The Wolf Den #193 - Invest Only What You Can Afford To Lose
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This newsletter is sponsored by PHEMEX, the only exchange that I use to trade crypto with leverage. Sign up with the link above and get some free Bitcoin. I really encourage you to check them out - you know that I never endorse a product that I do not use!Invest only what you can afford to lose.This is an age old lesson about trading and investing that I have learned countless times over the years. On numerous occasions, I have made poor investments with too much size that I came to regret - from buying a mutual fund when I graduated college that I needed to cash out a year later for 60% less than I bought it for to going "all in" on a single stock and watching it go to 0.Last Friday I experienced my first exploit/hack in the crypto space, with one of my largest holdings dropping 90% in a matter of minutes. I was both an early investor in PAID as well as a buyer multiple times on the open market, most recently when it dipped to $1.80. Fortunately, I did not invest more than I could afford to lose, but the loss in value was still tough to stomach.I had trusted people who vetted the project for me, I did as much research as I could. The project and code was audited by Certik to confirm that everything was in order, which it was. The project is fundamentally sound.What was not sound was their security. As far as I can gather, the team that wrote the code handed off ownership to the PAID team, but never revoked their own permissions. They later used the code they had built for PAID to pitch another project, as an example of their work. When they uploaded to GitHub, they compromised the private keys, allowing someone to hack them. The hacker burned 60M coins, which he had to do because the supply was fixed and already minted. He then minted 59M new coins and dumped them on Uniswap, earning about 2000 ETH or 3.2M dollars. The price of PAID went from $3 to under .30 cents in a matter of minutes. It was recently $5.The code itself was solid, which is why it apparently survived the scrutiny of auditors. Once it was compromised through the private keys, the code was altered to add the burn and mint features.PAID will attempt to make investors whole by utilizing a snapshot from before the hack, but this will not immediately restore the previous value. We have seen a number of projects overcome these hacks (SUSHI, for example), so now it's waiting game.This is a cautionary tale.The lesson here is that we all have to be VERY careful where we put our money in this space. If you are going to invest in these news coins, understand that that investment can go to 0 and that this is beyond your control, no matter how much research you do or how much you trust the auditors.Invest small, considering your stop loss to be 0.I feel awful for anyone who lost money on PAID, or any of the other hacks, exploits and rug pulls that we have seen of late - there were two more this weekend.Be careful out there.Side note - I am working on my laptop, so all of my charts will likely look smaller.In This Issue:Bitcoin Thoughts And AnalysisAltcoin ChartsLegacy MarketsGBTC NAV Has Gone NegativeThe Public Is Doubting Michael SaylorThe Original Satoshi Mailing ListETH Supply Being ReducedMy Recommended Platforms And Tools
The Wolf Den #193 - Invest Only What You Can Afford To Lose
The Wolf Den #193 - Invest Only What You Can…
The Wolf Den #193 - Invest Only What You Can Afford To Lose
This newsletter is sponsored by PHEMEX, the only exchange that I use to trade crypto with leverage. Sign up with the link above and get some free Bitcoin. I really encourage you to check them out - you know that I never endorse a product that I do not use!Invest only what you can afford to lose.This is an age old lesson about trading and investing that I have learned countless times over the years. On numerous occasions, I have made poor investments with too much size that I came to regret - from buying a mutual fund when I graduated college that I needed to cash out a year later for 60% less than I bought it for to going "all in" on a single stock and watching it go to 0.Last Friday I experienced my first exploit/hack in the crypto space, with one of my largest holdings dropping 90% in a matter of minutes. I was both an early investor in PAID as well as a buyer multiple times on the open market, most recently when it dipped to $1.80. Fortunately, I did not invest more than I could afford to lose, but the loss in value was still tough to stomach.I had trusted people who vetted the project for me, I did as much research as I could. The project and code was audited by Certik to confirm that everything was in order, which it was. The project is fundamentally sound.What was not sound was their security. As far as I can gather, the team that wrote the code handed off ownership to the PAID team, but never revoked their own permissions. They later used the code they had built for PAID to pitch another project, as an example of their work. When they uploaded to GitHub, they compromised the private keys, allowing someone to hack them. The hacker burned 60M coins, which he had to do because the supply was fixed and already minted. He then minted 59M new coins and dumped them on Uniswap, earning about 2000 ETH or 3.2M dollars. The price of PAID went from $3 to under .30 cents in a matter of minutes. It was recently $5.The code itself was solid, which is why it apparently survived the scrutiny of auditors. Once it was compromised through the private keys, the code was altered to add the burn and mint features.PAID will attempt to make investors whole by utilizing a snapshot from before the hack, but this will not immediately restore the previous value. We have seen a number of projects overcome these hacks (SUSHI, for example), so now it's waiting game.This is a cautionary tale.The lesson here is that we all have to be VERY careful where we put our money in this space. If you are going to invest in these news coins, understand that that investment can go to 0 and that this is beyond your control, no matter how much research you do or how much you trust the auditors.Invest small, considering your stop loss to be 0.I feel awful for anyone who lost money on PAID, or any of the other hacks, exploits and rug pulls that we have seen of late - there were two more this weekend.Be careful out there.Side note - I am working on my laptop, so all of my charts will likely look smaller.In This Issue:Bitcoin Thoughts And AnalysisAltcoin ChartsLegacy MarketsGBTC NAV Has Gone NegativeThe Public Is Doubting Michael SaylorThe Original Satoshi Mailing ListETH Supply Being ReducedMy Recommended Platforms And Tools