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Early Bitcoin Investor: Most Traders Lose Money

Nov 16, 2021

Nithin Eapen

Nithin Eapen is a technologist, investor, entrepreneur, and a very successful crypto investor.

He is also a two-time TEDx speaker... and has delivered presentations on cryptocurrencies in front of thousands of people during those talks...

And besides taking care of the family office crypto portfolio, Nithin is also an advisor to multiple startups...And a speaker at various blockchain conferences...

He's also called the "Crypto Swami" for his love of helping people like you understand the bitcoin/blockchain space.

Read on for a very insightful interview...

Equitymaster - Tell us a bit about your Bitcoin journey. When was the first time you bought into a Bitcoin? How has the experience been?

Nithin - I became aware of bitcoin in 2010 through Prasanth Powar, my friend from an Orkut Libertarian community.

Even though he tried his best explaining the concept to me, I just could not understand or didn't bother trying to learn it. I still have that email saved.

Then I watched it go from US$1 to US$1,500 per coin by 2013 and then crash to US$140.

I thought the craze or fad is over. I read the Satoshi paper in 2015 and that was when I realised this is the greatest socio-economic political experiment ever in the history of mankind.

It was giving the power of money to the people and I had to get on board. The purchase of a bitcoin or multiple bitcoins made me re-learn computer science, economics, politics, history, theory of credit, distributed computing all in one go.

It was the greatest learning experience. When you put money into something be it stocks or crypto, it forces you to learn about it.

Then it was going down the rabbit hole and trying to devour anything and everything I could.

Equitymaster - Now many see Bitcoin as a "trading" opportunity. You on the other hand see it very differently...as an "investing" opportunity. How did that come about? How has this changed your experience?

Nithin - Any stock be it Amazon or Microsoft or Reliance, who really makes the wealth? Is it the person who day trades or trades it weekly or the person who holds it for 20 years?

If you take Amazon, even if you bought it after the IPO and invested US$1,000 in it and could hold it till 2020, it is worth a million plus in dollars. If you sold it for US$5,000 or US$10,000 by 2006, it is a great return but not close to the million dollar return. Same is the case with bitcoin.

It was highly volatile going maybe up to by 100% a day and falling 20-30% a day during the early days. If you were trying to time the market, you were making money but you kept missing the large upside.

Let's assume you sold bitcoin at US$200 after buying at US$100 and only to rebuy it back at US$300. It might as well have been better if you just held on to it. You would at least save on taxes and have your entry point lower.

This understanding does come with age and experience that investing is better and trading is a losers' game. Most traders in any asset class lose money in the long run.

Equitymaster - There are reports splashed all over the Indian newspapers that India's young have taken to punting big time on Bitcoin and other cryptos. What would you want to say to them.

Nithin - Welcome to the club. Learn about this technology and political theory and economics rather than just day trade. Learn about encryption, private keys, UTXO, proof of work, proof of stake consensus mechanisms.

This is your moment to become free from the tyranny of the state. Build on this and protect your wealth. Learn about DeFi, NFTs, DAOs.

Equitymaster - Now that Bitcoin has hit an all-time high...how do you read that?

Nithin - What is all time. This is what people said when it reached a dollar, US$10, US$100, US$1,000, US$10,000.

I would say we are still in the early innings of a 9 innings game. As long as governments keep printing money with no end, this is still a low rather than a high.

Equitymaster - What's next for the world of Bitcoin / cryptos? More in terms of the community, the platform...and the disruption that is being caused around the world.

Nithin - There are still 3 billion unbanked people in this world. There are way more people who do not have access to credit or who are being cheated of their money when governments print without no end.

There is the power of community to learn about and there are scams to be wary about.

Take control of your life and the fruits of your labor. Be a part of the experiment that is becoming a revolution.

There are a ton of innovations waiting to be created like DeFi, NFTs, DAOs which I cannot even imagine. I never imagined the others like the Automated Market Making and Uniswap. These are innovations that no banker could even imagine and that is a reality today.

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