Letter 17 - Money

Wealth is the slave of a wise man. The master of a fool.

This post was originally meant to be Part 3 on the Bored Ape Yacht Club (and I have half a post written already for that), but this topic seemed more pressing. The BAYC isn’t going anywhere. So let’s talk about money.

Money has never yet made anyone rich - Seneca

This letter is going to perhaps be a touch more personal and subjective than my usual objective missives. I think a lot of people might be able to relate to some of what I speak about and my hope is that writing my thoughts out will be helpful to some. This is also likely to be pretty rambley and less structured than my usual Letters. Apologies in advance, but I am planning to just start typing and let the words pour out and leave them to be read in the order they came out.

This year has been insane. Specifically the last couple of months. I have made more money than I can dream of knowing what to do with, and I am not alone. There are so many people in this space making unfathomable amounts of wealth and it is all happening so quickly that I predict most people are like me and are struggling to wrap their heads around it. Then there are also so many people in this space not making unfathomable amounts of wealth but they are adjacent to people that have been fortunate enough to make life changing money, and might be feeling all sorts of negative feelings about themselves. I know and can relate because that was me a few months ago.

Man, it’s hard to believe that a few months ago I would look at a purchase of 1 ETH and gawk at how enormous it was, and dream of having a bankroll large enough to be able to justify a purchase so large. I would list some Art Blocks CURATED pieces for sale under 0.1 ETH because I needed liquidity. Fast forward to where we are now and.. really, life doesn’t feel very real any more.

I literally spent an entire day a few weeks ago with my mouth agape watching the Art Blocks sales-bot feed flying by. I was legitimately in shock; paralysed with what was happening. I wasn’t listing anything for sale, I wasn’t buying anything. I wasn’t even thinking about doing either of those things. I wasn’t really thinking about anything. If you cracked open my head you’d probably see the words “holy shit” and “wtf is happening”, and nothing else. Even now, 20% of my thoughts are “holy shit, wtf is happening”.

I feel fortunate that I have 15 years of experience as a professional poker player behind me which has trained me to have a healthy disassociation from money for times like these. What is a healthy disassociation? That’s a tricky question to answer. It’s basically the Goldilocks level. Not too much, but not too little. You want juuust the right amount.

It is not healthy to completely disassociate yourself from money. That’s how you end up spending $50k on a watch, $250k on a car, $10k on a night out clubbing, $20k flying first class around the world, and infinite money on God knows what else, and having nothing left to show for it once the tap runs dry. I saw this happen a lot in the early poker days. 18-22 year old kids found themselves making $500/hr and all of a sudden they lost whatever small concept of money they held and eventually the games dried up and got tougher and most weren’t able to cut it and had to leave the poker world to go back to study, or work a ‘normal job’, and it was never an easy transition.

It is also not healthy to completely associate yourself with money. If you are constantly checking the price of everything you have and converting ETH to fiat and thinking about what you could be buying in “the real world”, and thinking about how many weeks/months salary you are making/losing on a daily basis.. it will drive you crazy. You will also never be able to diamond hand projects and realise the massive 100x+ gains that some people are finding in this space if you are following the price every day and wanting to sell whenever something doubles in price.

A healthy middle ground is necessary to thrive in this crazy, crazy world we live in. How do you find this middle ground? With great difficulty, I think. It takes a special type of madness to have something double in price and not want to sell. It takes a great deal of conviction in a project to be able to do that. Or, it could just be greed. I am sure that a lot of what is propelling this market (like any market) is greed, for better or worse. I think it’s a part of human nature. Very rarely is what we have “enough”.

It is not the man who has too little, but the man who craves more, that is poor - Seneca

I think we could all stand to do better at being happy with what we have. This is not an easy thing to do. It’s literally something humans have been working on for thousands of years, and will probably continue to work on from now until our species becomes extinct. I’m not saying that you’ll be able to achieve contentment, but I am saying it is worth trying.

So much of the anguish (actually, all of it) that we feel in this space is self-inflicted. Oh damn, I sold xxx and it went on to be worth 100x more! Oh damn, why didn’t I mint that?? Oh damn, why didn’t I mint more of that?? Oh damn, why didn’t I sell less of that?? Oh damn, why didn’t I sell more of that when it was higher price?? Oh damn, why did I mint X which is doing nothing when I could have minted Y which is now mooning?? Oh damn, oh damn, oh damn.

I’ll share a feeling I have had over the last few days to show how utterly illogical the human mind can be. The hot new project floating around is called Loot (for adventurers). It was dropped for free and was claimable to anyone willing to pay the gas. When I found out about it the floor was 0.07 or so and I bought 7 bags of Loot. The floor is now 12.85 ETH ($48,978.42). I sold three bags at around 2.4, 2.5 and 7.5 ETH each. I am insanely blessed to be in the position I am currently in, yet, my brain still sometimes goes “why did I sell those 3” or “why didn’t I buy more???”.

I effectively just made $250k+ USD, while on vacation, all because I was fortunate enough to receive a DM on Discord alerting me to the project, and yet my brain still wants me to sometimes feel bad about myself for the position I am in.

THIS IS ABSURD.

I can, thankfully, and healthily, quickly ground myself and realise how fortunate I am and how blessed I am and not feel “bad” about the situation. But my brain still goes there, and I know from a few months ago when I was in a much less fortunate position that when my brain had these thoughts I would sometimes wallow and spiral into a worse place. I am sure many people in the space are going those places now because they missed out on Loot, or x/y/z other project. It’s so easy to beat yourself up and to lose sleep over decisions made (or not made) in this space.

I don’t have an easy answer for how to stop feeling the bad feelings. It’s something everyone needs to work on and figure out for themselves. But I will say that if you feel it getting to you too much, take a break. A 10 minute walk away from all technology might be all it takes. A shower. Some exercise. Perhaps a day or two away from NFTs is called for. Perhaps a week or two. Whatever it takes to maintain your sanity, it’s worth it. The space isn’t going anywhere. I dunno if you’ve heard or not, but we’re still early. I truly believe that the only thing you really need to do to thrive in this space is to survive it.

If you’re here, now, reading these words - you’re probably gonna make it. Whatever ‘make it’ is. Soak up as much information as you can, invest whatever you can responsibly afford to, or invest nothing and find other opportunities to take advantage of. There are literally an infinite amount of opportunities in this space - if you can’t find one you like then you can make your own opportunities. Just don’t lose yourself in the process.

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There are very few people in the world that can understand what we’re all going through. Nobody outside the NFT space understands the NFT space. Heck, I’m not sure anyone inside the NFT space understands the NFT space. We’re all figuring this madness out together. We’re building a new world from the ground up. Some people are quite literally creating the building blocks and foundations that future generations will use; most of the rest of us are using the blocks and supporting them. We are all pioneers. We should all stick together and lift one another up and foster as warm and welcoming an environment as we can for anyone new looking to join the space.

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Think about tax

This thought just came to mind as I was thinking about what I might want to say to anyone else that is making money, significant or not, in this space. There’s plenty of psychological things to talk about when it comes to money but something that isn’t spoken about enough and should be is tax.

It’s so easy to think of ETH as “play money” and “not real” and just buy and sell things without putting much thought into them. This is dangerous. This is not play money, this is real money, and real life, and in real life, we must think about tax.

in this world, nothing is certain except death and taxes - Benjamin Franklin

I’m not a tax expert. I haven’t figured out my own tax situation, but I am talking with two accountants to try and get to the bottom of it. You should do the same, or at the very least do some googling and try to understand what your tax liability might be. Set aside some money to pay your future tax bill(s).

Another thing to consider is which NFTs to sell, and when. Consider the capital gains of your investments and when it might make the most sense to sell, if you want to sell. Consider not buying something if your only intention is to quickly sell it and create a new taxable event which is going to eat at an already-thin profit margin.

Just.. think about tax. Sooner rather than later.

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Think about charity

I don’t know about you, but I feel guilty knowing that I have so much and others have so little. Figuring out a way to give back is good for the mind, good for the soul, good for humanity; it’s just good. I’ve recently started my own NFT project that has a charity element, I’ll be posting more about it in a future Letter but it’s my small way of giving back for now that I hope to build upon and grow into something much larger.

I don’t think it makes anyone a bad person if they don’t give anything to charity. We are all in different phases of our lives with different life situations and we all have different views about the world. It’s just something to think about.

There is so much money flowing around in this space that I think we can grow the space, create personal wealth, and give back a tremendous amount to the less fortunate in the world. It is amazing to see that many if not most NFT projects these days include a charity component in their roadmap. Sure, you could say a lot of them are still cash-grab projects and doing the charitable donations purely for optics. Perhaps that’s the case, perhaps not. Regardless of the intention, the result is that some % of money from the ecosystem is flowing to good causes, and I think we can all agree that that’s a good thing.

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Nobody went broke taking profits

I know a lot of people, myself included, like to joke about how you should never sell NFTs. I want to make it very clear that I am joking whenever I say that (which I also say at the time I make such statements). Don’t ever feel bad about selling and locking up profits - whether it’s to boost your bankroll to invest into future opportunities, to pay for a holiday, to pay off a debt, to put in the bank so you feel more at ease having “real money”, to make your partner happy, to make your parents happy, or whatever other reason you have to sell an NFT. Nobody ever went broke taking profits.

It is virtually impossible to “pick the top” when you sell. There’s a lot of talk about Dollar Cost Averaging as a good strategy for investing in crypto/in general - essentially instead of trying to time your buys with when the market is low, you invest x amount on a periodic basis - say once a week or month. That way you are investing at all points of the market cycle and are much more likely to capture both the lows and the highs and have a nice average entry price point.

You could take the same approach to selling. If you’ve built up an NFT portfolio that is sufficiently large and you feel like you might want to lock up some profits, don’t feel like you need to do it all in one go. The last few weeks I have been listing a few things here and there for sale and slowly converting some of my NFT money into fiat and/or other crypto coins. Sometimes the things I sell continue to go up, sometimes they go down. I am mostly nonplussed by these movements (aside from the temporary brain explosions I have when I feel bad about selling Loot too early or whatever). Once I take a step back and look at my overall portfolio position and buy/sell decisions, I feel pretty good about the whole thing, even though I have ‘left money on the table’ so to speak.

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Wallet Security

This is another big one and probably deserves its own Letter, but i’ll just briefly touch on it for now. Most people in this space are probably not securing their assets “enough”. What is enough is very subjective but if you are holding 6 figures or more in assets than you should at least invest in a hardware wallet like a Ledger or Trezor. Make sure to only buy from their website. If you buy from ebay or amazon or win one in a twitter giveaway then you cannot be certain the device hasn’t been compromised.

If you are holding 7 figures or more then you probably want to take even more extreme security steps, likely involving multiple wallets and/or bank safety deposit boxes and/or splitting up your recovery code(s) into multiple places.

Make sure someone or some people you trust with your life know how to access your wallet(s) in case you get hit by a truck tomorrow.

Don’t put this off. Be smart.

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THIS IS ABSURD.

I’m going to end with a note/story on the absurdity of life as I know it. There’s an NFT project called the Pudgy Penguins. They announced this week that for every penguin you hold, you could claim a Pudgy Present. A gift that will be opened/revealed on Christmas this year.

I own six Pudgy Penguins. They are all stored in one of my accounts connected to a hardware wallet. My hardware wallet doesn’t work with the macbook computer I have while I am away from home (for some dumb reason). The current floor price for a Pudgy Present is 0.39 ETH ($1,481.49), so 6 presents = 2.34 ETH ($8,888.96). Therefore it made sense for me to go to the shops today and spend $800 on a new laptop just to claim some god damn Pudgy Presents.

I bought a brand new laptop like a month ago, but it somehow made sense for me to buy another one today. This whole world is bonkers. Seriously, this is because I own some PENGUIN JPEGS. What is life, seriously.

Amidst all this absurdity, I am constantly trying to remind myself of the important things in life. Health, friends, family, charity. I am trying to keep myself grounded, while still taking advantage of the crazy opportunities around me. It’s a delicate balance; but it’s one worth striving for. I hope I can find and keep that balance, and I hope you can too. More than anything, I hope you’re happy.

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There’s not a whole lot on my radar once again so I will end this by plugging my podcast. Two Bored Apes is a podcast that my friend and fellow ape Jaime and I record and release once a week. We have a lot of fun doing it and try and talk about whatever is current in the NFT space, although we often get sidetracked discussing the correct pronunciation of words and other random stuff. Episode 4 was released a few days ago and episode 5 should be out this coming Tuesday - you can find it wherever you normally listen to podcasts or at twoboredapes.com.

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We’re still early.

Disclaimer: The content covered in this newsletter is not to be considered as investment advice. I’m not a financial adviser. These are only my own opinions and ideas. You should always consult with a professional/licensed financial adviser before trading or investing in any cryptocurrency related product.