Things are not looking good so far

On Jan 1, 2018 it was hard to imagine things turning out the way that it has these days. At the beginning of the year, I had made over $50k on the crypto market, and I had the opportunity to make an additional 40% ($20k) by transferring it to my Korean gf’s crypto account that she made for me and selling it in Korea, since Korea was trading crypto at a 40% premium at the time. I was on pace to having the best financial year of my life, and I had a beautiful, sweet, loving Korean gf who was waiting for me in Korea. All I had to do was transfer it to Korea, sell everything, quit my job, move to Korea, and I was set.

Easy right? Well not so much. I was reluctant to sell my crypto assets because I was too greedy. All my friends had made more money in crypto and I was envious. I wanted to make more. I didn’t trust my gf fully enough because we had only dated for a few months at that time and I felt uneasy transferring such a large amount to her bank account. I wanted to make just a little bit more on the arbitrage before transferring it. I wanted to get a loan so I could dump more in it and take advantage of the arbitrage. I called my bank and they were unwilling to offer me anything. I tried another bank and they declined as well. Frustrated, I began looking online for anybody that would give me a loan. As luck would have it, I found three lenders, who were willing to lend me $85k in loans but the problem is – the loans came in too late. By the time the loans arrived, the South Korean justice minister announced a crackdown in crypto, slashing the premiums down by half. I was devastated. I decided to put the loans into crypto anyways, since the market was dipping, and wait for the premiums to go back up.

It never did. I watched in horror as the crypto market slide 30%, then 40%, then 50%, then all way down 70% – taking down more than $150k worth of my savings+loans with it. That’s where I am right now. I had the opportunity to be up $60k but now I’m down $150k. That’s a $210k swing. Crazy right? To make matters worse, the Chanel bag I bought for my gf, she didn’t like it so I sold it on eBay instead. I didn’t know mailing options that well – I chose first class instead of priority shipping. What I didn’t know was that first class mail does not offer tracking in Canada. So the bag inevitably became lost, the buyer asked for their money back and now I’m down a further $2300 because of my stupid mistakes. What’s more – because of the crypto downmarket and the loss of all this money, I had to work longer in the USA. I originally had planned to be out of the USA and back to Korea by April. The crypto downturn set me back 2 years worth of salary. But obviously I cannot work another 2 years, so I settled on working another 2 and a half months instead.

The tension of the long distance relationship got to my gf and she threatened to break up with me several times. Even now, our relationship is all but certain to fail. In addition she closed our crypto account in Korea. Even if the premium goes back up, I cannot take advantage of it anymore. Also alot of my money is now stuck in ICOs – because I took even more risk, all that money is basically tied up and lost at this point.

So I went from having potentially $230k in savings (yes my savings are only worth $20k now + the $210k I would have gotten), the opportunity to live in Korea without working and living with the girl that I loved – to having next to no savings anymore, no crypto account in Korea, no way to get funds to Korea, and an imminent breakup with my gf. How much can change in just 3 months right? Depressed doesn’t begin to describe me anymore.. it was my fault, lesson learned, don’t be too greedy, don’t take too much risk.

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Thoughts on Bitcoin and making money

I’ve been reading about Bitcoin a lot lately. It’s a very interesting concept… its a crypto-currency, its value is only worth as much as how much people are willing to accept it. The more Bitcoin is used, the more value it has and the more accepted it becomes. There are two ways to get Bitcoin: Mine them, or buy it at an exchange. Online Bitcoin exchanges post the currency value which fluctuates day to day, but Mt.Gox seems to be the biggest. Mining them is very interesting.

When you mine Bitcoins, you need a powerful computer that can compute the answer using the bitcoin algorithm to a computer problem. Once you get the answer, a block of bitcoins, depending on difficulty and time, is awarded to you. The more bitcoins that are out there, the higher the difficulty, the higher the difficulty, the less bitcoins you will receive relative to the time the computer spends on the problem.

So in 2011, Bitcoins were dirt cheap because not many people knew about them, and people were using their home computers and GPUs to mine them. Now though, more people know about Bitcoins, and the value of a Bitcoin currently is around $135. And specialized computers called ASICs are being developed to mine them. These manufacturers like Butterfly Labs and Cointerra are building computers designed specifically for Bitcoin mining, with up to 2 Terahashes per second.

So how much money would you make buying one of these machines, and start using them Jan 2014 (since they ship in fall 2013)? Well, the thing is with Bitcoin, its very volatile. How much its worth depends on how much people trust it. And the advantage of time. If someone had started investing in Bitcoin last year for example, when it was around $20, they would have made a lot of return, since now its $135 and it was even as high as $260 at one point. Therefore people who started mining earlier, even at the beginning of this year, would have alot of advantage and would have made alot of money. But now though, its kind of late to start. There’s comparison charts all over the web like this one.

The thing is, once these 500+ GH/s ASICs start shipping, the difficulty is going to increase massively, and its going to be much harder to get a return on investment. So, I would not invest in a miner now for that reason. At the beginning of this year, probably. But not now. But it might be worthwhile to purchase bitcoin currency now. If you think people will continue to accept Bitcoin at the rate it is now, then its worthwhile to purchase some, even at $135 a piece. The reason is because once more and more people start mining, each individual Bitcoin is going to be harder to get, making the supply of Bitcoin ever lower (actually the total circulation is capped at 21 million). Thus, because of lower supply and holding demand constant or higher, you can expect the value of Bitcoin to be higher in the future.

This brings me to a talk about money. I’m not the kind of person to care too much about money. Last year, I had $200,000 cash in the bank from my parents to help me finance my house, and in addition to my Intrade earnings, I could’ve used that money on various investments, but I chose to be a good son and not risk that money anywhere. If I had heard about Bitcoin back then and invested in it, at $20/bitcoin in Dec 2012, and $200k, that would be worth over $1.3m today. Or I could’ve invested in stocks/options like TSLA/PCLN/LNKD/NFLX/QIHU which have had monstrous returns this year. Anyways, the point is there’s always opportunities to make money, and I’m not really concerned about it too much. As long as I keep steady on my current job and do reasonable investments on properties and stocks, then I have a reasonably good chance of becoming a millionaire in the near future (take a look at this page).

In fact I have two stock option strategies to share: the first is called Straddle. Straddling a stock basically means you are betting that the stock will move in either direction. So you buy both a put and a call option on the same stock. If the stock moves in either direction, you hope that the return is higher than the premium you paid for both the put and the call. And that’s it.. pretty low risk option strategy.

The second is called Naked Put. Some people may say this is a high risk option strategy because you are uncovered, but the payoff graph is the exact same as a Covered Call, and its even better than that: With a naked put, you can be in a win-win. If you see a stock you really like, but the price is too high, sell a put contract on it, at the strike price you would like to buy it at. You get the premium for the put no matter what; and if the stock does go down to that price, you are obligated to purchase it; but that’s what you would have wanted anyway!! So I see naked puts as a win-win strategy.

Anyways, there always opportunities to make money, and so I’m not too worried if I miss out on some of them; I realize there is always more in the future. Did you bet on Obama winning the election on Intrade last year? Did you invest in Bitcoin in 2011? Did you invest in any stock in 2009? Did you invest in Shanghai/Seoul properties in the 1990s? Did you invest in the US housing market in 2010? Did you buy AAPL stock in 1990s? Did you buy call options on TSLA at the beginning of this year? Working part time on IT consulting? Buying iPhones in US and selling them in China for a markup? Stocking up on gold in 2008? How about writing a book about how to make money? How about selling an app in the App Store that links you to your book about how to make money? All of these could’ve net you a massive profit. But point is, its always about timing, and available capital. Its hard to estimate timing, but as long as you take the risk, there is always opportunity to make money and get rich. And the more money you have, the more money you can afford to risk, and thus the more you can make. That’s what I’ve learned through all my financial knowledge.

I uploaded some videos recently, including reviews of the Ouya and Wikipad and cover of Bruno Mars: