“Of all the words of mice and men, the saddest are, “It might have been.” — Kurt Vonnegut
Though crypto is a much larger space now, from time to time when I meet new people I’ll get the question, “When did you get into bitcoin?” For most people, this is probably a pretty straight forward question. For me, it’s a little bit trickier. If my intuition tells me to take a risk as I size up the other person, I’ll say I found out about bitcoin in 2011. Otherwise, I’ll say I started investing in bitcoin in 2017. Both responses are true. Sometimes when people hear me say 2011, they’ll think I bought into bitcoin super early and assume I made a lot of money. It’s at that point that the story takes a long tangent.
I heard about bitcoin in 2011 from a friend. I was a drug dealer at the time and my friend mentioned that he had access to some very pure MDMA coming from Europe. As he was explaining the logistics for getting the MDMA to America, he began discussing this new payment technology we could use to securely buy the drugs anonymously (at least that’s what we thought at the time). I was intrigued. Money surveillance was the bane of my existence at the time. Almost all of my life revolved around cash due to the numerous regulatory agencies that made it extremely risky to move money through any conventional channels. The idea that there was a new technology that would level the privacy playing field got me very excited.
A few weeks went by and I finally got my hands on the MDMA. It was incredibly pure — far better than anything I’d come across in the US. The whole process made the wheels turn in my head. How much of this could I buy with bitcoin? What else could I buy? I sensed that there was a revolution in the underground, but all these visions of drugs, anonymous payments, and unseizable money would get tossed away when the DEA arrested me in 2012. A life of drug dealing had finally caught up to me and the next five years of my life were about to take a dramatic turn.
Bitcoin stayed on my mind from time to time while I was in prison. 2013 was a pretty significant year given the arrest of Ross Ulbricht and the take down of Silk Road in the fall. At that point, I was pretty pessimistic that bitcoin would survive the negative press or the strong association to money laundering and other criminal activity. A couple other guys and I followed the case from inside. Despite being sentenced and knowing how the justice system could go, we were still surprised at the life sentence that Ross received even though he had a sentencing guideline of 20 years. The judge wanted to set a precedent, and that precedent didn’t look good for bitcoin.
While I was following Ross’s case, another monumental event happened in 2014: the hack of Mt. Gox. As I watched the ensuing legal fiasco play out and the magnitude of the bitcoin supply that was involved, I thought for sure that bitcoin would finally die. The dramatic price decline reinforced this notion. It was only a question of whether it would be a swift death or a slow passing out of existence.
In my last year in prison in 2016, bitcoin was still alive. Its resilience had proven remarkable. The last skeptical thoughts I had towards bitcoin came that year when the Ethereum DAO was hacked. Having limited access to information, I didn’t understand enough to know all the differences of the DAO and blockchain security vulnerabilities, so to me it looked like a very concerning event. If Ethereum could just arbitrarily fork when they wanted to, what would stop bitcoin from doing the same? What would that mean for the value and security of the bitcoin blockchain? These were questions that brought me back to the thought loop that bitcoin may or may not survive.
At long last in January 2017, I was released from prison to a halfway house. With near full access to the internet, I was able to start getting caught up on the cryptocurrency narrative from 2012 onwards. It was an interesting time to come back to the world. Bitcoin had crossed $1000 — something that hadn’t happened since the bull run in 2013. I still wasn’t completely convinced that Bitcoin was in the clear from the existential risks that I thought were ever present. Nevertheless, by the summer of 2017 the shift in the public consciousness and rapid industry growth (thanks in large part to the ICO boom) convinced me that it was here to stay. And that’s when I bought in for the first time — not to buy drugs or hide illicit profit, but as an end in itself.
Coulda, Woulda, Shoulda
An interesting comment that I hear from people just getting into the space is how they wished they had bought in earlier than when they actually did. I went through this thought process myself from time to time. The bitcoin price was single digits when I discovered it. I had plenty of disposable cash. If only… but then I remember everything else that prevented me from making that decision. Almost no one at that time had realized a significant profit on bitcoin unless they were early miners or in cryptography mailing lists from 2009/2010. Similarly, buying in single digits in 2011 and seeing bitcoin break $1000 only to see it fall back below $200 wouldn’t have been the easiest decision to hold through. This is especially true when you consider the backdrop of Mt. Gox or Silk Road collapsing. Hindsight makes everything easier to evaluate, but corrupts the ability to see the probability distribution of outcomes as they are happening. Is it good risk management to not sell after seeing a 200x return because you’re holding out for a 2000x return?
The other thought that crossed my mind was what took me so long to buy in since I first discovered bitcoin? It’s easy to forgive myself for not buying when I was in prison, but even when I got out I was very cautious when I started to hear more people talking about bitcoin’s price. For one, I was jaded and extremely paranoid. I learned first hand how the federal government surveilled people’s every waking moment and how they worked with the Bank Secrecy Act investigators to permanently red flag people of interest. Part of me wondered if it were possible for them to have a backdoor into identifying who every bitcoin holder was, and then find a way to legally seize their bitcoin and other assets when it suited them. Experience told me that the stakes were high, but my experience was also my bias.
More broadly, how can we manage our biases that we carry from our past experiences so that we don’t miscalculate the risk of an opportunity that reminds us of past events? This is a very difficult question. People often get burned in an investment and it leaves a sour taste in their mouth, though it may have been many other factors other than the investment itself or even just bad luck. When a new opportunity rolls around for the same type of investment, they pass because of the strong association from the past experience. The only way to truly assess the new opportunity is to parse apart the past experience in detail. This task can be difficult for the ego, especially when your analysis reveals you were lucky, contradicting your narrative of the investment being a skillful decision.
Reframing bitcoin for me meant separating the risk and illegal activity that I had been involved in. Perhaps there were other potential futures in which hyperbitcoinization wouldn’t just mean a world where criminals, dissidents, and tech nerds played with magic internet money. When I made that shift, I realized that the evidence of what bitcoin meant as a financial instrument had existed even when I first discovered it. It was right there but harder to see, and I chose to see it’s value differently due to the circumstances of my life at the time. It was a healthy reminder to evaluate all probable narratives when making an investment.
Today my perception has largely shifted to a high degree of confidence that bitcoin is here to stay. All the ICO’s in 2017 promoting to be “the next bitcoin”, the forks, etc, have all reinforced the resilience of bitcoin. But I try to keep this new opinion in check. I think about how the adoption of some new technology or cryptocurrency could come along and make bitcoin obsolete or dramatically decrease the value it has accrued. I also think about how the federal government is a huge unknown in all of this. Having witnessed the power that they possess first hand, they are never to be underestimated. Only the naive and foolish think they can outplay an opponent who can arbitrarily change the rules of the game.
If there’s one thing that I’ve learned going through this journey, it’s that dogma tends to struggle in the face of a rapidly changing future. Yesterday’s meme is today’s bag holder. When your identity becomes too entrenched in an old thought pattern or attached to an investment, it makes it harder to process new information that could potentially change your opinion. The cost of not being mentally fluid is high. Staying balanced between past experiences and the uncertainty of the future is key to grounding one’s conviction and focusing on the process of good decision-making. There are an infinite number of ways in which changing certain decisions or events in our past would yield vastly improved outcomes in the present, but this is a fruitless exercise. The real strength is in taking these hindsight regrets and applying them to the future.
