It’s difficult to not feel just a little bit insulted by articles such as this one calling people who are involved in Bitcoin a doomsday cult. Then I recently had some back and forth on this blog where I got called insane and told I just don’t get it. Sigh…
But it’s certainly understandable why people in the media and elsewhere would have a lot of concerns about Bitcoin, to say the least. It is also true that the risk of losing all your Bitcoin in some website getting hacked and going under is ridiculously high. I get that. And I get that for a lot of people it’s not the best idea to outright buy Bitcoin with fiat and hope to later sell at a higher price. I wouldn’t even recommend that for myself. The last time I bought Bitcoin with fiat was just so I could get my funds out of my exchange which had suddenly decided to not process ACH transfers, and I took a hit buying the Bitcoin back, then again when I sold it on another site because I really, truly, needed the fiat. And yes, I have also lost Bitcoin in a scam and a hacked website, so on a smaller scale I feel the pain of the Mt. Gox customers who lost their funds. I wouldn’t wish that pain on anyone.
That said, Bitcoin has worked for me, so well, in fact, that all the negativity truly astounds me in the sense that it feels like it’s about something else. How could it possibly be about the same thing which has worked out so well for me? But I know we’re all talking about Bitcoin. Or are we? This cognitive dissonance has led me to try to figure out what exactly it is about my story with Bitcoin that has made things work out so well even while so many are calling for and predicting the end of it.
Making Bitcoin work, part 1 was the beginning stages of trying to wrap my head around this, and I believe I covered some good territory with it, but I know it’s still missing some important components–some less tangible pieces of the puzzle of my Bitcoin success.
On one hand it really doesn’t matter why things are working out for me, just that they are. I also don’t particularly care what other people think of my Bitcoin involvement or whether or not I should even be involved. It really isn’t relevant that people, even very smart people, say “it will never work,” and “you’re insane to be doing this” when I’m making regular ACH transfers to my fiat bank account and paying off bills and debt with it.
On the other hand, since I’m not some major financial guru, nor have I landed on some great secret, I assume that if it can work for me, then it can work for others as well, and I like to see others prosper. I have been very candid about my negative and devastating experiences in the crypto world. I have been quite honest about the Bitcoins I’ve lost along the way and how these losses happened in the hopes that my readers can learn from my experiences and be spared at least some of the pain I went through. I’d like to be equally candid about my positive experiences for much the same reason. In short, I hope it helps someone.
Without further ado, here are some of the more ephemeral, less tangible qualities of Bitcoin which are important to consider in navigating its world.
It’s not just Bitcoin I mentioned in Part 1 that Bitcoin is really just another material object, but it turns out that isn’t entirely accurate. I do stand by what I said earlier about Bitcoin not being some sort of political or freedom movement (regardless of what some want to make it out to be). But it is also true that Bitcoin isn’t just a currency, and it’s not even just Bitcoin. It’s also a new and different system and way of thinking about and using money. Fiat money isn’t just money either; it comes with a complete monetary system as well. Bitcoin is a system, and that system is different from what we are used to. Successfully navigating in the Bitcoin world means making a careful study of the Bitcoin system and figuring out how to work with its particular quirks.
There is a Biblical principle that enjoins one to not put new wine into old wine skins, and I believe this is highly applicable to Bitcoin. In the world of fiat currency, there are principles and rules of the game which are followed by the successful. These principles are worth learning about and include a whole list of things concerning cash flow, personal debt, investments, budgeting and much more. This doesn’t mean that the same rules that work so well in the fiat world work equally well in the Bitcoin world. Some of those rules still apply, and some need to be tweaked or overhauled in the Bitcoin world. In short, the Bitcoin system is a different animal than the fiat system. It’s not necessarily better (determining that is for another article), but it is different. If you try to force all the fiat rules onto Bitcoin you’re going to miss things.
If you who are reading this have been very successful with fiat money, then think of Bitcoin as a new system to learn about, and be willing to put your old assumptions on the table. They are not all necessarily wrong, but you definitely want to discern which ones are wrong and which ones are still valid. If you have never quite made it in the fiat world, it may be that your quirky approach might work very well in the Bitcoin world, so give it a try, but also be ready to make changes as you learn.
Networking has immeasurable value This is actually a principle that is true in the fiat world, which is why small business owners spend a good deal of time attending various networking events as well as make sure they have a social media presence online. When it comes to Bitcoin, the value of networking is multiplied. It is also easier. Much of the value of Bitcoin itself comes from the relationships and collaborations people within the Bitcoin community have developed. People get chatting on the forum about something and before you know it they’ve developed something new.
I would highly recommend that anyone seeking to get involved in Bitcoin first register an account on the Bitcoin Forum and then spend some time there reading threads, meeting people, and learning. As with any kind of online meet and greet, you have to be careful and discerning about who you interact with. It will also take a while to sort out the truly productive from those who just spout off, but that will come with time. You’ll figure out where you fit in and what interesting and productive developments you can participate in. You can also begin to identify people who need and want something you have to offer and who are willing to pay you in Bitcoin for it.
The worst thing someone can do is wander over to some random exchange, deposit some fiat money, buy some Bitcoins and then sit on them without ever tapping into the Bitcoin community. The community is important, vital even, to one’s success. It was from my interaction with different people in the Bitcoin community that I knew as early as last June that Mt. Gox was a bad risk. Even back then people were talking about how difficult it was to get fiat out of the exchange and even going so far as to completely ignore as irrelevant the Mt. Gox price for Bitcoin. It was through the Bitcoin Forum that I learned some very important lessons about how Ponzi schemes really work (the Bitcoin world is rife with them, sadly), and it was through the community there that I learned about Devcoin and the Devtome opportunity. I truly wouldn’t be where I am today if it weren’t for that community and the wealth of knowledge, experience, creativity and opportunity contained therein.
Alt coins matter The day I began researching Bitcoin I saw a banner ad about earning Devcoins by writing for the Devtome, and I remember thinking that I couldn’t handle the learning curve for another cryptocurrency when I was so new to Bitcoin. I lost interest and returned to focusing on Bitcoin once I realized that the advertised compensation for writers would not be in Bitcoin. I’m glad that I did not keep that myopic attitude for very long, and that I did start writing for the Devtome and earning Devcoins.
People who are interested in Bitcoin ignore the alt coins at great cost. Bitcoin is what it is in large part because of the alt coins. It’s not that the alt coins have made any major changes in the Bitcoin system, protocol, code, or anything technical. It’s that the alt coins have enriched the Bitcoin ecosystem tremendously with their contribution. Alt coins do a number of things, but an important one is that they provide early adopter opportunities which are largely tapped out for Bitcoin. The days of mining for Bitcoin with a home computer are over; mining is now the domain of those with powerful and expensive application specific hardware. However many alt coins can still be mined with regular computers, and there are new ones being launched all the time.
Alt coins also improve on things that Bitcoin is not so good at. Bitcoin may be the first cryptocurrency, but it’s not the only or even the best one. As people have noticed things that Bitcoin simply cannot do, they have created alt coins which do those things. For example there is nothing in the Bitcoin protocol which allows for open source developers and artists to be compensated in any sort of sustainable way. But the Devcoin protocol does allow this. The Bitcoin network is highly energy intensive which many have complained means bad things for the environment, carbon footprint, etc. Next coin has a network which runs on entirely different technical specifications and was created to use much less computer power while still being secure. Next is a much greener coin than Bitcoin will ever be, and it’s not the only one. Some alt coins have been created specifically to serve a particular industry or to accomplish a particular goal. UFO coin aims to compensate people who contribute their stories of UFO sightings to a specific website (a bit like a Devtome with a much narrower focus). Doge coin is all about a popular Facebook meme. Franko and Aurora were created to serve specific geographical communities.
There are so many alt coins out there that for just about any niche use and market you can imagine there is likely to be an alt coin that’s perfect for it. If there isn’t already, there soon will be. It is true that many of the alt coins will ultimately fail, so I don’t recommend indiscriminately buying or mining any of them. But you can certainly learn about them, get to know who’s involved and in that coin’s community, and get some sense of the strength of its fundamentals. You may find ways to earn alt coins that are even easier than earning Bitcoins, or you may manage to get in on the ground floor of the next successful alt coin.
I have purchased a lot of Bitcoin over that past year, but back when Bitcoin was priced at $90, I was too cheap to spend $90 on an entire Bitcoin–I probably purchased a total of around 0.75 BTC when it was all said and done. The rest of the Bitcoins I own or owned, I have purchased with Devcoins. Ultimately I’ve traded my writing for Bitcoins, and then those for fiat. Alt coins matter.
Some alt coins provide their own investment opportunities. The major Next coin exchange, DGEX, is in the midst of its IPO. I bought some shares of it and am looking forward to weekly dividends.
How do I know about any of this? The Bitcoin community. You can’t put a price tag on that kind of value. And it’s free to join.
Don’t be afraid to fail Babies all learn how to crawl and walk pretty much the same way–trial and error. They try to claw and pull themselves into the right position, and they fall down, and they doggedly (and usually cheerfully) try again. Before long they become proficient and the parents now have a mobile child on their hands. Bitcoin (along with cryptocurrencies in general) is a brand new invention, and it’s still just a baby. No matter how much experience we may have (and I have a year of experience under my belt which is like ancient in this business), we are all still newbies in diapers. We’re going to make mistakes; we’re going to fail at times. But that’s how we learn.
Don’t be afraid to try things; don’t be afraid to lose some Bitcoin (or alt coin). Most of all, approach every new experience ready to learn. If it turned out to be a big mistake, learn from it so you don’t need to repeat it. Research all opportunities and do your homework but don’t get paralyzed in all the details; at some point if you haven’t encountered any major deal breaking red flags, then give it a try and see what happens. The crypto world is by nature risky right now, so you will never get anywhere if you aren’t willing to take risks.
Expect to work One principle which has served many people well in the fiat world is that hard work pays off. This principle has been refined to include working smart, so as to maximize the return on one’s hard work. This principle actually carries over into the crypto world. If you want to get rewarded in the crypto world, just like in the fiat world, you do have to put in the effort. There are essentially two honest ways to obtain cryptocoins. You can buy them or you can earn them. If you choose to earn them, you will be working. There is no way around that.
I believe going into Bitcoin or any other cryptocoin with the idea that you are going to make a tiny investment, sit on your butt, and be set for life once your investment grows ten thousand fold is the wrong attitude. It does happen, and the likelihood of it happening in the cryptoworld is higher than say, winning the lottery, but it’s an unrealistic expectation. If you have that expectation you will wind up putting a lot of pressure on yourself and your crypto assets to perform and that stress will ultimately be detrimental to your creativity and ability to take advantage of the truly great opportunities which present themselves. So be ready to work, whether that work is coding, writing, or even just informing yourself about various possible investments, and network with others in the community who are willing to work. In other words, treat this as a professional endeavor.
I recently was asked why would I do paid work in the crypto world instead of in the fiat world. The oversimplified answer is that there are different and in some cases better opportunities in the cryptoworld than there are in the fiat world. The market for your line of work may be very competitive in the fiat world and less so in the crypto world. I have also found that even with all the scams which take place, people in the Bitcoin community are generally a more trusting bunch, willing to conduct business on little more than a virtual handshake, and eager to delegate certain tasks so they can focus on others. There are also a number of people who managed to obtain Bitcoins for next to nothing and are willing to be generous with them. There is also much less regulatory burden so it’s easier to pay or be paid in Bitcoin. In my experience it’s been way easier to land good writing jobs within the Bitcoin community than it has been to land them in the fiat world. I also believe I would need to spend a lot of time (that I wouldn’t be getting paid for) networking and marketing myself as a writer in the fiat world, whereas much less of that goes a longer way in the crypto world. Some people for whatever reason are considered unemployable in the fiat world. If that’s you, working in the crypto world can represent a fresh start for you; it could also serve as a resume builder for someone who does want to eventually conduct business in the fiat world. If you are already successful in the fiat world, you can pick up a few extra clients quite easily by simply accepting Bitcoin. In short, for a number of reasons, it makes economic sense for some of us to hang out our shingle in the crypto world at this time, even with all the risks and challenges, and that’s a wonderful thing. The cryptoworld has given many of us a lucky break as long as we understand it’s not a guarantee. When you do start earning some Bitcoin, be sure to carefully consider the rest of my recommendations and do not put them all in the next Mt. Gox.
I still have the feeling I’m missing something, but it has helped me tremendously to be able to write about at least some of what has made Bitcoin work for me. I hope that some of what I’ve shared will be useful to my readers. Feel free to take any of this information and apply it to your situation as makes sense to you. I suspect, though, that ultimately, each person who does well in the crypto world is going to have a unique story, and a unique perspective. As such, my perspective should not be treated as the last word for anyone, or even for me. My perspective is also just one of many held by various people navigating this new and interesting world.
The main thing I want to communicate is this: Don’t let the bad press scare you away from Bitcoin. It may or may not be a good fit for you, but let that be your decision and no one else’s.