i lost more than $30,000 by being a big idiot

Point and laugh at me, but the dog really did have a hat.

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Joining the corporate world left me disillusioned. Time started slipping, friends got busy, bills got real. The days passed, and I never quite fit in. I grew bored and despondent, looking for something to channel my curiosity into. I found cryptocurrency.

And I would be shocked if many of you couldn't guess where this story is going, but please do stay for the train wreck.

While I connected deeply with the underlying ethos and principles and found the technology exciting as a software engineer, I, as many before me, was led astray. Not by someone else, but by my own jealousy and hubris.

Here’s a quick rundown. Blockchains are the underlying technology behind cryptocurrencies. Each blockchain is a network. The cryptocurrencies exist on such a network. Anyone can deploy code they make to the network. This code can be a new cryptocurrency. As such, anyone can deploy a new currency.

Enter memecoins.

But it doesn’t do shit!

A memecoin is a cryptocurrency based on a meme with no functionality.

And that’s the point. Free from expectation, the memecoin is a vessel of speculation, unfettered by the demands of ever-increasing revenue, formulas, expected value and realistic market capitalizations, amorphous and capable of taking on any valuation the market sees fit to ascribe it.

People simply deploy random shit with no utility.

The perennial example is DogeCoin, which as you have likely heard, has created millionaires. But the rabbit hole goes deep. I was “in the trenches”, as participants referred to it colloquially, in a hell of our own making, researching budding memecoins.

The shining stars, ready to shoot across the skies.

New currencies constantly released—500 or more every single day. Most, obviously, are downright scams, with the deployer looking to steal away all liquidity. The cream of the crop would be met with hype and willing buyers eager to cast their die—and in turn, the valuations would rise as hype was garnered.

They would, at least, rise until someone cashes out, that is. But the rare few memecoins broke through. The coin reaches escape velocity, permeating the culture so thoroughly it transcends the cashing out by those who found themselves at ground zero.

One such case late last year was a coin known as DogWifHat (yes, really).

The eponymous dog with a hat. Come rain or shine, one thing would be certain. The dog would still have the hat.

Hat stays on

I first encountered the dog with the hat when it had a market capitalization of $3 million. Crypto as a whole had recently seen a market wide surge in valuation, coming off the most disastrous year one could quite possibly imagine in 2022. A year of purging bad actors, and a year of disastrous crossfire befalling too many.

On seeing substantial financial gains for the first time after a brutal, unending, merciless beatdown, market participants were entering a frenzy.

Prices were going up. Risk tolerance was going up. Nothing seemed stupid anymore. People wanted to make money, and make it NOW.

A term started circulating—financial nihilism. The idea that the economy was so far gone that the only way out for the regular person was gambling, as evidenced by the meteoric rise of Bitcoin itself, the housing and economic troubles of the millennial/zoomer variety and the meme-stock craze of yesteryear. Apes strong together, diamond hands.

People were looking for ways to gamble, and the technology to allow for memecoins to exist and prosper had grown to facilitate it. Many, including myself, had become apathetic, no longer caring about the fundamental value of something.

All that mattered was price go up.

The moon mission

DogWifHat started soaring, as it took on the meme-mantle, becoming the face of financial nihilism in cryptocurrency. From that initial $3 million valuation, the dog with the hat would rally everyone in the space to the cause. Its valuation would pump, nay, moon, in fact, extremely quickly, leaving sidelined investors stuck in fiat.

The valuation would almost reach $5 billion within 6 months.

Quick math: an increase of over 1000x from where I first saw it. Of course, the lucky, absolutely commendably crazy individuals caught much of that rise.

A fire took hold. No longer a spark, the flames fanned, catching on to every leaf and branch they could find.

Memecoin this. Memecoin that. Your memecoin is garbage, mine has a hat.

Many memecoins would follow similar, though less extreme, trajectories as market participants were searching for the next big winner. The idea manifested itself—all it takes is a single hit, one home-run, one jackpot.

And so, the Hunger Games started.

May the odds be ever in your favor

Convincing everyone that your coin was next to make the journey to the moon was the only goal. Reflexivity was the be all, end all. The more people that knew about the coin, the more people would buy it, the more its value would increase, the more people would know about it.

And, of course, it works both ways.

Alliances, tribes, intellectual theses with hidden motives, scams, hacks. All out war, nothing off limits. It was both incredible and filthy to be a part of. Intoxicating, exciting, risky, absurd, stupid, disgusting, oddly fun. Like any good horror movie, death was lurking around every corner, and we couldn’t stop tempting it.

A veritable Player vs. Player environment. A financial zero-sum game, with winners and losers.

Mostly losers.

I made a little money. I rode many coins both up and down, seeing incredible unrealized gains that would end in losses, in a vanishingly short period of time. I was becoming numb, oblivious to the fact that Michael Myers was fast approaching, machete in hand.

Of course, eventually, he caught up.

Photo by Louis Hansel on Unsplash.

The damage

Keep gambling long enough and you’re bound to lose, especially in a zero-sum game where you are on the losing side of information asymmetry. Many participants were left devastated, and few walked away with the spoils. The funny thing about losing in such a game is that it becomes a downward spiral. We believe we can turn it around, and in our poor headspace, we simply make it worse.

We entered the arena; desperate, and crawled out of it; battered and hopeless.

I did not lose it all. But I lost way more than I should—a lot of hard-earned money that would have done just fine compounding away somewhere else.

I ended up losing somewhere in the ball park of $32000, a large chunk of my net worth, and a majority of my liquid value.

Alas, I don’t regret it—there’s no point in that. Now, looking back with clarity, I can see how stupid it was, and how privileged I am to write this. But I was desperate, lonely, numb, and depressed, looking for something to feel, led astray by impatience, dreams and greed.

In some ways, I look back at it fondly, somehow. It was an experience that clarified many things. An expensive one, but an interesting experience nonetheless. I hope whoever threw the spear that pierced my stomach, that rat bastard, found their way out of the arena, before they, too, succumbed.

Somewhere out there is the Marvel to my Rue.

If there is one key take-away from witnessing the crazy idiots in the trenches, it’s this:

We’re never completely out. It’s just money. We can make it all back. It’s not the most important thing in the world.

I’ve seen numerous people at their wits end after losing everything. And I’ve also seen countless numbers of these rise from the ashes, and find their path. At least I had the fortune to be able to say it’s completely my own fault.

Obviously, I don’t recommend taking the same path as me. Don’t light your money on fire. Please, point and laugh at me. I deserve it.

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