Surviving the HODLcaust

Everybody minds losing money, even if they were just paper (pixel) gains to begin with. The absurd optimism of 2017 is giving way to a self-reinforcing pessimism as one news story after another confirms that government or multinational corporation after another intends to try to limit, interfere with, or dip their hands into cryptocurrency. Just about all of the coins are down across the entire spectrum.

Every single coin and token has a different white paper with a different hype man claiming his coin has its own distinct market, use case, ecosystem, and timeline. Some of them are honest and competent. Some of them aren't. What matters right at the moment is--all the technical documents aside--the vast majority of the investors are still speculators. Even the majority of the money which is remaining in the market during this historic dip is speculative, belonging to speculators with bigger nuts than the ones who've already fled.

Ripple shot up to the number two slot in December because the herd actually believed that the federal government and conventional financial institutions were on the brink of embracing cryptocurrency. That's Ripple's whole angle, it's a shitcoin which claims (baselessly) to have the inside track on Wall Street finance and big bank integration. While even Monero (a privacy coin which should be at least somewhat counter-cyclical) has been brutalized, no major coin has been hit as hard as Ripple.

Ripple represents the hopes and dreams that the system will welcome crypto, hopes and dreams that are circling the drain at less than a quarter of their peak.

A few readers may be disappointed that I didn't "call" this drop. I should have clarified a problem with Ethereum. The problem with Ethereum is that while the platform itself is very solid and has a bright future, there's no real way to invest in ether independently of all the really flaky schemes and scams which have grown to dominate its ecosystem. When somebody invests in a smart contract ponzi scheme, ETH goes up some. When the ponzi scheme unravels, ETH goes down some. By becoming a seinfeldian crypto about cryptos, Ethereum's platform catches whatever cold its children catch.

Monero, on the other hand, should, in theory, be a safe space for those who believe in crypto's future but believe this process will be fundamentally hostile to and integrally incompatible with Wall Street. Within the last couple days, it's exhibited signs of being a counter-cyclical anti-hype counter-weight. As the speculators stampede for the exit, the places to look for strength and stability are the places where the geeks and thieves still rely on the coins for actual things they're actually doing with crypto: ETH, LTC, and the privacy coins.

I didn't time the dip. I never promised to time the dip. I'm not a numerologist. My assumption was that the correction would be less steep than this, and the lesson I believe I need to take away here is that the vast majority of the money moving around here is much more short-term in its thinking and conventional in its political outlook than I had presumed. I took all the news reports about government FUD regarding crypto as to be expected, but I was apparently not in the financial majority on that outlook.

While I believe privacy coins are a smart place to hide right now if you're scared, I'm still bearish on them in the mid-term and long-term because I believe Ethereum is planning to cannibalize that niche, removing the legitimate reasons to rely on them. I had imagined "the flippening" as a triumphant event, but if the market continues hemorrhaging speculators, ethereum doing less bad than bitcoin may be a silver lining solace for me to an otherwise grim day for cryptocurrency investment.

None of this money talk changes the fact that smart contracts are coming online in the coming months which will do incredible and innovative things, including p2p lending platforms which may very well revolutionize finance in a way that dwarves what the platform's initial coin offerings have done. The elimination of trust altogether in financial services is still going to revolutionize global commerce. The monetization of network storage and traffic with cryptocurrency microtransactions will still replace the current corporate Internet backbone.

These things will all come to fruition in due time. In the meantime, please hodl.