Which Altcoins Got me Rekt in 2017?
Biases to Watch Out For
Altcoin - Any coin that is not Bitcoin
The first cryptocurrency I ever held, was an Altcoin called Dogecoin. When I started investing in cryptocurrencies, they all seemed more or less the same to me, including Bitcoin. I didn’t always hold Bitcoin with great reverence. During the 2017 bull run, I did end up getting REKT1 with several of my Altcoin purchases. My losses happened for two reasons as far as I can tell.
My failure to understand the importance, and uniqueness of Bitcoin
My Greed and FOMO for Altcoin Gains
One of the main purposes of this letter, is to have you (the reader) learn something from my experience, in the hopes that you don’t make the same mistakes. If I can help you make better trading decisions that avoid losses, and lead to more gains, then I will feel a sense of accomplishment knowing my readers are better off by avoiding my mistakes.
USD is an Altcoin
The definition of an Altcoin is anything that is not Bitcoin. Originally, I thought that Altcoins just referred to cryptocurrencies that are not Bitcoin. Since then I’ve modified my personal definition of Altcoins to include FIAT currencies, and stocks. The reason why I made this philosophical jump is because of my progression in understanding of what Bitcoin is. Bitcoin is truly the only decentralized money that has ever existed. The only thing that comes even remotely close to it is gold. This switch in thinking is part of my goal to Go Full Crypto, and think of value entirely in terms of BTC.
It becomes sort of a funny exercise to think of government currencies as Altcoins. I began to trivialize holding CAD and USD the same way I would trivialize holding Doge. Altcoins typically have a use case, or a purpose. The purpose of CAD is to be able to spend money, and represent value anywhere in Canada. The purpose of ETH is to spend money on the Ethereum network. The use cases of Altcoins pale in comparison to the use case of Bitcoin; that is, to be the unbiased, global reserve asset.
Which Coins Got Me Rekt?
I fell for the value proposition of many cryptocurrencies that I pretended to understand. In general, I had five reasons for rationalizing buying Altcoins.
Unit Bias: Thinking that you’re getting a “Good Deal” on cryptocurrencies because the unit price of the coin is low. (Ex. XRP at $.025)
Use Case Bias: Thinking that the cryptocurrency fills a gap in the market.
FIAT Price Bias: Thinking that I would do well on an investment because it will increase in price in FIAT terms.
Innovation Bias: Thinking the project would be successful because they came up with an idea that I was not knowledgeable enough to understand was useless. Many people convince themselves that if the project uses lots of jargon, and tech terms, then they must have a good product.
Sunken Cost Bias2: Thinking that you need to continue with the investment, because you already have so much invested in it.
SiaCoin
SiaCoin is a decentralized file storage network. People would host nodes, and get paid for hosting other peoples content. I invested 0.1 BTC (Now worth $6k) into this in 2017, and I sold it in 2019 for about $8. At the time SIA was worth less than a penny per coin. I was able to own a million SIA for only $100 worth of Bitcoin. Good deal. I fell prey to Unit Bias, Use Case Bias, and Innovation Bias. There really was no innovation with SiaCoin, uTorrent already does decentralized file sharing for free. No need for a cryptocurrency. SiaCoin is one of the main reasons why I never invested in Ripple. “Cheap” tokens, controlled by a centralized entity, claiming to have significant innovations, and a unique use case. No, thank you.
DragonGlass
DragonGlass (DGS) is probably my most embarrassing coin to have invested in. The idea was that I could be rewarded with ETH by playing a video game. In the background, they were mining ETH and distributing rewards to the players of the video game. They would also mint NFT’s and distribute them as rewards to the players of the game. I invested .8 ETH (Now worth $1,600) into this in 2018, and now its worth $0 because there is no liquidity for DGS. Again, this was my Unit Bias, and Innovation Bias getting the better of me.
Peerplays
I used to work for Peerplays. I was involved in it from 2017 to 2018. Their core token is called PPY. It was a project aimed at providing provably fair gaming to the world through decentralized smart contracts. The problem was that it wasn’t decentralized, and there was no demand for the token. There was very poor marketing behind the project, and thus basically everything I invested in it is worth $0 today. To this day, I don’t know how much BTC and time I sunk into this project. If you’ve been reading my letters then you know that Bitcoin and Time are two of my most valuable resources. The main bias I fell prey to, was the Sunken Cost Bias. I implored myself to stick with the investment, even though I had already lost so much to it. This is a fallacy, because if the project sucks and is failing, then more of my time and money is not going to turn it around.
Plenty of Other Mistakes
There are about 10 other pretty big mistakes I made in 2017. It is only due to the magnitude of how much Bitcoin pumped that kept me in the green. You can take a look at my Ethereum Address and see the other terrible projects I invested in. To name a few, Envion (ENV), ALIS, CoFoundIT (CFI), and ChangeBank (CAG). Even though I’ve made these costly mistakes, I don’t regret them. Each bad investment taught me something about myself, and about the market I was investing in. If I didn’t get as rekt as I did on the markets, then perhaps I would still be blind to the ultimate potential of Bitcoin.
I Thought Bitcoin would Fail
I got really caught up in the hype of the 2017 crypto bubble. There were countless exciting projects, lots of promises, and few deliveries. Meanwhile, Bitcoin was happily chugging along, minding its own business, publishing 1 block every 10 minutes. I thought Bitcoin’s low transaction throughput, and its simple tech would be its downfall, but I was wrong. Those things are its strengths, not its weaknesses.
At the end of the day, Bitcoin offers something that no other project is able to offer. That is, unbiased, leaderless, inflation proof, censorship resistant, egalitarian money. You can’t create those features with 3rd generation blockchain tech. Bitcoin is what it is today because of a unique set of circumstances that cannot be recreated. Bitcoin’s value offering has increasing momentum because of its Path Dependence.3
Came for the Gains, Stayed for the Philosophy4
Ultimately, the decisions I made while investing lead me to discover the underlying philosophy behind Bitcoin. I came to cryptocurrencies because I wanted to make money. What actually happened, is that I started to learn about money itself. I was naive to think I knew what money was when I started, and even today, I admit there is much more to learn. In 2017, I made enough money to pay off my student loans, those were my gains. I could have left right then and there but I knew there was something deeper keeping me in the space. Altcoins attracted my attention because there was the possibility of getting rich quick. Bitcoin kept my attention because there is the possibility that it can actually change the world.
All The Best,
Keegan Francis
REKT Definition on Decryptionary - https://decryptionary.com/dictionary/rekt/#:~:text=Rekt%20is%20defined%20as%20completely,severely%20beaten%20by%20an%20opponent.
Path Dependence - https://www.investopedia.com/terms/p/path-dependency.asp