The drama factor

It’s been quite a while since I’ve updated here, but I’ve stayed involved in the cryptosphere the entire time. In the past six months or so many new altcoins have joined the scene. The NEM platform and associated XEM currency finally did launch (it only took a year!). The SEED coins I worked so hard to mine and have been staking ever since appear to be well on the way to becoming a dead coin, as BitTrex, the only trading platform supporting it, finally dropped it due to low volume. I keep my wallet unlocked in the hopes that the new developers will succeed in reviving it someday. At the very least SEED served as a valuable learning experience on how Proof of Stake (POS) really works. A few days ago I bought a million PIGGY coins. Since they were only eight or nine satoshis each that million cost me less than twenty dollars. PIGGY has potential as it is positioning itself as the first truly child friend cryptocoin. The QT wallet is very cute and the official faucet quizzes the child about some fact most children learn in grade school. And it stakes very well–my million+ PIGGY coins are churning out around 90 new ones a day. This has potential for paying out my children’s allowances one day. I managed to get in on another Proof of Stake coin set to launch this July. Neucoin is positioning itself as the big one, and if all the ads on major crypto news sites are any indication, it has the marketing budget to make sure of it. When you read the details you find founding members with a lot of clout in the real world. I didn’t buy any, but I did manage to score several thousand by providing some requested feedback in the form of a couple surveys. I’m looking forward to that launch.

And then there’s Paycoin…

Paycoin is the brainchild of GAW Miners. If you recall, GAW Miners is the company which sold me what I thought was hosted mining hardware. The “hosted” Black Widow and Furies eventually morphed into Prime Hashlets which were supposed to be always profitable and mine forever. Only they didn’t really mine. I don’t think anyone knows exactly what they did. As Scrypt mining costs escalated during that time, GAW Miners determined that mining really wasn’t profitable and they were going to launch a new coin instead. Paycoin was going to be a proof of stake coin on steroids. But it only really staked (at least for me) in a “wallet” called a Hash Staker. There was much fanfare about everyone converting their Prime Hashlets to Prime Hash Stakers, and the Paycoins were supposed to be floored at twenty dollars apiece (they are worth around nine cents now). Throughout this entire process (if it truly can be called that), GAW Miners kept giving away digital hardware to their loyal customers. Apparently I was a loyal customer because I got gifted with some extra “hash power” turned “hash staking power,” and figured that no matter what happened I wouldn’t have too much trouble recouping my original investment (which mind you was intended to be for simple scrypt miners).

But there was one factor I’d failed to consider: the drama factor. OK, there are lots of opinions flying around about GAW Miners and whether or not they are legit or fraudulent, and whether or not they actually are the subject of a Department of Justice investigation, and whether or not the disgruntled former employees who pulled stunts such as making wild accusations on Reddit and locking GAW CEO Josh Garza out of the Paybase platform are telling the truth or flat out lying. I’m not interested in trying to figure any of that out. I mention it only to illustrate what I mean when I refer to the drama factor.

It was insane trying to keep up with anything going on with GAW. Since I’ve been involved, their forum has migrated twice and been riddled with technical difficulties and infighting (lots of stuff flying around about whether or not users who post negative comments are justifiably banned). I’d try to log into my ZenCloud account (which holds my scrypt miners, I mean my Hashlets, I mean my Hash Stakers) and I’d find the entire site or parts of the site not working right. Then I’d log into the forum and search for some kind of explanation of what was going on. Usually there was an explanation but you had to know where to look for it. An hour or two later after reading through a couple threads I figured the issue was under control. One or two issues cropping up here and there is to be expected, but it seemed pretty constant with GAW Miners.

Then there were all the accusations I referred to earlier concerning the integrity of the CEO, which he refuted with his version of the story and expressed outrage over the death threats he had received and the naked pictures of his wife that somehow got leaked. Seriously.

And all this time the price of Paycoin kept dropping and dropping and dropping. A valiant attempt was made for around thirty minutes to maintain a twenty dollar price floor, but then it was brought to the company’s attention that this sort of thing is actually illegal. It was also very expensive.

The last time I logged onto the forum I read a post by the CEO explaining his side in yet another scandal that I knew nothing about, and I thought, I just don’t have time for this.

Meanwhile…

The price of Bitcoin gradually dropped from a comfortable $800 to under $250. During that time the price for renting hash on Mining Rig Rentals kept dropping. So you have Bitcoin losing value and the price for hash rental (which is priced in Bitcoin) decreasing. And yet the data center monthly fee, payable in US Dollars, remains the same. Needless to say, running Scrypt miners became completely unprofitable, as in I now pay hard earned US Dollars just to keep them going. To make matters worse, none of the Scrypt coins are particularly profitable to mine either. It’s actually now cheaper to just buy them on a trading platform.

Looking for a way to keep my fledgling mining operation afloat I bought some shares in LTCGear from the NXT asset exchange. At the time, LTCGear was paying very well and I figured if I bought enough shares the weekly payouts would help offset the cost of running my own hardware.

And then LTCGear quit paying. That story is another tale involving much drama. The jist is that the site had poor security and got hacked and some payouts were redirected to the hackers’ addresses. Chris, the owner of LTCGear, apparently caught the breach early before it resulted in a major loss and has been working frantically trying to unravel the problem and repair the site ever since. Only it’s a long process because LTCGear is a one man show. One of these days it will all be sorted out and shareholders will get paid again (maybe). Both the Litecoin and Next forums were abuzz with posts of latest developments and plenty of people claiming to be shareholders demanding their payouts.

For the first month of the drama (which coincided with the already busy Christmas season) I stayed glued to the forums and even the IRC channels in hopes of some good news. After about six weeks of this I gave up. I never sold off my shares, but I gave up on the dream of a quick resolution to the situation. At some point I decided that if my shares ever pay out a massive dividend I will sell them as soon as that happens.

Every week or so I log into my GAW Miners ZenCloud account and send the Paycoins my Hash Stakers have staked straight to the trading platform and dump them. I have all of my Hash Stakers up for sale and hope there’s one final surge of hope within that organization that might incentivize someone to take them off my hands at my preferred price. I’m not too optimistic of that happening. But I can at least buy a few DNotes for each Paycoin I dump.

I’ve watched DNotes from just a month or two after that coin launched. I remember reading that this coin was designed to not be good for speculation, that its value would be stable and trend upwards from day one. I thought, “Yeah right!” And I watched. And the entire first year of DNotes’ existence, that’s exactly what it did. Now it’s my favorite coin to mine and will be for as long as I have mining rigs.

Over the past few months I got more involved on the CryptoMoms forum, launched by the DNotes team. People are very polite there and it’s not a super busy forum. It’s made up of people who have a substantial life outside of crypto. There’s not a whole lot going on and I can catch up on everything in under twenty minutes. There are occasional announcements from the DNotes team about innovations just around the corner (or I can just read the press releases), and then without fanfare those innovations happen. I’m an eager participant in pretty much every one of those innovations. I’ve started contributing more to this forum because it has the same solid, built to last and grow feeling that DNotes has, and my contributions are truly appreciated.

About eighteen months ago I stumbled into a Bitcoin asset which has done extremely well for me. It’s the Rental Starter fund on Havelock Investments. As the name implies, it’s backed by a real estate company–a very good real estate company. Monthly dividends pay out like clockwork. I purchased the bulk of my shares between 0.003 and 0.005 BTC each. They are now worth 0.017 BTC each. The founder and CEO of Rental Starter holds monthly investor meetings. I used to participate in them but it very quickly became clear that they knew what they were doing and were doing quite well. I didn’t have to be constantly monitoring the situation for breaking news.

The original way that Rental Starter communicated was through the Bitcoin forum. But like with many threads on the Bitcoin forum, Rental Starter’s thread got hijacked by trolls. The trolls were so bad that it depressed the share price for months at a time. When I heard (from one of the early investor chats) that the trolling had negatively affected the share price I scraped together Bitcoin and bought all I could. Rather than take on the trolls, the CEO simply moved communication elsewhere, first to an IRC channel, and now to Slack (and I still need to respond to my Slack invite). He didn’t focus on the negativity, just moved on and kept buying, renovating, and renting out properties. It took awhile, but the share price finally recovered–to the point where I can hardly afford to buy any more. I’m so glad I bought as many as I did while the price was low. I’m so glad I’m sitting on that one good investment.

Somewhere between pondering my strange apathy regarding participating in Rental Starter investor meetings, the easygoing yet productive atmosphere surrounding CryptoMoms and everything else associated with DNotes, and the contrast between all the angst with GAW Miners and LTCGear, I came to an important conclusion: when making any investment decision, you can’t just look at the numbers; you also have to take into account the drama factor. There are hidden (and not so hidden) costs involved in trying to stay on top of a volatile situation, and even if you manage to make money on that investment, does it really compensate you for all the time and worry you put into it trying to keep up with what was going on? How about the sinking feeling that you should have logged into the forum five days ago because that’s when something happened that should have prompted you to sell out, but since you missed the news it’s too late?

Even if the people running a company embroiled in drama are ethical and truly have their investors’ best interest at heart, even if all the worst accusations turn out to be false and everything turns out to be fine in the end, I have determined that all the drama makes it a bad investment. It’s just not worth it. When it comes to investments, drama is toxic.

From now on I will be carefully monitoring the drama factor of any new projects I get involved with. If I see it up front I’ll stay away. If I don’t see it until after I’ve invested, then I’ll look for the earliest available exit and move on.

Not the easiest lesson to learn, but I’m glad to have learned it. And I’m glad to have a stake in at least two very solid, drama free endeavors: DNotes and Rental Starter.

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