Did Early Bitcoiners Get Lucky?

Some say that anyone who got to bitcoin early is lucky. If only I knew about bitcoin back then, I would be rich too! Anyone from the early era of bitcoin who actually still holds onto a significant amount of bitcoin knows this isn’t true. The journey from the invention of bitcoin in 2009 up until the present day of bitcoin being the dominant global digital asset has been long, arduous, and uncertain.

Were early bitcoiners lucky? Certainly not. They were educated and steadfast.

If you survived a decade of Bitcoin, and still have a stack congrats! I know you worked hard to get where you are today. We have it a lot easier now thanks to contributors like yourself, and I can only hope that in 10 years people say that I was “lucky” too!

6 Reasons Early Bitcoiners Were Not “Lucky”

1. Bitcoin Was Literally Worth Nothing In The Beginning

Unlike any of today’s ICOs and crypto projects, when the bitcoin network was launched, its tokens were worth $0.00. There was zero value to them. The only way to acquire bitcoin was to mine them. In reality, bitcoins were worth less than nothing because you had to pay for the electricity to run your computer!

Imagine how crazy you’d have to be in 2009 to think that a digital token worth less than nothing would someday be worth more than $50,000 USD. Some people had wild imagination (or visionary insight), but to most people mining bitcoin at the time, it was a toy to tinker with.

There was no monetary incentive to mine or acquire bitcoin during the first year of its operation, and it wasn’t until October 2009 that bitcoin could actually be purchased on Liberty Exchange at a price of 1 USD for 1,309 bitcoin.

The network was just barely getting started and was fragile. Nobody knew what the future of bitcoin would hold. Could it withstand an attack? Could it be hacked? Would the government intervene? Fire had been stolen from the gods and given to mankind. Pandora’s Box was opened. The network’s success was not guaranteed.

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2. It Was Very Hard To Use Bitcoin Early On

Bitcoin was not “user friendly” during the first years. There were no mobile wallets. There wasn’t even a GUI in the beginning. You had to use a command line to interact with bitcoin. That means you either needed to start with the technical knowledge or make an effort to learn it. For any normie computer user, this would have been a big challenge.

These days, there are many ways to get support with bitcoin as you get started. There are technical books, like Programming Bitcoin and Mastering Bitcoin, or you can hop into Telegram groups and Discord channels for 1-on-1 support. Many have trail-blazed the rabbit hole before you, so there are guides for your journey ahead.

Ten years ago, that wasn’t the case. If you ran into problems, you had to troubleshoot them yourself or hope that someone would answer your questions on BitcoinTalk.org.

Not only was it hard to set up the bitcoin client, but you also had to manage key security on your own as well. Keys were stored in the wallet.dat file which could be accidentally deleted or accessed by malware on your computer. If your hard drive was corrupted or you switched laptops and didn’t remember to bring over the wallet, then those coins would be lost forever as well.

Even buying bitcoin was difficult. Though I wasn’t around during this time, from what I understand, to buy bitcoin on the most popular exchange at the time (Mt. Gox) you had to send a money order through a local in-person shop to Japan, and hope they sent you bitcoin in return. Coinbase didn’t appear until 2012, and it was pretty much the only exchange you could use with bank transfers.

You had to care intensely about bitcoin and its technology just to buy, mine, send, receive, and secure it properly. This was not a casual hobby!

3. Hodling Through Dips Requires Resolve

The price of bitcoin going from less than a penny to being worth tens of thousands of dollars has not been a straight line. Bitcoin’s price volatility is famous and moving 20% or more in a single day is not uncommon.

Now, we have memes like HODL, diamond hands, and “Buy the dip!“, but these come after more than a decade of watching bitcoin climb up and to right. In the early days of bitcoin, it wasn’t clear if a 90% drop in price was the end of it all.

When bitcoin went down, the entire world piled on. There was the crash of 2011, then the double bubble in 2013 and the extended 2015 bear market. Imagine you had a few thousand bitcoin sitting in a wallet.dat file on your laptop in 2011. Suddenly they’re worth $100,000, but then the market crashes 90%. Would you have sold after a 50% dip to collect your 50 grand? Would you have kept your coins sitting in the red, or even doubled down and bought the dip?

Most people sold their coins as the media declared bitcoin was dead.

4. Hodling Through FUD Is Hard

Not only would you have to hold your coins through several 90% dips over the course of ten years, but you would also have to be ignoring the advice of everyone around you. With every crash, the chorus of mainstream media chanted that the digital money pyramid scheme had imploded. Your mom. Your brother. Your friends. The news. Everyone took their turn to remind you that you wasted your time and income on magic internet money.

“It’s a Ponzi and a scam” is just one type of bitcoin FUD you’d have to live through. Would you stand tall and keep your conviction that bitcoin would become a global reserve currency competing with the US dollar? Keep in mind that we didn’t have the expansive amount of digital media around back then, so you couldn’t just listen to Nic Carter, Matt Odell, or Lyn Alden talk about dispelling FUD and myths. You’d have to do independent research to disprove it yourself and dedicate a lot of time to becoming a “Bitcoin expert”

Here are some of the classic FUD you’d have to live through:

• China controls the hashrate
• China controls the ASIC manufacturing
• The US government will shut it down
• It’s only for criminals to evade laws
• You can’t buy anything with it
• It’s not backed by anything
• It can’t scale
• It’s too expensive

5. Hodling Through Distractions Takes Focus

2011 brought the concept of “altcoins”, which were non-bitcoin cryptocurrencies. Some claimed to be like bitcoin, but faster. Others claimed to be like bitcoin, but with unique features. By 2017, the value of the cryptocurrency market as a whole had grown to more than a trillion dollars. Many coins on the market claimed to be the next bitcoin, or the bitcoin killer.

There was even a fork of bitcoin called Bitcoin Cash, which claimed to be the “real bitcoin”. They said that the coin using the ticker BTC was not true to the nature of the original Bitcoin project.

Some coins made compelling arguments. People speculated that bitcoin was “old tech”. It was the Myspace of crypto and it would be replaced by something newer and better. The world had seen bitcoin grow more than 100,000% over the past few years, and it was hard to not see the potential of some other coin surpassing bitcoin and making those same gains.

These various coin projects would pump and dump. Social media had really hit its groove, and shills were pumping their bags on Reddit & Twitter. The shitcoin casino was running full steam. Bright orange bitcoin signs were flashing in front of everyone’s eyes, notably because insiders were cashing out of these coins behind the scenes to acquire more bitcoin for themselves.

Many people lost their assets trading shitcoins trying to find the next bitcoin. The ICO bubble burst in 2018, and bitcoin was the only cryptocurrency other than Ethereum to make new highs years later (although ether never reached its previous ATH when priced in bitcoin).

It took a lot of conviction to hold only bitcoin and not try your hand at the crypto casino game. After the bubble burst, lots of people threw in the towel. Would you have written off the industry as a whole or would you have been humble enough to realize Bitcoin is the real deal?

Shitcoining was just one type of distraction that could happen over a decade. How many people moved and lost a laptop along the way? Or a hard drive became corrupted? Or you forgot a password?

As a new father, I know how absolutely time consuming and energy draining having an infant and toddler can be. Before the kid, I would just sit for hours tinkering with bitcoin, reading articles, and studying everything I could get my hands on. After having a child, I can barely get through one of Alex Gladstein’s epic articles. I’m still trying to get through the first few paragraphs of The Invisible Cost of War without falling asleep (my son is teething and isn’t sleeping through the night).

School is another huge distraction that affected many. When you’re busy with classes and trying to make grades, it’s hard to find the time to study bitcoin full time to keep up with everything going on. Not only that, but the cost of going to school could be eating up your bitcoin savings. In 2013, if, you had to choose between keeping $10,000 in bitcoin or paying for another year of school, would you really have bet your future on Bitcoin?

6. You Needed Rational Hopium For A Decade

To hold bitcoin through a decade of FUD and everything else, you needed to be intelligent, self confident, open minded, consistent, positive, and hopeful. It’s not often that a person embodies all these qualities at once.

A ragtag group of misfit cypherpunks and internet nerds bootstrapping a global monetary system from scratch is something that not even Hollywood movies would have considered as realistic science fiction. How the hell was something like this even possible? You really had to see the Bitcoin story through rose-colored glasses to believe it.

Bitcoin is not perfect money. Bitcoin is not inevitable. You had to see past Bitcoin’s flaws. You had to see what the future could hold and believe that it would happen.

Even today, there is a lot that can go wrong. The Bitcoin story is not finished. Can you imagine what bitcoin will look like after a decade? How fast do you think adoption will come, and how will you react if those goals aren’t met? How much of your net worth is stored in bitcoin and how long will you leave it there if your predicted scenario doesn’t play out in the time frame you expect?

7. You Can’t Stay Lucky Without Understanding Bitcoin

It’s true, there are some people who just “got lucky” with bitcoin. These are the stories in the news you hear of someone mining bitcoin in 2009 or 2010 for fun, then forgetting about it, only to discover a lost hard drive 10 years later with millions of dollars worth of bitcoin. It happens from time to time, but have you noticed that you don’t hear many of those stories anymore?

You can get lucky once, but you can’t stay lucky without understanding bitcoin. Many of those people sold everything during the 2017 bull market, and now they have no bitcoin.

Even if you had 1,000 bitcoin and sold them at the absolute top of the market in 2017, you’d have about ten million dollars after your 50% haircut thanks to capital gains taxes. The only problem with that? You’d have zero bitcoin. That means you would have missed out on the run from $20k to $69k over the past two years.

Now you have to decide what to do with that ten million dollars. Real estate? Art? Stocks? Or would you put it back into bitcoin?

This guessing game of when to sell and buy back is why traders constantly lose money in the market. They “have a gut feeling” it’s a top or a bottom and are proven wrong over and over again until they are out of bitcoin.

Lastly, let’s not forget that on a technical level in the early days bitcoin was just hard to use. People lost coins all the time due to wallet mismanagement, malware, computer failure, or just plain mistakes while tinkering.

Not All Early Bitcoiners Have A Lot Of Bitcoin

Back then, many people were hyper focused on the medium of exchange element of bitcoin and missed out on the store of value aspect because of it. I think that this was in part because of a misunderstanding of the word “cash” in the Bitcoin white paper title, Bitcoin: A Peer-to-Peer Electronic Cash System. These days, cash means petty cash, while the traditional meaning of the word cash is bearer instrument, meaning the holder of the item is the true owner.

Many people spent their bitcoin simply because in their mind Bitcoin’s success wasn’t measured in price, but in volume. When you focus on buying coffee with bitcoin, you lose the idea that bitcoin is the foundation of neutral, global money. The problem isn’t that I can’t buy coffee. The problem is that money has been corrupted by legacy institutions.

A number of people picked the wrong side of the debate during the Fork Wars and ended up selling all their bitcoin for bitcoin cash (BCH) or subsequent forks.

Plus, ten years of holding any asset is a long time. Life is expensive, and you never know when an emergency will surprise you. Along the way, you’d have to make decisions about whether to keep your bitcoin or pay for something important.

Think back to 2014. You’d imagine that anyone holding for 8 years would be a whale, holding thousands of bitcoin right? It’s less likely than you think.

As this tweet points out, with a price of $1000 per bitcoin, it’s unlikely that early bitcoiners had $50,000 to invest and that they would put it all into bitcoin. There is a very small number of people who would YOLO 50 grand into bitcoin then not touch it for a decade.

A great example of this is the famous, long-time bitcoiner Andreas Antonopoulos. He’s well known for educating people on bitcoin for more than a decade, often teaching to a near-empty room in the early days. During a Twitter exchange, revealed that he had sold most of his bitcoin in 2013 in order to pay for rent. I would imagine this is a common story among other early bitcoiners, because when push comes to shove, would you rather have magic internet money or a roof over your head?

For some early bitcoiners, working on bitcoin paid the bills, but just barely. Since bitcoin is not a company, there is no central organization hiring smart coders to pay for their time. Everything is done voluntarily. Though there are grants, these are competitive, and not guaranteed income. It’s hard to be a bitcoiner AND an entrepreneur AND a marketer AND everything else it takes to find consistent freelance work.

There are plenty of people who are building bitcoin companies who are very wealthy, but often they are not working on bitcoin itself. They are building exchanges, investment funds, apps, or other things which leverage bitcoin as a product, but don’t actually build out the bitcoin protocol.

To be honest, I can’t think of a single wealthy Bitcoin developer off the top of my head.

Final Thoughts

It’s way easier to hold bitcoin in 2022. To be honest, we have it pretty good now. There is a ton of free, high quality resources for new entrants and the technology for using bitcoin is way better too. Imagine not even being able to store your keys in a 12-words thanks to BIP39 or not having a mobile wallet!

Yes, there are a few folks who “got lucky” in bitcoin and became rich, but for the majority of people, this isn’t the case. Most simply lost their bitcoin through mistakes and malware, traded them away with hubris and overconfidence, or diversified into other digital assets which ultimately underperformed. The folks who got rich and stayed rich did so because they put in the work to understand bitcoin, accepted the risk, and held onto their stack through some volatile times.

Personally, this is one of the hodl frameworks I use for my own mindset. I’m putting in the work just like the early bitcoiners did. I’m reading the books and articles. I’m listening to the podcasts and consuming the media. I built my node. I hold my keys. I use lightning. I’m going to continue doing this for ten years and see where I end up on the other side of it all. In the end, people will say I’m lucky but I know that won’t be true.

Further Reading

• Early Speculators Reward