True confessions of a 40-bagging Bitcoin Surfer

LONDON — Peter McCormack is proof that there's a novel waiting to be written in every life. An advertising entrepreneur who fell into Bitcoin because of his terminally ill mother, he bought early, enjoyed a 40-fold return on investment, but stayed too long at the fairground. He shares this cautionary tale that could describe every investment bubble, and sharing what happens to our thinking when we get caught up in one. His wild ride provides a fascinating insight into human behaviour, and leaves a reminder that the biggest challenge for every investor is suppressing emotion. Always far easier said than done. – Alec Hogg.This is The Rational Perspective. I'm Alec Hogg. In this episode – Lessons from a Bitcoin bubble surfer. We learn early in my craft of journalism that everyone's life is worth a novel. Scratch the surface and extraordinary things are happening to seemingly ordinary people all around us. This story that follows is one of them..___STEADY_PAYWALL___.Peter McCormack is a heavily tattooed, 30-something, single father of two, from a non-descript town in England called Bedford, who supports Liverpool FC and dreams of one day having enough money to buy his local football club. Five-years ago his terminally ill mother needed treatment that could only be paid for with Bitcoin. Peter wanted to help, sparking a ride that saw him surf the cryptocurrency wave as it swelled ever higher, and then crashed. He tells a lovely story so good that his Twitter account has almost 50 thousand followers and his regular blog on Bitcoin generates over $10k a month in advertising but that's chump change, compared with what he was once worth, on paper anyway..But we'll get him to tell the story, as he does here with Bloomberg's Joe Weisenthal and Tracy Alloway, who started by asking Peter how he got into Bitcoin in the first place?.So, really a couple of times I first found it in 2013. I worked in tech so I heard about it, I can't remember the website – I checked it out, it looked kind of interesting and rode that bubble for about a week or two. I was trading CFDs on Plus500 and made and lost a small amount of money in comparison to the last year, and then kind of forgot about it. Then in December 2016, it's quite a sad story, sorry, but my mother was dying from cancer and we wanted to get a certain treatment for her that was only available for purchase with Bitcoin. I said to my dad, 'I can do this.' So, I went onto Google, did a search, found Coinbase. Bought a Bitcoin and bought the treatment..Sadly, she passed away but my parents lived in the middle of nowhere in Ireland so I was out there for a week and I just went back on Coinbase, transferred the leftover Bitcoin back and there was an Ethereum thing, so I was in between. I was out of work. I used to have an advertising agency that fabulously collapsed at one point but I had money left over from that so, I thought, 'you know what, I'm going to check this out.' So, I checked out Ethereum and Bitcoin and a whole journey started there and I put £23k in, I think that's about $32k, which I don't think, by the way, is a small amount of money and I just went on this epic ride for two-years now..I'm sorry to hear about those misfortunes. You said $32k roughly. How much did you end up making at the very top?.Well, it's funny you say that. So, I guess I didn't end up making any because I didn't cash in but the portfolio value at its peak was over $1.2m so, when I was looking at my portfolio that was the value and that was about January 2017..One of the things that I find really interesting about bubbles is it feels good to make a lot of money and see your net worth on the screen continue to go up. But what I'm always curious about is did it stress you out also, on the way up? Like did you get upset with yourself for not buying more in the beginning?.No, I wasn't really stressed out. A couple of times I thought I should have put some more in. I had more money available at the time, but I didn't really worry about that because when you're at $1.2m it doesn't really matter, does it. You're just like… And it wasn't stressful at all. It was just a lot of fun and it opened a lot of doors for me. I met a whole bunch of people. I've launched this podcast and it's created a whole life for me. So, no, it wasn't stressful. It was a lot of fun. I was very careless with money. I bought a very expensive watch, I bought a new car, I gave a lot of money away. At Christmas last year I gave my brother and sister each £5k. I bought my dad a Breitling. I paid for the hospital where my mum worked, before she passed. They needed £6k for a garden so, I paid for that so, I kind of paid for all this stuff just being frivolous but I was paying for it out of my savings and not out of my crypto so that was kind of stupid. But no, look, it's just been so much fun. It's been a hell of a ride and no, there was no real stress on the way up. Strangely enough, it hasn't been stressful on the way down either..What was the ball case for you, when it came to Bitcoin a little over a year ago? Like what was it that you thought was happening here and what made you want to stay in Bitcoin and, I guess, some other crypto-coins versus going into more traditional investments?.It was just innovation, right. There was this whole wave of innovation around cryptocurrencies and crypto networks and it just felt like the start of something new. A bit like, I was part of the Dot.com era when it first started. I worked at a Dot.com and I spent 20 years in digital advertising so, I experienced that and it, kind of had similar feelings. Not exactly the same but I didn't ever believe the crypto networks would ever be as big as the internet itself but it did feel like a new way of transacting, sending money, and building things. So, at the time, I kinda bought into all of it. My opinion, over time, has changed but I did buy into all of it because I just thought this was something new, something cool, but I didn't invest the money, at the time thinking I was going to make a lot of money. When I first invested, I just thought, yeah, there's an opportunity to make something here but in no way did I think what was going to happen. I think my prediction at the start of 2017 was that wouldn't it be great if, by the end of the year, Bitcoin hit $2k, and it ended up hitting $20k. It was a very strange ride but nothing played out exactly as I thought it would..Well, for people who don't remember their history, it's as Bitcoin peaked in December, and was still pretty high in January 2018, we saw an even crazier explosion in a lot of other cryptocurrencies, many of them of extremely dubious quality, having big projects – things that were mediocre to anyone who looked at them but that's something you see in bubbles in which the real trash really surges at the end. I think you said in your tweetstorm that on the way up you started buying other non-Bitcoin assets more and more. Tell us about the decision to do that..At first, there was no strategy around it. I was just learning about things, and reading about things and just wanted to try it out, so I bought Dash because that seemed like a different kind of Bitcoin and seemed interesting. I bought Ethereum because it was like this world computer that sounded interesting. I bought Monero because it was a private coin. I bought Ripple Coin because it was a banking coin. I just kind of bought everything. I just went for it and then over time I started to consider maybe a more fundamental analysis, so I started looking at things to see if they had value or had a purpose and then I kind of refined my strategy. But still, up until the end of 2017, I believed in most of these networks and most of these coins as being an opportunity..I had an expectation that lots would fail but it was kind of like Dot.com era. Webvan.com sounded great at the time, Boo.com sounded great at the time – they just weren't ready or just weren't built in the right way and I just thought I'll spread my investments and things that will be successful I'll make money from and the things that fail, I won't but with a diverse portfolio I should be okay. It's only since like… I think a bear market is very good to get you to be a bit more rational and look at things in a bit more detail. Now, my opinion has changed a lot..So, with that background in mind, when you saw all these coins, plus Bitcoin, sort of going up together did you, at any point, kind of think this is weird or this is too easy?.Yea, definitely. I definitely thought this was too easy but I just rode it. I just went with it. It was continual the whole year. There were 3 or 4 crashes. I remember once, I was flying out to LA and I'd gone into the airport lounge and I've always wanted to have a Breitling watch. It was something that I could never normally afford and I just bought it, and I got on the plane. When I got off the plane the market had dropped 30%. I was like, 'whoa' okay, that was a lesson, and exactly the same happened when I bought the car. I bought a Mercedes, and when I was in the garage picking up the keys the market dropped again. But each 30% drop the market always rebounded. So, when it dropped again January, this year, I expected it to come back..Do you mean January 2018, right?.Yeah..I want to hear more of what you bought. Just give us a list of things that you bought..Just like everything. I took my kids on loads of amazing holidays, to America, to Florida. As I've said, I gave a lot of money to my family. I bought my dad a watch. I bought a car. I flew first-class for the first time, something I've never done. It's nothing I could ever normally afford and I was flying back from LA and I had a date booked with a girl in London and I was on a flight, which meant I would be landing in the afternoon. I knew I'd be tired and I thought, 'you know what, I'm a millionaire. I'm just going to get myself a first-class flight,' which I did. Not in an idiotic way. The way I always think about money is use it and enjoy it. You might not have it tomorrow, and funnily enough it turned out, and I'm glad I did. I got to experience a bunch of things and do a bunch of things I could never normally do. Same for my kids, my kids got to experience and do a lot of things they couldn't normally do. Yeah, it's just been a lot of fun..I used to take 25% out, so every time my portfolio kind of, at the end of the month, I used to take 25% of the profit out. But as I got towards the end of the year, I was thinking if this carries on for another six-months – I'd always had this goal in life. I wanted to buy my local football club, I know it sounds stupid but I live in a very small town called Bedford. It's just a nothing town. Our football club is in the lowest of the low divisions. They're not in the football league. About 100 people go and watch them each week, so I had this price in my head if I could make £5m I could buy the club and I was working through it with one of my friends and we figured out that that would be enough money to buy the club and get them in the football league. So, I was like, right, if I could hit that by the middle of 2018, I'll cash-out the majority of it and go and buy the football club. I know, it sounds so stupid, on reflection..When did it all start going wrong?.So, it's funny. I don't see it as going wrong. I see it as losing portfolio, but I actually, on reflection, I think 2018 has been a great year for the crypto category. Personally, myself, it's a real lesson I've never had in life. Like we have securities laws, which stop people investing who aren't accredited investors but if you don't invest you won't learn so, 2018 has been a huge lesson in money for me, conserving capital and protecting capital. So, from about January it started to happen but I thought it would be another bounce. I thought it would drop and bounce back. I would say from about March, I was thinking okay, this isn't coming back and my biggest mistake is I invested around $400k into mining because I wanted to have another way of growing my capital, so I bought all these different ASICs and that's where I've lost the majority of my money because the equipment isn't worth hardly anything now and I was locked into power contracts, which were costing more than the Bitcoin I was mining..So, across the year – it's just been something that's happened over the whole year but again, I don't reflect on it in any kind of negativity. I'm not bothered by it. I'm actually still very positive about Bitcoin in the future and I'm glad it's all happened in a kind of weird way. Obviously, I wished I had cashed out but I haven't and we always make the best decisions we think are at the time, and every time I've considered cashing out and I haven't – that, I believe, was the right decision, so I don't have any regrets..When you think about going back in March and realising that something was different and this drop was not going to be like one of the plunges in 2017. Was it harder to sell or do you think it was harder to make wise trading decisions because you had hit a high watermark of $1.2m and you felt like that is sort of where you should get back to?.I think one of the difficulties of selling is that there was so much good news and so many good things happening in 2018, especially for Bitcoin. There was real Wall Street adoption in terms of futures, and other derivative products. There was the news of potential ETFs. There was so much good news happening that I kept… Every time we hit another low price I was thinking, 'it's not going to go lower than that.' I think that was my problem. It wasn't that I was looking to get back higher. I just never thought it would go lower and each time it went lower I was like, okay, maybe that's the base. But I'm not a trader. I've got no experience with this. I think pretty experienced traders would have recognised this pattern. In a year or two, if the same happens, I'll probably be better prepared than I was this time..So, talk about where you are today. You started, I think you said, with $32k, and rode up to $1.2m. You spent $400k on crypto-mining equipment that's now worthless, (as you've put it), you've got into all these long-term contracts, you pay taxes – are you just back to square one?.No, I'm not. Some people wrote to me thinking I was completely wrecked and broke. So, I'm not broke. I have a, I won't tell you the amounts now, very small amount of Bitcoin, which I've got leftover. So, what I ended up doing is I just sold all my old coins. Cashed out a certain amount just to give me a bit of breathing room because I'm a single father with two children, so I have to be responsible. So I cashed out a certain amount to give myself a few months breathing room and retained a small amount of Bitcoin, and I've got some Monero as well. But the mining operation is still there. I'm still paying those bills, which is frustrating but, at the same time, I guess one of the other reasons I'm not too worried is that my podcast has been really successful. I think last month I went over 100,000 downloads for the first month. It's profitable. I'm selling adverts each month. I think revenues for this month is around $10k..So, I've got a sustainable business that's come out the back of this, so I think that's probably one of the other reasons I'm not too worried. It's not been hugely upsetting. I've always been entrepreneurial. I've always run businesses. I've always kind of thrown mud at the wall and see what sticks. So, now, I was perfectly comfortable doing it. I fundamentally believe in Bitcoin, especially over a long enough timeframe. I fundamentally believe in it and I have a curiosity with other parts of crypto, although I would say I'm heading down the maximalist route at the moment. But no, I was never worried and I'm not worried now. I'm still invested and essentially, in some ways, I'm still dabbling on Bitcoin because I don't do anything else. This is still my fulltime job and it looks like I may have survived a bear market so, I should come out the other end of this okay..Do you think any sort of traditional or historic financial investments are ever going to be able to match the excitement that has come with cryptocurrencies over the past few years?.Maybe, who knows? You can't predict this but one thing I would say is I think the reason the bubble was so accelerated and it was such a quick, fast, and crazy bubble is that cryptocurrencies essentially, have broken some of the rules down, it's so easy to trade. Trading shares and stocks is quite difficult, right. There are certain rules you have to follow, there's certain companies you have to go through. Trading gold is equally, to me, it appears hard – I've never done it. If you want to buy gold and silver physically you've got to order and have it delivered..So, technology seems to make trading easier and easier over time, and crypto just seems to be the easiest thing to trade. You're buying digital assets from any internet connective device, from anywhere in the world. So, it just became very easy for everyone to just get on board and get involved. There was very little regulatory framework around it. I only see technology becoming more advanced, so perhaps there'll be something in future, which is similar – who knows? But it's very hard to predict that, right?.Yeah, I wish we could predict it. I think we all wish we could. You have your podcast, you have 45,000 people who follow you on Twitter talking about Bitcoin. You've made your identity around it. Do you think that publicly putting oneself forward, associating themselves with an investment or a movement or a trade makes it harder to change your mind? Like, if you decided one day or you came across evidence in your mind that Bitcoin is not going to be as big as you think it is, or for whatever reason you thought the price had further to go down. When you have that much of your identity and public identity wrapped up in the success of this thing does that make it harder to make a rational investment decision to get out when the going is good?.Not for me. I think it does for a lot of people. I think if you look across crypto there are a lot of people who've probably got doubts and who are not admitting it, like people who've raised money on an IC or on a project, they're probably thinking, 'you know what, maybe this isn't a goer anymore.' It's kind of strange because most people don't want to admit they're wrong because they're worried about the impact on their credibility. But usually if you're kind of honest and transparent and open and admit mistakes – people respect you for it. The tweetstorm I did, you've seen it, right?.Yes..I expected a response but not the response I did, it was like 8,000 likes and 3,000 re-tweets. Amongst that I think there must have been like one or two negative comments, where people were like, 'oh, you're an idiot, you don't know what you're doing,' etc., of the hundreds and hundreds of other comments everyone was positive. Everyone was grateful and people said, 'thank you for doing that, it needed saying. It's good that you did that.' I've had yourself get in touch. I've had The Guardian get in touch and various other news networks. I think what people actually appreciate is honesty. It just doesn't happen enough because it just feels wrong. It' really hard to admit you're wrong but usually, when you do it, it's like a weight off your shoulders..So, I'd say you're right. Most people are scared to do it but I'm not. If I'm wrong about Bitcoin so be it. I don't think I am wrong about Bitcoin because I'm not really talking about price anymore. I'm talking about the technology. The technology on what's trying to be achieve with Bitcoin I fundamentally believe in, even if it fails – I won't change my opinion that it was the right thing to support. I just won't get behind prices anymore because price predictions are so hard and that's where you can really come unstuck..There has to be a lot of people in your shoes, who rode it all the way up and rode it all the way down. There's the whole crypto Twitter community and I don't think most of them would have come forward and talked about the money that they gained on paper and then lost afterwards. So, I really do think you've done people a favour and I appreciate you coming on..Let me just tell you one story, so I reckon I had over 300 DMs on Twitter from people saying thank you, telling me about their experience, and it was the same story over and over again, just different amounts. It might be somebody invested $100, who got up to $30k and lost it all. But there was one person who invested I think it was $6k, very early, rode it up to eight figures, so somewhere over $10m, and lost the lot. I think it's happened to way more people than other people realise and I think therefore, it is something that needs talking about..That was Peter McCormack, a Bitcoin surfer and proprietor of Whatbitcoindid.com, and a popular podcast that's drawing a cult following in the cryptocurrency world. This has been The Rational Perspective, I'm Alec Hogg, until the next time, cheerio.

True confessions of a 40-bagging Bitcoin Surfer

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