I found STEEM and EOS. Again, I’m sharing my learning experiences with the community with the hopes that at least one person can benefit from my mistakes and not have to go through what I did.

TLDR; Lessons Learned:

1. Do not trust exchanges; not even the ‘good’ ones. They are not banks and, just like most of us, are only in it for the profit/gains. Keep your crypto in your own secure wallets and make sure you have them locked down and backed up. Preferably on an air-gapped medium in a secure location; such as a thumb drive in a fire proof safe or even a hard copy in a safety deposit box.

2. Do not waste your money on hardware for mining, unless you can use it for multiple purposes. For example, don’t buy a bunch of high end graphics cards unless you’re a hardcore gamer and can actually use them for something worthwhile after you realize you’re not getting back your investment through mining.

3. Trying to time the markets for big gains is like a white dude trying to Double Dutch. Some white dudes can own it, but most of us don’t have any sense of rhythm and simply lack the required coordination to succeed. Chances are you’re going to end up doing a face plant; it’s a fact and I’m certain you can find plenty of funny videos online if you’re bored after reading this and need a good laugh! Crypto is still in its infancy so there is still plenty of money to be made using a buy and hold strategy.

4. Not every new coin has the potential to make you a millionaire. Even if it has solid developers with good intentions. Lots of new coins are just rebranded and are released by people looking to “get rich quick”. In order for anything new to be successful, it needs to be innovative like ETH, STEEM and EOS. If in doubt, opt out.

5. No matter how ‘different the next crypto coming out is, don’t ignore it just because it doesn’t fit the regular mold. Take your time to fully research and make your own determinations based on its ‘intrinsic’ value and possible uses. Remember, even Bitcoin was an outlier in the beginning.