For those of us who live under a rock (I do), it seems that the "stablecoin" (quotes because it unpegged itself) UST (which I thought was a typo from USDT) had a huge crash yesterday (something around -70% in less than 12 hours).
If you go visit the terra luna sub on Reddit, you'll find plenty panic, people mentioning huge debt, people who lost up to $450K, or even redditors saying they might take their lives.
Whether accounts or stories are fake or not is up for debate, but the one thing you can be sure is that a great number of people are losing money that they did not own or was essential for their well-being.
It's extremely important that anyone heavily invested in Bitcoin follows the exercise of thinking what they would do if Bitcoin hit an all-time low in an extremely short time, to the point that would make them feel like "all is lost".
I am NOT saying that Bitcoin is going to zero. In fact I believe the opposite. But it may go low enough, for long enough (or fast enough) for many people to panic into thinking this is going to happen, and sell at an incredible loss.
So here's the exercise I do often when I am having negative thoughts (if you never have negative thoughts you shouldn't be here, becoming the reincarnation of Buddha is far more profitable that Bitcoin).
Alright, here I go:
Why am I invested in Bitcoin?
Obviously I want huge, or at least a positive ROI (and anyone who tells you they don't is lying) but this won't happen overnight, so I spend about one or two hours every day reading books about Bitcoin, tech articles, and pure Computer Science math. This shit is hard, I often want to ragequit.
I have nightmares with elliptic curves or mnemonic seed words. But I remind myself the reasons why I believe Bitcoin can bring a big change to the world. No one knows how positive it can be but we can rest assured that the current fiat system is absolute crap for the 99% of us, so the bar is set very low.
If I lost all my money (Bitcoin suddenly disappears, someone steals my keys or points a gun at my wife and tells me he knows how much I have and expects nothing less), what happens?
I have a stable job, pays well enough so that I can start stacking again or getting my savings back in place. I have two children, so I need to take finances seriously. We have great social security. It would be a very shitty situation, but it won't be life or death. I'll be able to perform normally after a weeks.
I don't own a house, a car, and the most expensive thing on our rental apartment is a US $1,000 sofa that we bought (I might sell it for Bitcoin, wife might get really pissed though).
I don't have any debt, stock, bonds, and my last CD (3% interest rate lol) is expiring soon -- as soon as it does it's going to my Bitcoin stack.
If Bitcoin crashes for long enough to make me doubt, would I feel it's still worth it?
Hell yeah. All the learning has put me on a higher level as a software developer: cryptography, math, security, privacy, anonymity, reading about countless hacks, best-practices, etc. I am learning rare and valuable skills, that can let me find great jobs with lots of flexibility like the one I have now.
If you're in Bitcoin for the wrong reasons, you might leave for the wrong reasons, and leave in the deep red.
Let's face it, if Bitcoin crashes, our chart-reading skills won't transfer into a well-paying job (alright alright, unless you live in Manhattan).
Just few days ago a friend panicked because Bitcoin and his "diversified crypto portfolio" went down like crazy, and so did tech stocks. He's basically hiding under his blanket, not knowing where to go, helpless, and not being able to function well (he is heavily invested).
All while I am secretly hoping more people sell and I buy cheap.
Enjoy your morning/afternoon coffee!
NOTE: Originally posted this essay on reddit only to get it immediately banned on /r/bitcoin. Here I was trying to make good arguments in favor of Bitcoin ;(
Great post! Yes and always invest only what don’t need to live. Slow and steady wins the race.
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You basically just described my situation and perspective, except I have 3 kids (and a 4th on the way).
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congrats! If two feels nuts, I can't really imagine 3 +! I used to think it would be n * 2 = n2, but it's more like n².
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Originally posted this essay on reddit only to get it immediately banned on /r/bitcoin
Reddit continues to suck. I'm guessing the mods saw Terra or UST and your post got deleted or banned due to the "no altcoin" rule. But when you are contrasting two things, how do you do that without mentioning the other thing?
Anyway, ... thanks for sharing this!
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I reworded it and it got through fine, yeah, it was just immediately deleted by a bot, I removed all wording o terra/ust/etc. But the feeling wasn't the same. oh well!
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First, I would also add that it's valuable to read books related to Economics - once you do you will be more fearful of the historic failure of ALL fiat-based economies vs. fearful of a Bitcoin dip.
Second, read old reddit posts when people shared similar fearful sentiment when Bitcoin crashed to $70 around 2013.
Third, would you feel more comfortable investing in stocks right now (https://www.multpl.com/shiller-pe)? I have a bunch of money in ETFs and can barely understand wtf they're invested in.
Finally, even if Bitcoin does crash to zero, Bitcoin is arguably the first true free market with global reach. I am happy to contribute funds with hopes that this experiment become successful. If it isn't, it will be a good learning lesson for the next evolution in money.
'HODL' will be a 20+ year journey. Enjoy the ride and learn as much as you can.
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I'm also casually reading economics, now reading the Big Short. But I don't understand much so almost any book would influence me, hence I started to go heavy first on tech as a first barrier of entry for me.
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Everyone always asks me if what if it crashes I stick to my guns of 1 sat = 1 sat tell them if the dollar were to crash right now we could then use 1 for 1 sat we would still have a unit of account usually that'll speak to them then they start talking gains shits coins etc....Just stick to old school austrian sayings like you don't get rich over night....even though now a days it is possible thats not how u build life changing wealth...If it crashes I'm fine I've shifted my unit of accounting already and believe the bitcoin community is that strong can already live on a btc standard and would support each other...My wealth is unf**kwitabble and its an amazing feeling... and if i lost my bitcoin it was my fault I wasn't secure enough with it high risk high reward y your money in the bank is so stagnant and bitcoin jumps im taking a higher risk holding my own wealth rather than putting it into an insured bank that will only give me like .2 percent back...if that...yikes...
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1 bitcoin = 1 bitcoin, don't care about ROI, it's just a nice to have byproduct.
The game is not about ROI or fiat value of your stack, it's about increasing your stack.
But yeah the exercise that you did is essential. The way I see it is to 1) diversify your income streams, 2) put all your savings from those streams in Bitcoin, and 3) once you have a big stack, consider selling and diversifying slightly (5% max imo) into biz / real estate in case shit hits the fan.
Meanwhile stay humble, stack stats, and continouly learn about Bitcoin!
Don't waste your time and energy with shitcoins. You have so much to learn about Bitcoin that you will need ate least 10 years to catch on (if you entered into Bitcoin in 2020). Start now and ignore all the noise about x and y shitcoin.
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