Why I Sold My Bitcoin To Buy A Nintendo Switch

Author: | Date:

8 Jul 2014.

The day I bought my first Bitcoin.

I bought it from a Bitcoin ATM at CityLink (the machine is no longer there, but can be found in other parts of Singapore.)

It looked something like this:

Jon had recommended a wallet at blockchain.info so I opened one and transferred my Bitcoin from this machine.

I didn’t know that Bitcoin will become so hot at that point in time. In fact, the price had just fallen 50% after it surged past US$1,000. One mantra I learned from the stock market is to be a contrarian, acting against the crowd often pays off well.

Plus, what’s there to lose if I just use few hundred dollars to buy the future of Bitcoin?

Later, I also learned that I could buy Bitcoin over independent exchanges.

Being a skeptic, I was fearful of illegitimate and fraudulent sites that could cheat my money. So I read a few reviews and found itBit exchange which has an office here in Singapore. It gave me more assurance, especially with the multi-layered security checks on the platform. So I bought more Bitcoin over the next 1 year.

4 Jun 2015 was the last time I bought Bitcoin. I didn’t own much. I only had 1.1378 Bitcoins with an average price of S$433.16.

My Views About Bitcoin, Cryptocurrencies and Blockchain

Bitcoin will always be the #1 Cryptocurrency

It is the first mover. Just like the .com domain, you simply can’t replace it. No matter how many .org, or .net or .what springs up later, they are not going to change the status of .com.

Just like gold. You cannot replace its role with other precious metals. It is just not the same. Hence, other cryptocurrencies will pale in comparison, even the other versions of Bitcoin are not going to beat the one and only original Bitcoin.

Ethereum has more practical uses than Bitcoin

Ethereum adds a lot of value to society.

It has the smart contract element in it. And oh boy, that’s very powerful because legalities can now be coded into the network. This means businesses can operate in this new paradigm. Instead of paper agreements, contracts can be coded and be legal binding without the use of lawyers. It is transparent, and the evidence is indestructible.

Bitcoin doesn’t have smart contracts and hence loses out in term of its practical value.

That said, silver has more practical uses in our products than gold. But gold is still the most recognised precious metal. So suck it up Ethereum, you will work the hardest but Bitcoin will still be the prettiest.

Blockchain technology is going to change our world

The most valuable thing that cryptocurrencies have brought into this world is the blockchain technology.

To put it simply, it provides a distributed system for verification of transactions.

And this is what’s making most governments and bankers uncomfortable – their role of controlling the financial system is diminished if anyone on the network can replace their roles to verify a transaction.

Loss of power = Loss of money.

But blockchain has wider use than just monetary transactions. It could replace the way stock exchanges operate. Instead of relying on a company to manage the exchange, the network will take over this role and verify every buy and sell order in the market. Slap on a smart contract and you may not even need a broker or depository to issue you a proof of ownership.

Cryptocurrencies are not going to replace fiat currencies

Although powerful, I do not think cryptocurrencies are going to replace the currencies which we are using today.

The reason is that the value of these cryptocurrencies are too volatile. Would you be able to live peacefully if the value of your networth in cryptocurrencies fluctuates 10 percent a day? Some stock investors can’t even handle a $100 flutuation!

Currencies require stability and cryptocurrencies do not offer that, in the present day. I equate Bitcoin to digital gold and the rest of the cryptocurrencies as digitized forms of precious metals. And my opinion is that cryptocurrencies are here to stay, and would coexist with the fiat currencies.

ICOs are weapons of mass destruction

What I cannot agree with in this entire Cryptocurrency trend, is the Initial Coin Offerings (ICOs) that are sprouting out from all corners of the world.

Most would understand the concept of companies going for listing, the process is known as Initial Public Offering (IPO).

The IPO process is highly regulated and strict criteria have to be met in order for a company to list. This is to protect the public from investing in nonsense because their ability to discern the good from the crooks is assumed to be non-existent.

ICOs on the other hand, appears to be circumventing the Securities Acts of every country known on Earth. Any Tom, Dick and Harry can now raise money from the public through ICOs. There are no checks on these offerings and there are a lot of frauds going on.

But you know what? People don’t care what I say. They invest in what they want to invest. Be very careful when you are being ‘sold’ an ICO, I foresee that there will be a few major ICO frauds that would destroy wealth for the masses as Cryptocurrency gains even more awareness in the near future.

Finally…why I sold my Bitcoin

Sorry that I digressed.

I had told a few friends that I will not sell my Bitcoin. I just want to keep it for fun.

But when it quickly crossed US$10,000, I was shaking my head in disbelief. 😧

It was too fast too furious.

I would think that what I have learned about the stock market is applicable to Bitcoin. A parabolic price move tends to crash heavily eventually.

While I believe in the future of cryptocurrencies, I think the recent price moves are unsustainable. People may say “this time is different” but to me it is always the same because it’s the same greed and fear that is driving these prices. It could be tulip, stocks or Bitcoin. The asset is different but the people are the same. As the Thais like to say, same same but different.

So I was sitting on the toilet bowl in the morning when Bitcoin price crossed US$10,000.

I logged into my itBit account and cashed out 1.0168 (you might notice I still have some Bitcoin left, if you are sharp enough).

I wondered if I would get my cash. It only took a day and I saw S$13,540.17 in my bank account. So itBit is real.

That’s 3,026% returns in 4 years.

The price may continue to run up but I don’t think I can ever call a top. So I have given up the desire to be right. I am happy with the profits I have taken.

And bought a Nintendo Switch…

What do you do when you suddenly have access to S$13,540.17? 🤔

I decided to earmark S$3,500 to enjoy life and save or reinvest the other S$10,000. What’s the point of keeping all the money or reinvest everything if I can’t bring along to my grave?

Research has shown that one should buy experience and don’t buy stuff, if you want happiness.

I have been cracking my head on what experiences I can buy with S$3,500 in Singapore. It isn’t easy.

I will probably spend S$800 on a staycation at Marina Bay Sands and bring my son to the infinity pool.

And maybe enjoy a meal with my family at a Michelin star restaurant in Singapore.

I splurged $700 on a Nintendo Switch and play the only game I will play – FIFA. Is this stuff or experience?

Anyway I still have some surplus to spend. Any ideas you can offer?

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Co-Founder. Believer of the Factor-based Investing approach. Running a Multi-Factor Portfolio that taps on the Value, Size, Profitability and Momentum Factors. Quant at heart. Believe the financial industry can treat their customers better. Wants to change the world.
  • HI Alvin,

    Nice article. Lucky you managed to bought a bitcoin at a very cheap price. Personally, i would just hold on to it unless there’s really a need to cash out but that’s just me. Cryptocurrency is the reason why despite attending your factor-based investment class, i have yet to start my investment in stock market 😀 but i promised i will, soon.

    With the surplus you have, again in my humble opinion, i would re-invest them again in buying multiple penny coins. A bit like Warren Buffet style by buying cheap coins. Of course, one needs to research if such coins have real-life use-case. Else, i’m sure you already know what you want to do with the surplus being an experienced value investor yourself 😀


    • You are right that I was lucky. At the moment I only think bitcoin or ether are worthwhile. The rest I haven’t got a clue. Generally not interested to get in Crypto because it is too hot. I don’t like it when it gets too popular.

  • Congratulations to your huge gains. Your views about bitcoin in this post – do you have the same views at the point of purchase or is it just hindsight? Also, as a factored based investor and instructor of such courses, how did you value bitcoin then and now? What is it that made you hold even after substantial gains and sell now? A contrarian bet can be speculative as well so I believe readers would appreciate if you provide more concrete numbers since you are a quant at heart. .

    • Those views were developed as my understanding of cryptocurrency improves but I wouldn’t say I am an expert. My thinking process was that bitcoin has just tanked from 1,000. And many people seem disinterested already so I am confident there’s some degree of cheapness in itself. And there’s no harm picking up 1 bitcoin as it could potentially grew overtime. So you are right that there’s much speculation but the risk is not much to begin with. And I didn’t put a lot of money in it shows that it is not a confident bet.

      As to why i sell now is quite the same thought process as I bought it in the first place. I think there’s too much attention and chatter about bitcoin and I believe it is bubbly and not sustainable in time to come. I expect a crash and I would pick up some again if indeed it happens.

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