Do you want to be a bitcoin trader? It's not glamourous: Reflections from a new-ish trader

Hello steemit,

I am a bitcoin trader. Peer-to-peer (p2p) bitcoin trading and day trading bitcoin. I started doing this 2 1/2 months ago on-and-off but have been largely committed to it in the last 3 weeks. To date my modest investment in bitcoin has more than doubled through the process of selling bitcoin at margin and then buying back into bitcoin and then re-selling again. Vast majority of my profit being made within the last 22 days. I survived the Bitfinex fiasco from 18 days ago. I'm not making a full-time livable income off this. But I bet I make more profit than a lot of the low-margin churners out there who burn through their bank accounts and get scammed and I know I work a lot less than they do. Given my success in a short amount of time, what I have to say has some merit.

My impression of the business thus far is that there may be too much over-saturation of aspiring pro bitcoin traders. And so many of them engage in a "race-to-the-bottom" with their prices to one-up each other. I see traders selling at less than +5%, +6%, +7% above stamp P2P while accepting moderate-to-high risk payment methods like email money transfers (EMTs). While I stopped trying to compete directly with those kinds of traders and charge +20-21% now for the same method. Charging +30 to 42% to micro-transactions. After paying the 1% escrow fee on these p2p bitcoin trading sites, the low-margin traders are left with making like only $30/BTC profit. How is that worth anyone's time exactly? There are only so many people out there who want to buy bitcoin p2p at-margin right now. You have to churn considerable volume at those rates to make decent profit. 

And it's not just that low-margin churners don't value their own time. They don't shelter themselves from market volatility either. Bitcoin is a digital commodity. Commodities, like petroleum, gold, silver, etc. are volatile in nature and bitcoin is no different. If you are an aspiring pro trader, you always need coin on hand. If you dump your coin for so cheap and then the price goes up afterwards by the time you re-stock on coin (and when you churn at low-margin, you need to re-stock on coin far more frequently), you just fucked yourself. And if the price of bitcoin goes down from the time that you bought those coins, your low-margins provide no shelter. The Bitfinex fiasco that led to a huge downward price drop screwed over a lot of low-margin sellers. And now that the Bitfinex thing is behind us, those low-margin traders are back again...

Oh and let's not forget the scammers. When you sell at low-margin, one scam can wipe out a shitload of progress. I am lucky because I got scammed nearly 7 weeks ago for nearly 0.4BTC by a Russian identity thief pretending to be a domestic buyer. I got banned from the EMT network. My bank must have felt sorry for me because I came forward and was honest about everything. That I was trading bitcoin and got hit by a scammer (pro tip: DO NOT LIE TO YOUR BANK. They frown upon trading bitcoin with your bank account because of the high incidence of fraud related to selling bitcoin. But they hate liars even more). They took the hit for me it looks like and they didn't shut down my bank account. I remained banned from the EMT service though so I took a 3 1/2 week break from trading to do some soul-searching. 

I was ready to quit P2P trading for good because of all the bullshit scamming and oversaturation of wannabe bitcoin traders encouraging a race to the bottom. Making bitcoin trading unprofitable. I get it. Customers themselves are pretty broke these days. Wages are not keeping pace with inflation at all. Customers don't have a lot of disposable income to spend back into the economy and they are cost-conscious. All the Quantitative Easing has went to Wall Street, not the working person. Not the reserve army of labour that has been effectively shut out of the workforce. That's why people are out there voting for Donald Trump and Bernie Sanders. Two different wings but both feed off the same working-class frustration. Their situation sucks and they are pissed off. 

I did get a new bank account and decided to get back in there though. It's difficult to heed the siren call admittedly. I like being a bitcoin trader way more than any 9-5 job I ever had and didn't want to give that up. Getting scammed was a learning experience. 

The most important thing is not even getting scammed out of the money. The most important thing is to avoid getting your bank account shut down for receiving fraudulent funds or for triggering one of their flags because you're doing so much volume. High-margins provide cushion for scam losses and lead to less customers. Less customers = more time to vet customers = less scams. You cash deposit sellers have to be careful too with all the Man in Middle (MiM) scams. Having your EMT feature disabled is also a pain in the ass because it's 2016, people are lazy and prefer the convenience of getting their bitcoins without having to get out of their pajamas. Have you ever seen the line-ups at a bank when you want to do a cash deposit with the teller? Ain't no one got time for that shit in 2016.

Do not take short-cuts with identity verification for reversible payment methods (bank/email money transfers, PayPal, Serve, etc.) If you accept cash deposit, prepaid voucher/cards, ask for receipt proof showing they paid in cash, watch out for MiM scams, etc. Some sellers will cut corners from time to time because they are desperate for money. The customers whine that identity verification is too intrusive. "Respect my privacy!" What privacy? EMTs expose their name to the receiver anyway. lol. And then boom, that customer ends up being a scammer and eats the trader alive. 

It's better to be respected than liked in this industry. Bitcoin traders like to think of themselves as legitimate businessmen and buy into the bullshit "the customer is always right" mantra. That kind of mentality is for losers. A real entrepreneur doesn't waste time on low-rent low-class customers who are more trouble than they are worth. You think banks and insurance companies give a fuck about high-risk clients who whine, bitch, moan and are more trouble than they are worth? They will drop them like a bad habit. The truth is we have far more in common with drug dealers than we do a ma and pa shop. After all many of our customers are likely using bitcoins to buy drugs. And even ma and pa have to deal with thieves once in awhile.

Most of our customers are buying bitcoins to do something illegal, grey market or something the bankers don't like: buy drugs, gamble or purchase "escort" ads on backpage (which is a nice way of saying you suck cock and get fucked for money. Maybe guys pay you for the privilege of taking you out on a date once in awhile but that's the main course. lol). Let's be honest with ourselves. Real speculators or people who use bitcoins to buy goods and services they can buy with fiat don't buy at margin p2p. Except maybe in special circumstances. Drug and gambling addicts are degenerates who won't hesitate to steal from you in order to get their fix. The type of men who see prostitutes are disproportionately rude, smelly, creepy, misogynist, etc (Yes I know, NAJALT - Not All Johns Are Like That (R)). So if a woman is so desperate for money that she's willing to deal with potential physical abuse/rape day-to-day, you really think she'd have any moral qualms about stealing from you out of that same desperation for money? Hell some of our customers are probably buying bitcoins to get stolen credit cards, fake IDs to run scams and shit like that too. Shady people. 

If you're not a hard motherfucker, you're gonna get eaten alive. Bitcoin is about survival of the fittest. Whereas in the fiat world anyone who isn't careful can just be like "oh I got my credit card/bank account stolen!" "I had my identity stolen!" "I got scammed!" "Bankers, police, big daddy government, protect me!" And protect them they will! And that's all fine and good. Whatever. I'm not opposed to fraud protection in the fiat world. Some people fucking abuse that shit though and take advantage of customer protection laws. Credit cards and bank accounts are not fucking secure. Identity theft is easier than you think. And whose going to be left holding the bag in cases of fraudulent purchase of bitcoins? YOU. Mr. Bitcoin trader. Because unlike fiat, bitcoin transactions can't be reversed!

TL;DR: Don't sell at low-margins or else you're gonna get burned and you're fucking over p2p for not just us but yourself too. Everyone wants to be a fucking entrepreneur these days. But the economy is not strong enough to support every entrepreneur. It's a tough business. Don't get into trading thinking it's easy. It's super tough and risky. Do proper identity verification of clients for email money transfers, bank transfers, PayPal, Serve, etc. Don't cut corners out of desperation. Make sure the person you are talking to online is the same person who is paying you. A disproportionate number of people who buy bitcoins are scumbags who lack moral integrity and therefore wouldn't hesitate to steal from you. Try not to get flagged by your bank's risk management department. Don't use your everyday personal banking account to trade bitcoin in case they shut you down.