Welcome to Crypto, Bitches

Blog Post 6/15/17

This latest bull run has brought in a lot of fresh blood. A lot of people quitting their jobs because they “discovered” mining, or thought they could play the market with some capital. While mining is quite profitable over the past couple months and I do wish the best to the newly initiated and naive, I hope today is a wake up call to a lot of people: Crypto is not for the faint of heart. You gotta be prepared for 25%+ portfolio swings in 24 hours. As the saying goes - DO NOT INVEST MORE THAN YOU CAN AFFORD TO LOSE. For those getting into crypto now, pump the brakes, absorb more information, and learn the history of the space to prepare yourself for days like today.

Alright now that thats out of the way, what caused this correction? Even I thought this was a bit premature. Well, there are three reasons floating around right now and if you were aware of none of them, then I hope you’re not blindly investing in the space because you had FOMO. For every millionaire story I read about, I read two “I lost it all” stories.

1. Pending Congressional Legislation

It appears the US is seeing all these new crypto millionaires as a threat to their existence, or funding terrrorism, or something. New draconian legislation which includes language that puts you in jail if you have 10k cash and not filling out their form. It also places KYC/AML language on all “issuers” of digital currencies. It’s obvious that Congress has no idea how Bitcoin works, but it may render mining pools, exchanges, even hardware hosting companies subject to this sweeping law looking to further control capital in the US. Thank you, government overlords.

1. Upcoming Potential Bitcoin Chain Split

If you’re invested into crypto, yet don’t know what a hard fork or a soft fork is, you should probably re-evaluate your portfolio. Bitcoin is reaching the climax of its 2 year+ argument over how best to scale the chain. It has already lost a number of prominent developers over this issue. Yesterday, Bitmain, the largest Bitcoin miner supplier, announced that if UASF were to go through, they’ll just go ahead and fork off. Bitcoin may be split into Blockstreamcoin and Bitmaincoin. It’s official that everyone lost the block size debate.

1. ICO issues within ETH

For some reason, everyone and their mother heard about Bancor raising $150 million in three hours, which I thought was a mildly interesting project that aims to solve liquidity and exchange centralization issues. I thought maybe it was just over my head, but then I read this. Regardless, the hype around the ICO was real. So real in fact, the number of people who tried to get into the ICO had rippling effects throughout the ETH network. This begs a number of questions: 1. What is the best way to host an ICO? 2. Could there be perverse incentives for miners to buy ICO tokens to attempt to collect oversized block rewards during large ICO’s? 3. Will there potentially be a liquidity issue with ICO’s keep locking up Ether? We don’t really know the answer here, but it’s an interesting thought experiment.

June 15th, besides being my mother's birthday (Happy Birthday Mom!), will go down as one of the first big negative swings in price we saw since this new influx in crypto noobies, and no more. I doubt it will be known as the day the bubble popped or the largest swing in crypto moving forward. This is just the nature of the game, and if you want crazy! gains, you gotta be prepped for the swing against your position, too. However we may recover quickly; we're in a period of large-scale price discovery absorbing this new userbase. Stay glued to your screens!