While my first sell and buy of Ethereum in May (mentioned in my Dorena does Day Trading post) got me thinking about day trading, I still thought like a long-term investor.  I could see the prices going up and I just wanted to use the proceeds from my house to buy a chunk and sit on it.

However, I was thwarted by daily and weekly purchase limits imposed by Coinbase.  I purchased all I could at the end of May and even considered making a credit card purchase with a 12% fee. (Which I regret not having done – since the overall price would have been $190 and within two weeks Ethererum was over $400.)

At some point, my partner turned me on to GDAX.  The fees were a fraction of Coinbase, the limits were higher and I could place buy and sell orders at speculative but set prices instead of being forced to place an instant purchase.  However, by the time I got the account funded, the price of Ethereum was up another $100.

I bought my last few Ethereum with the long-term investor mentality when the price was maxed at $400 on June 12th.  Then the prices started to drop with lots of daily fluctuations.  This is when I started considering day trading.  Buying 10 ETH and then selling when it was $20 higher would make $200.  The market was so volatile it almost seemed predictable that it would fluctuate that much. Since, I was already keeping my eye on the price, why not play around with buying at the daily low and selling at the high?

On June 21st I decided to give it a try.  Setting aside the majority of my ETH, I picked a safe number I wouldn’t feel bad to lose, to play with.  I bought at a low and sold when the value went up $10.  I made $99 the first time I did this.  For the next three days I bought modest amounts, but the price kept dropping and I just held.  Then on the 25th I bought a chunk, got scared and sold it as soon as it went up a fraction and made $20.

I was an anxious wreck.  And, I was curious.  What underlying belief was keeping me so nervous.  I had already decided what I was willing to lose.  I could sense a lot of different programs pushing at me.

• The need to be right
• The need to not make a mistake
• Shame at looking bad
• My mother’s ideas that you don’t lose money unless you sell
• My attachment to the outcome
• The volatility of the market, requiring hypervigilance
• My attachment to my plan

I thought it was stupid to continue, but I was intrigued if I could actually learn how to day trade without attachment.  My mind kept thinking about two of the Eight Worldly Thoughts:

Being happy when things go your way.

and

Being unhappy when things don’t go your way.

This totally described my situation.  Could I learn to be detached in the face of rising and falling prices?

My fascination with cryptocurrency actually began in 2015.  If you have read my book, Deconditioning Ground, you may remember Carlos, the mysterious man from Mexico, that stayed at my house for a month in 2014.  Carlos actually did come back into town in August of 2015.  He paid for his room with silver and left me a bitcoin tip.

The tip he left me was 0.005 bitcoin, which was about 8 cents back then, but today it is worth around $12.  In two years, the value has gone up 150 times.  I should have had him pay for the room with bitcoin not silver.  I think he paid with 2 ounces of silver for two nights.  The silver was worth about $32 then and still $32 now. In comparison, the bitcoin would be worth $4,800.  Just imagine…

I was pretty trusting of him, since I let him install a program on my computer which actually has a complete copy of the block chain.  I remember being slightly suspicious, since when it was open it really slowed down my computer.  (What was it doing?)

Now I know that when I have the program open, it updates the block chain.  I only do this once a month, since it takes about 3 hours for the missing four weeks to download and uses more data than I am allotted with my rural internet.  In the good-ole-days, people could actually mine for bitcoins on their home computers.  Now, specialty equipment has made at home regular prospecting obsolete.

You might be wondering what a block chain is, or even what a Bitcoin.  First off, I am not really sure if I even know.  Somehow, people are making money and other people, like me, are buying it with US dollars.  A recent article would call me a “dumb money” investor.  But I’ll go ahead and tell you my lay-women’s understanding of it all.

Bitcoin was the first cryptocurrency.  Basically, it is some sort of computer algorithm program that people all over the world can download.  I think the one on my computer is just like the ones all over the world.  This is what is required for mining bitcoin.

When people “mine” cryptocurrency, it isn’t like digging around in the code looking for the money.  It is more like as you are building the next link in the block chain, bitcoins fall out.  Everyone running the program is mining, or building the next link in the chain, but only operations that go the fastest can get the coin.

The other thing about cryptocurrencies is that the block chain also records exchanges.  When I sell or buy bitcoin the transaction becomes imbedded into the code of the block chain.  If you want your transfer verified fast, you can pay a small fee and that goes to the people that are mining.  This gives them an incentive to record your transaction first in the new link in the chain they are working on.

Earlier in the year, I tried to purchase something with bitcoin and didn’t want to pay the fee for instant verification.  The bitcoin I sent to the vendor took 72 hours to be incorporated in the block chain, and by then the vendor had cancelled the transaction.  Once it was verified, the vendor sent the coin back to me.  No loss, but I get a little jittery with cyber transactions like that.  However, I can imagine gaining greater comfort as I get accustomed to the process.