I have been interested in crypto for a while now. Aside from watching Bitcoin go up like 1000%, I have been wondering whether this was the next frontier in the finance space. We’ve had a couple of lifechanging developments that we seem to take for granted, and more importantly, seem to understand very little about. First we had barter, with its many inconveniences such as determining value. We then had paper money, which became the proxy for value, while being valueless in itself. We then had debt, where we discovered that we can enjoy thing we want with money we don’t have. And finally, and most recently, virtual money, when we discovered that money can be completely intangible. Ones and zeros on a screen.
Background
With this curiosity in mind, I have been dollar cost averaging into the crypto market for close to six months now. It was probably the worst time to enter the market, with the whole crypto crash and all. It is likely a stupid decision on my part, but I keep crypto at around 10% of my entire portfolio. I got in when crypto was around 40K, and watched my initial investment halve in a matter of weeks. Yikes. But I’ve kept on buying every month, as the DCA approach seems to be the one that consistently give the best results. This finding is of course related to stock market investing, but with crypto and the stock market so highly correlated these days, what’s the difference? Besides, I’m only 25% down on my crypto portfolio. That isn’t so bad, right? Right?
Not Your Money
The strategy worked well for a while. That is until a few weeks back when the recurring buy I set up with my exchange executed. The transactions went through, but a day later I realized that I couldn’t withdraw money from my account. That was followed by a call from one of the bank’s representatives, who asked a couple of questions, then told me to call customer care to have the issue sorted out. “Won’t take that long. Just call them. They’ll sort it out,” she said. However, the representatives weren’t seeing anything wrong with my account. That or they did, but didn’t know how to handle it. So they’d just take me in circles, until one asked me to visit a branch. A side note: customer care really is a weird job sometimes. Product teams and management make decisions without any sort of consultation, and customer care is left to deal with the backlash. Seems kind of unfair, but that’s the world we live in.
Give It Back!
What was interesting to me was that there were no procedures in place for this situation. The agent I was speaking to was at a loss, completely unsure how to handle the situation. After a few call, he determined the cause. Apparently my account had been flagged by the compliance department. There were some new directives by the Central Bank to stop transactions in crypto through the banks. But here’s the funny thing, even the compliance department didn’t have a process to get my account back up! They determined that I had to handwrite an acknowledgement letter, addressed to the manager of the branch that I was at, that I was not going to continue buying crypto using my account. HAND-WRITE. In 2022. And what happens after that? They gave the manager the letter, and she’s like, ‘what’s this?’ And a whole discussion ensues on whether the letter would be sufficient. Goes to show that they’re making this shit up as they go.
Why Though!
Maybe I should stop. It is a pretty risky asset class. If it is an asset class at all. But its too big now to simply go away. Its too entrenched into a part of the population to be forgotten. I don’t have any good reasons why it will become the next big thing. All I do know is that there’s a chance it might. Most central banks are thinking of developing and issuing their own digital currencies. That might be a sign that crypto’s here to stay. They’re just making it hard for the ones they don’t control, as they build ones that they do. The issues raised about money laundering and corruption are valid, but I don’t think they are the full story. And while one might argue that the central banks have no right to control how I use my own money, you have to remember, its not your money. Its theirs. They’ve just lent it out to you, under very specific conditions.
Oh Well!
Long story short, I did manage to get my account operating again. Only I can’t buy any crypto. However, basic human psychology will tell you that this kind of policing makes you want to do the very thing that’s being policed a lot more than before. Its just a question of how. There are many ways to skin a cat.
For those curious, I use Coinbase to purchase crypto. I only have four cryptocurrencies in my portfolio. Bitcoin, Ethereum, Solana and Cardano. With “the merge” coming up for Ethereum, and the corresponding price appreciation, Eth makes up close to 35% of my crypto portfolio - the largest holding. But Bitcoin’s close behind. And yes, I’ve staked whatever can be staked, and earn around 4% APY. I will say that crypto’s highly volatile, and can lose you a lot of money, if not all of it. So this isn’t financial advice, and you do have to do your own research. A lot of it, if you’re smart. I can’t stay out of it completely, so I only put in a small amount every month - the amount most people spend on junk food or alcohol every month. If it turn into something, good! If it doesn’t, I’ve learnt. And better to learn earlier than later.