So you got into shitcoining because you heard you could make a lot of money in a short period of time, but it was not a get-rich-quick scheme. Let me guess the person that told you this also told you to invest in some of those coins told you it wasn’t financial advice. You decided to take the unqualified financial advice, did some research and started to “diversify” into this new asset class because you’re a savvy investor.
You’re not gambling on different digital ponies; no, you’re hedging your bets; and you’ve done the research, and for a brief spell between 2020 – 2021, you were proven right. You were making multiples of on your investment.
You had the chance to take profits, but you thought you’d ride your luck a little longer. You thought to double down on your positions; you pondered to yourself, let me make a little more to cover the taxes I need to pay and thought you could time the market.
But you didn’t, and today you’re sitting with a fraction of the paper fortune you once had, and you’re coming to terms with it.
If this is not the situation you find yourself in, how on earth did you even find this article? Drop your answer in the comments below.
If this is the situation you find yourself in, and you’re licking your wounds, wondering where did I go wrong, what should I do? How did I get myself into this mess?
Greed and green candles are a powerful cocktail that preys on the mind. It’s a cruel mistress that will have you casting away your doubts, your fears, your gut feeling, your due diligence, and your rational mind, all in favour of a few extra percentage points added to your net worth.
When the goal is to increase your wealth, you don’t consider the how and why, and the only thing that matters is the number on the screen and the feeling it gives you. When you’re in that mindset, you eventually get dragged into positions of vulnerability, positions where you couldn’t and, most importantly, wouldn’t react to negative feedback, and in doing so, you pay the ultimate price and end up losing everything or at least 80% of it.
When you wear rose coloured glasses red flags 🚩 simply look like flags
Lisa Kudrow – “BoJack Horseman”
Getting your “wreck-ucation”
Getting rekt hurts, but in it lies some valuable lessons should you accept and learn from it. For many of us, so-called bitcoin maximalists getting rekt was the tuition fees you had to pay for the education we have today and willingly share for free.
It’s a bitter pill to swallow, but tough times make you stronger, not the good times. As a bear market comes in and clears out the leverage, clears out the greed-fueled FOMO, clears out the weak miners, clears out the weak companies, it also allows you to clear your mind.
You can now start from scratch; you are no longer a dopamine-driven degen trying to gamble your way to early retirement. Once you’ve made peace with the situation, you can start to rebuild on a solid foundation of knowledge and avoid falling prey to the same traps with new names and logos in the next cycle.
“It’s only after we’ve lost everything that we’re free to do anything.”
― Chuck Palahniuk/Tyler Durden, Fight Club
The shitcoin industrial complex
Yes, there is a definitive lesson to be learned in personal responsibility, but the truth is there was very little chance of you coming out on top in the shitcoin game.
If you’re going to play a rigged game, you better be the best at cheating.
There is an entire industry dedicated to taking money from you, and if you’re not careful, they will raid your pockets until you’re left with nothing.
- There are shillfluencers looking to net a return through affiliate payments or selling their pre-mine allocation.
- Venture capital firms and angel investors use their brands and network to encourage you to buy their bags at a markup.
- Exchanges offer leveraged products, knowing you’ll misuse them and blow up your account.
- There are exchanges actively trading against you with more data and more capital.
- There are subsidised returns in CEFI and DEFI looking to sucker you in and turn you into the yield.
- Honeypot shitcoins are hoping to sell you a position you can never liquidate at a profit.
- There are PR companies willfully taking venture capital money to create favourable PR puff pieces that are used as “research.”
- There are bitcoin affinity scams claiming to be like bitcoin but better, and tech coin is “cheaper.”
All this and more is designed to drive continuous hype and increase the number of retail users coming in and falling for a false sense and encouraged to ignore negativity and dismiss it as FUD, despite knowing there will be inevitable and irrecoverable drop for most of these projects.
Moreover, it’s vital to understand that the shitcoin market is nothing more than a leveraged play on bitcoin cycles. All it is are projects with a thinly traded float hoping to encourage capital that would flow into bitcoin to flow into their controlled pool of assets. The project, the use case, the tokenomics, the partnerships, it doesn’t matter; those are all secondary; that is all marketing.
The killer app for shitcoins is creating a mouse trap for retail investors who fall for unit bias and their other marketing techniques and sell you a false bill of goods because there isn’t regulation against selling you these securities.
Once you realise this, you realise that anything you hold that isn’t on-chain bitcoin is basically worth zero. While there is still a market for these coins, you could recover a few satoshis, but this is only a consolation prize.
You faced a great loss, it’s understandable, and you might be going through the grieving process, finding yourself in a state of:
- denial
- anger
- bargaining
- depression
- acceptance
If you’ve reached the acceptance stage of your shitcoining and feel you’re ready to move into recovery, then these twelve steps can help you on your way.
1. Admit you were wrong
This might sound like a simple step, but for many of us, it is one of the hardest; our ego won’t allow for it, and we don’t have the humility for it. We would rather deflect and blame others; it’s the market, it’s the scams, it’s the hackers, it’s some or other external source, but not me.
But the fact of the matter is, you were wrong; you’re mistaken. Your investment thesis was flawed and rightly blew up in your face because that’s what should happen if you don’t make wise decisions.
You were not smarter than the market. You’re not smarter than a 5th grader because most 5th graders aren’t sitting with a hand full of doggy coins with negative equity.
Once you’ve admitted to your mistakes, you no longer feel powerless and can now begin to take action and own the experience.
2. Cut ties with shitcoiners
You may have made some shitcoiner friends during the last bull run, and they’re all sitting around sharing stories filled with hopium and copium with no relation to reality. They are still hanging on every tweet from their favourite founder, even though that founder continues to drain their wallet into bitcoin and stablecoins.
These people are toxic, and if they don’t decide to change, you can’t force them to take this path with you; your best bet is to cut ties with them and limit your engagement. While they waste their time and energy and allow their mental health to suffer, you can focus on rebuilding yourself and your portfolio.
3. Rid your life of shitcoin temptation
Shitcoining is gambling covered by an investment paintbrush; it’s less about the productive use of capital and more about the dopamine hits from seeing your bet payout. If you’re going to hang around the casino, you might see yourself placing a few bets.
Take your recovery process seriously by removing any of the following
- Subscription to financial newsletters
- Unfollow shitcoiners and shitcoin projects on social media
- Close your account on shitcoin casino exchanges
- Destroy the private keys to your shitcoin wallets
- Delete the shitcoin wallet apps from your phone and desktop device
- Remove bookmarks and RSS feeds for shitcoin sites and blogs
If you don’t eliminate this temptation, you’ll make the path to recovery harder, and the likelihood of relapse will be far greater.
4. Tally up your losses
The best way to avoid relapsing into shitcoining is to face facts by creating a list of all the losses; it will give you a summary of how badly you screwed up and will be a reminder of why you should never go back regardless of the returns promised in the next cycle of Ponzi investing opportunities.
Pull out a spreadsheet, then pull up all the data from the exchanges you used, calculate the price you paid for all the shitcoins you bought and work out the losses in both fiat terms and satoshi terms. Once you see the true extent of your mistakes, it will not only be a sobering reality check but an example of how badly you went wrong.
5. Top trusting and start verifying
Bitcoin is trustless money, so you shouldn’t trust anything anyone says; learn to be a sceptic and take precautions. Learn to remove trust from your bitcoin stack by running your full node and using bitcoin and any of its tools in a non-custodial fashion.
6. Sweep your shitcoins into bitcoin
If you still have shitcoins in a wallet or on an exchange and there is still some semblance of the market, you could wait to unroll those positions if their liquidity isn’t and set limit orders, or you could market dump and rip the bandaid off.
How you unwind your shitcoin positions are up to you, the important thing is that you get them into bitcoin eventually and salvage some of the value you’ve lost.
7. Remove any funds from exchanges
Once you’ve consolidated all your shitcoins into bitcoin, it’s time to remove custodial risk, whether with an exchange or some smart contract yield farming platform. Spin up a hot wallet and sweep all your bitcoin into a wallet where only you have access and control.
8. Humbly admit your fault to the maxis
Depending on how aggressive a shitcoiner you were during peak madness, you may have said some things you now regret. You might have crossed paths with bitcoiners who told you better, but you ignored them or dismissed their warnings.
Make a list of persons you shunned for trying to help you and let them know you’ve seen the error of your ways and you’re actively hoping to make amends to them all.
9. Repair your balance sheet
Depending on how long you were shitcoining, you might have done some considerable digging and left quite a hole in your balance sheet. Once you’ve salvaged what satoshis you could and moved them into self-custody, your next step is to start making direct amends for your previous transgressions to your savings.
Consider setting aside some capital each month to dollar cost average into bitcoin and try to rebuild a position you would have otherwise had, had you not wasted it on chasing a shitcoin fantasy.
10. Take personal responsibility for bitcoin with self custody
Now that you have your bitcoin in a wallet where you have the keys, the journey doesn’t stop there. Hot wallets are fine for funds you want to keep active, but they’re not ideal for funds you’d prefer to store long-term.
If the bitcoin balance you were able to sweep from exchanges is still a sizable amount, you might want to consider spending a little extra and purchase yourself a cold storage wallet and create a more secure self-custody set-up for your long-term hodl.
11. Improve your understanding of bitcoin
You can do this either through reading bitcoin books or following popular bitcoin podcasts (not that there aren’t paid shills in the space), or you can head to social media and various bitcoin forums to read up on the latest discussions in the space. Watch YouTube for instructional videos and start to get hands-on with your bitcoin, creating wallets, generating public keys, setting up a node, verifying transactions and sending and receiving bitcoin.
As you become more comfortable with the technology, you can decide to explore deeper topics like layer two protocols, inheritance planning, key management, and much more.
12. Participate in the community
Once you’ve gone through the cleansing process, it’s essential to find a support group of like-minded people; depending on where you are in the world, you might have regular in-person bitcoin meetups.
Meetups are a great way to find local plebs, engage in discussion, find bitcoin projects in your area, build a community of local bitcoiners and support the circular economy in your area.
If you want to remain anonymous, you might prefer engaging online with other bitcoiners; this can be through social media like Twitter spaces and Clubhouse or on forums like Bitcoin Talk and Stacker News.
The road to recovery
The shitcoin recovery process isn’t a straight line; some of you will fall back into irrational exuberance in the market, even though all of the thousands of coins out there will fail. So be prepared to face the temptation, the misinformation, and the volatility. If you lack confidence, I suggest sitting on the sidelines or sitting in a position that wouldn’t bother you that much.
Do your research first, do as much research as possible. Instead, spend your time building conviction before you take a position. First, learn about how bitcoin works, maybe buy a small amount and use it on-chain, try out a wallet and get comfortable with it first. Understand what bitcoin offers and compare it with the shitcoin offerings.
No, seriously, if you’re going to make a good go of your bitcoin experience, you will need to be hands-on in the future. Becoming your own bank means you have to take responsibility for every step, and if you don’t, you’re either bringing in trust in another party or opening yourself up to losing your coins in a malicious act.
Do not put your money anywhere you haven’t spent significant time looking into. Otherwise, you’ll find yourself playing Russian roulette with your finances until you lose it all.
