In my introduction post I mentioned that I would write posts about my experiences with crypto-currencies. Like so many other things, I've kept postponing this further and further... until a disappointment yesterday gave me the proverbial kick I needed. So here it is, my first two months in dealing with crypto-coins:
At First There was a Necessity
I have known about bitcoins for a couple of years, but I never bothered immersing myself in it until recently, when I was confronted with a challenge: A brother of a good friend from Hungary asked me for some classes and I was glad to oblige. Over Skype no problem, but how would he pay me? PayPal had become completely uselessness, at least for us who don't have a US bank account. So what then? Instead of resorting to a tedious bank transfer, I decided to look into bitcoin.
A week's research later, the transfer was complete, and I had a nice big fraction of a BTC on my Mycelium wallet. I was amazed at how quickly(!) and cheaply it went down. The ten dollar gift from Coinbase was a nice plus too, but what knocked me right out of my socks was the rapid growth in value compared to the dollar. I got quite excited, and started to do what most instructional videos were design to teach: trading for altcoins.
Getting a Feel for Trading
I don't know what made me decide to go with Poloniex, but that's the exchange I chose in the end. I'm not sure if I'd do it again... too many issues. However, it was a great learning experience. I got into reading candlestick charts, and making predictions about the future movements of a coin. At first I made very conservative plans, judging from the previous 24 hours of a chart, estimated a good price for buying, submitted my order and waited. Full of excitement I would refresh the screen every minute, until the price dropped to where my order went through. A short victory dance later, I entered the price for the sell order, and waited even more excitedly.
Once the sell order went through as well, and I managed to contain my joy, I calculated my winnings. They were as meager and modest as I guessed they would be, from my first conservative attempt, but I was a tiny amount richer, all thanks to this great coin... A coin I had not even the slightest clue about! I just invested in it because the price was right. Oh no! Always do your research, they say, so I googled it quickly. It had an interesting name: STEEM.
Over the next weeks I kept digging myself deeper and deeper into the world of crypto-currencies. Trading on Poloniex, now a bit bolder with higher amounts. At the same time I was getting acquainted with Steemit, reading up on various currencies, watching more videos on trading, and keeping up-to-date with the news, such as on Coindesk. Admittedly, most of the information went right over my head, but I got the gist of it, pretty much, or so I thought.
Naturally, the best advice was always the common sense one: buy low and sell high. Be patient if it takes time for the price to rise, and never sell lower than what you bought for. (duh!) Sometimes this can be easier said than done, especially if the price doesn't behave according to your prediction. This is why I was so happy about trading GNT Golem. Its curve followed a pattern that was not too hard to predict, and most of all, it kept it. Even when I failed to enter a sell order, and thus missed the peak price, a week later it would be back again. Of course this was all before it crashed, along with all the other currencies, anticipating the BTC segwit.
Making Informed Decisions (or not)
One feature of Poloniex I couldn't ignore was the Trollbox, a chat where trolls with various agendas talk undecided users into buying or selling something. Treating it for what it is, I never took the info in it too seriously. Still, I couldn't help getting a kick out of the interactions within: “Coin XYZ is about to take off, to the mooooon!” or “That other coin is never gonna go anywhere!” I kept laughing at the trolls, but sometimes certain things would just stay with me: “Digibyte is gonna become the currency for Minecraft!” It sounded like an obvious hype, but I followed the info and true enough: They were gonna have a conference with a number of tech and financial giants, such as Facebook and Citibank.
Okay, I thought, no matter how this conference goes down, all this talk about it will probably raise the price, at least for now, so I bought some. Sure enough, by the time the scheduled date for this conference rolled around, digibyte was on a new all-time high, so I sold... half of my DGB holdings. Succumbing to a sudden greed, however, I decided to abandon my plan and hold on to the other half. After all, digibyte seemed to be going up and up only... and thus learned what it means to be a bag holder. A lesson to learn from! I'm still holding... who knows for how long. But stubborn as I am, I refuse to sell under the price I bought it for.
Scalability … or maybe some other issue?
As I got more into trading, with decent to amazing results, I decided to put more funds into crypto-currencies. Following my first trial, I bought BTC on Coinbase again, and sent it to Poloniex. But it never arrived! On the Coinbase end everything seemed dandy, with confirmations coming in, and a link to Block Reader, with all sorts of info about the transaction that I would need way more time to comprehend. On Poloniex, however, it looked like as if the transaction never even happened.
At first I thought it was due to scalability, a common concern I read about, having to do with the actual time it takes to verify blocks, resulting in long transaction times. (If my wording makes it sound like I'm not quite certain what I'm talking about, it's because of that.) For that reason I attempted to make a small deposit in ETH, and later another one in LTC, just to test that it works. Both deposits went through without a problem. In any case, I waited patiently for a day, then another, and on the third day I wrote a ticket to Poloniex's support center. It asked me to make sure I had picked the right currency deposit, and copied the address correctly, which I double-triple-checked. It was all good.
Over the next week I kept checking the status of my ticket (still being processed), while using my funds on Poloniex for further trading. Meanwhile I noticed a change in the Trollbox: instead of driving the pump-and-dump hypes, there were increasingly frequent complaints about issues like mine: missing deposits, missing withdrawals, unsuccessful attempts at setting up a two-step-verification, all sorts of things. On one hand this put my mind at ease, seeing that I'm not the only one with these problems. On the other hand, I could only guess how long it would take them to address all these issues. To show that I haven't forgotten, I still keep sending a weekly reply to my ticket. The only type of response I've gotten was a notification that they closed their Trollbox and sent all its admins to do support. This just shows what huge jam they're in. One day... I keep thinking... one day they'll have it resolved.
Getting Ready for Segwit
By the end of June it was clear that trading was not going like usual. Granted, I had arrived at the height of a huge bull run in May, which I only noticed once it was over. But the type of bear over bear we are seeing now was still a bit shocking. That's how I got to know about August 1st and the approaching Segwit. Clearly, when many people are cashing out, prices will fall. So instead of panicking, I decided to sell my BTC and buy coins I thought should be all right. Then I leaned back and watched the carnage.
Prices fell, then fell some more, and just kept falling. Watching your holdings melt away never feels nice, so I started looking at it from another angle: how well these coins would sell once they've regained their former values. In fact, I would be a fool not to take advantage of these great bargains. So I went back to Coinbase.
Not wanting to step into another BTC issue, I bought a nice sum of ETH and sent it to Poloniex, where I would use it to buy some cheap altcoins... But once again, the deposit never arrived! One thing I noticed, was how it never even showed up in the deposit history. Normally it would indicate that it was coming, just needed some more confirmations. Once it was sufficiently confirmed, the status changed from pending to complete. In this case, there was no sign of pending either.
So once again I sent a ticket to Poloniex, and since I was already so worked up from all this, decided to channel it into something positive: writing this post. What I'm hoping for, more than anything in this case, are not so much the upvotes (though I do appreciate them, for sure) but thoughts and ideas, recommendations and advice, explanations and theories, to get a full perspective of what is actually going on here. All input is appreciated.
End note:
I just checked, and my ETH deposit has just made it to Poloniex (after a day). This gives me hope, that the "lost" BTC deposit is really just a scalability issue, and that eventually it'll show up as well.