Gonzo Crypto Blog - Week Five

Last week, I talked a lot about commitments and how important they actually are for dealing with mental instabilities and general procrastination. I wanted to trade a portion of my bitcoins for a new altcoin every day, choosing them almost at random. Well, I tried doing that, and it didn’t go entirely according to plan. Don’t get me wrong, I didn’t lie as I was actively trading and researching cryptocurrencies I invested in, I really learnt a lot about the crypto-market and some of the projects within this space, but this week I just couldn’t handle the market itself.

As you can see, it wasn’t a particularly great week. Bitcoin wasn’t doing so good, and as you know this means that the rest of the cryptocurrencies weren’t getting any higher in value either. Of course, this doesn’t mean that there’s no way to make profitable trades - I made some purchases that were alright, but nothing more than that. Clearly, this takes a lot of experience which I don’t yet have, but I’ll get there one day.

In retrospect, I can say that I had a decent start to the trading week, but then I got too cocky and hopeful.

The first coin I went for was the already familiar BNB. Last week, I bought a tiny amount so that I could pay cheaper fees. I’ve read up a bit more about binance coin and I got to say I’m impressed - it’s actually a very useful token that is designed to be profitable. This was actually the first time I bought a token for a specific purpose - 25% discount on Binance fees.

And as you can see on the chart below, this model is definitely working. I think it’s safe to say that everyone hates paying fees, so if there’s a way of reducing them most people are going to jump at the opportunity and buy the token that will make it happen, driving the value up. But the most interesting thing about binance coin is that the exchange’s team are doing something else to increase the token’s value.

This is done by ‘burning’ tokens. Basically, every quarter Binance uses 20% of its profits to buy back its own tokens and get rid of them. Essentially, they’re artificially creating scarcity, which makes the remaining tokens more and more valuable. But does this really affect the value of binance coin? Take a look at the graph above once again.

See the little spike on October 2017? A giant one in January 2018? A smaller, but still a significant one in April and then the one in July? That’s right, that’s Binance burning tokens. They’ve been quite consistent with the burning dates so far - the announcement is always made on the 15th and the burning takes place on the 18th. So, obviously I’ve missed out on the July burning, but I’m not going to miss the next one.

And you shouldn’t either. I think they’ll stay consistent with the dates, so expect the next spike on 18th of October 2018. Then - 18th of January, 18th of April, 18th of July and so on. The thing is, I’ve only found out about this after I bought and sold some BNB for an insignificant profit. The first trading day wasn’t interesting at all - there was no drama, no surprises, I just ended up with slightly more satoshis than I had before. I’ll definitely be stocking up on binance coins in anticipation for October though.

Next day I decided to trade ripple. It always seems to be one of the most actively traded tokens on Binance, with only EOS and ether having a higher volume at the time of my trading. I’m not fully sold on EOS just yet and EOS wallets have been suspended on Binance for a while now and etherium isn’t a new currency for me, so the choice of Ripple seemed obvious.

I’ve heard a lot about it. The platform is all about lightning fast transactions and its blockchain is used by global corporations like UniCredit, UBS and Santander. It’s in third place in terms of market cap among all cryptocurrencies, and yet it’s dirt cheap. Every time I opened Binance, Ripple seemed to be in the green, so I thought this was a good and safe choice.

To be honest, there’s nothing exciting to tell about trading Ripple. I placed a few orders, as usual slightly below the current market price - they got filled within a couple of hours. In the evening, I placed several selling orders, they got filled overnight and voila - I made some extra satoshis. Easy and kind of boring, to be honest.

I think I got bored after that, which led to me going all-in. I went after some tokens that I’ve never heard of before and that’s when exciting things began to happen.

Now, just to be clear - I didn’t buy them all on the same day, but I used the same strategy that I picked up from some YouTube video a while ago. Both days I was just trying to scout the market for tokens that just scraped through into the green. I was looking for 0.5% or 1% increased in the last 24 hours and a big trading volume. Both times I checked the ‘Social’ tab on Coinmarketcap to see that there was nothing major happening. Both times I placed an offer slightly under the current market price and both times it went through within several hours. I was getting excited.

Here’s what the Social tab for TRON looked like before I spent half of my bitcoins to get almost 3000 TRX. What do you think caught my attention and made me think this was a safe bet? Just take a guess.

But it wasn’t just that. TRON is ranked number 11 of all cryptocurrencies on Coinmarketcap and I kind of liked what they are trying to do. They’re aiming to build a decentralized content distributions platform for digital entertainment industry. To me, this is one of the most exciting things that blockchain technology will facilitate in the future - direct exchange of content between the creators and their audiences without record labels, production companies and other intermediary fat cat organisations telling artists what they should do while hoarding most of the profits.

I think that art - whether it is cinema, music or anything else for that matter - is dying as there is not much originality anymore, no experimentation, no adventure. And I’m convinced that a decentralised platform that enables creators to freely publish their content and most importantly own the rights to it while interacting directly with their audiences will change everything. So yeah, go TRON!

Verge was also mentioned in that tweet from a certain website, but it wasn’t the reason why I bought it. It was a relatively random choice too, just like TRON, Verge is one of the many privacy-oriented cryptocurrencies, which utilises the TOR network to anonymise IP addresses on its blockchain. For those of you who don’t know, TOR is essentially several proxy servers in one. It redirects traffic through a worldwide network of more than seven thousand nodes, making all activity untraceable.

Finally, the day after I spent the other half of my bitcoins on 4190 verge tokens I saw this in one of the Telegram cryptocurrency-related channels I randomly followed some time ago: That was destiny, I though.

But the cryptocurrency market decided to go all-red and lose 40-something billion dollars in market capitalisation, thanks for asking me in advance! At the same time, I got carried away and wasn’t playing it safe. I successfully bought both currencies under the market value and hoped they’re would just bounce back right there and then. I’ve put all the bitcoins I had into them. AND I set a sell limit close to their monthly peak prices. Right now, as I’m writing these words out, i’m beginning to realise just how immature the idea was.

I waited a day - they both dipped way below what I bought them for. I was not going to pull out and make a loss, so I waited two more days - nothing. Now, as I’m writing this the market seems to be recovering, so I’m hoping I’ll soon be able to sell them both at least for what I paid for them.

And as I said at the start, I didn’t really achieve my objective for the week. I didn’t trade 5 new tokens, I only managed to do four before running out of bitcoins. I don’t have funds right now and I don’t want to pull out from etherium, so I’m sort of at a standstill.

Perhaps, this is the best time for this though. I’m actually writing this on a plane heading to the sunny Georgia, for what is a much needed vacation, as I haven't been on one for at least a year and a half. And comparing my journey to the crypto market, I actually got a free upgrade to business class, so I guess karma works. I’m taking a week-long break from all of my current projects, except for this one. I don’t really know what I’m going to do this week, but I’ll let Georgian wine and chacha decide that.

So, have a good week everyone, see you soon!