Sometimes you happen to be thinking about shrimp, or a plate, or a plate of shrimp and then a Red Lobster commercial flashes up on your TV. "Synchronicity" is the quaint term for this phenomenon.
A week ago, as I was first learning about a Chinese Ponzi Coin (whose name must not be mentioned), there was another interesting and related development on the opposite side of the world that I just learned about because, well, I have a day job so I have catch up on news when I have spare time.
Li Xiaolai is a Grand Chinese Crypto Whale. He has opened exchanges, he has backed wildly profitable coin projects, and he is a Billionaire a few times over as measured in USD. He knows a thing or two because he has seen a thing or two when it comes to Chinese exchanges and Chinese coin projects. Last week, a recording came to light of a conversation Li Xiaolai had in private some months ago. I had never heard of this guy, but start searching for his name and he is everywhere. He is Mr. Big in the Chinese Crypto space.
There are three different camps of opinion regarding the recording:
a. It is real, but he's just complaining because he missed out on some really profitable coin launches and he is griping and smacktalking out of spite, envy, and ego.
b. It is fake, sensationalist bullshit.
c. It is real, and he is explaining in private how he sees the *entire* Chinese Ponzi Coin ecosystem -- Li did not realize he was being recorded and he was just telling it like it is.
I think the recording is a mixture of c. and a. Some of it is defintely smacktalk about specific individuals he doesn't like, for whatever reason. But I think the general statements about the Asian Crypto space, and what I am going to call Chinese Ponzi Coins from this day forward, are real unvarnished admissions.
I have not yet been able to find a completely translated English transcript but I am looking. If I find one, I will edit this post and add the link. The Google AutoTranslation sucks. That left me comparing several different sites which translated some of the highlights. This is my loose paraphrasing of what several sites reported and while this is 'loose' paraphrasing, I think I am capturing the gist. If you read this and you are fluent in Chinese, perhaps you can translate and post some of the other sections from the recording in your comments?
Here is Li Xiaolai's wisdom as it pertains to Chinese Ponzi Coins:
'Chinese coin projects are not about value investing. If you think this has anything to do with value investing, you are an idiot.'
[Think about that admission for a moment. What Li Xiaolai is telling you is that every white paper you've never bothered to look at for every Chinese backed coin project out there is beyond worthless because these are not even 'real' projects with real business plans - none of them are.]
'I had a key insight early on. These blockchain coin projects are not about technology, they are about eyes and hearts and building large communities of people who believe in you. The project may be trash, the technology can be really bad, but if you can get enough people to believe in your project you can make money anyways and continue to cheat them.'
'You should start a coin project with a celebrity that will attract people. The most important thing is to build up the community of true believers because nothing else matters.'
'If you can get enough douchebags to follow you, you will be victorious.'
By the way, "air coins" when you see that -- I think should have been translated as: SuperStupidShitCoins.
Li Xiaolai goes on to describe how whales like himself harvest the life savings from all the "leeks," or ordinary little people who are stupid enough to fall for these Chinese Ponzi Coins. He doesn't feel sorry for fleecing leeks, it is just a part of life. In this regard, Li Xiaolai mirrors P.T. Barnum's outlook on people: it is what it is, why not make money on the foolishness and stupidity of other people?
Now, I ask you: are you a "leek," or are you a whale?
Here is the easy answer. If you are Net Jetting around the globe on a monthly basis, then you may be a whale; if you are not, then you are definitely a "leek," even if you hate admitting that to yourself. It sucks, right? Well, man up and admit it.
What is "value investing"?
Warren Buffet has been talking about that topic for 50+ years up in Omaha - you can find Berkshire Hathaway's annual report/letter for each year pretty easily and download and read it. It means something like taking a $1 of your hard earned cash and buying one share of a real company, with real management, that sells a real product or service where you can actually *audit* how much money people are paying for the product or service. I emphasize that word "audit" for a reason. Finding these companies which have a leg up on everyone else involves a lot of work -- a lot more work than skimming a 25 page "white paper" that is 80% copied and pasted from prior "white papers" for different coins.
"In the short run the stock market is a popularity contest, but in the long run it is a weighing mechanism."
- Warren Buffet
The current ***MASSIVE*** Chinese Ponzi Coin ecosystem is entirely based on winning today's popularity contest. Social media, relentless shilling, fake airdrops, paid for puff PR articles, paid for sponsorships, controlling specific social media sites -- that's what all of these projects are about. PERIOD.
The Chinese Ponzi Coin whose name must not be mentioned is just one example out of hundreds more. The long term weighing mechanism does not matter to people like Li Xiaolai because he will take off in his private jet to some beautiful island that he owns off the coast of Australia when this blows up.
Over the past six months, one cockroach after another has come crawling out into the Crypto kitchen and just stared intently up at me, refusing to budge or scurry away when I flipped on the light. First one, then another, then another... and I am finally realizing the whole damn kitchen is infested on a scale I had never even imagined.
You think you are savvy enough to know that this market is manipulated, right?
That describes you, doesn't it?
I guarantee you, you don't understand how deeply and truly manipulated this market, especially all of these Chinese Ponzi Coins, has become. You don't. And you know what?
I'm a leek, you are a leek, and it's Okay. Time to admit it and start acting rationally.
1. There will be a "Black Monday" event that takes down the universe of these Chinese Ponzi Coins.
2. The day that happens, no matter how hard you pound on your keyboard, you won't be able to access your exchange account because the web traffic will crash the exchanges.
"And you will KNOW what the word PANIC means ON THAT DAY!" [Said in my best Samuel Jackson voice].
3. A day later, two days later, when (if) you are able to finally access your account, that Bullshittium Chinese Ponzi Coin you purchased based on a tip at $2 and then gleefully watched soar to $41, if you are able to sell it, you will be lucky if you can sell it for 0.40 cents. And if you were working on 3x leverage and credit... Uh-oh.
4. In between today and that event, some of you will truthfully make 10x, 100x, even 1,000x trades on some of these coins. I don't doubt that. But the music will stop, it always does.
Do yourself a favor in the meantime. If you get interested in a coin, take the 10 minutes to download the white paper and glance at who, allegedly, is on the team. If it involves anyone who has some connection to some prior Chinese Ponzi Coin, no matter how successul the prior pump and dump operation was, no matter if you made some good bank on that prior Chinese Ponzi Coin, that actually is not a good thing. You should treat that so-called project as if it were Ebola-laden plutonium.
If you are trading and speculating on these Chinese Ponzi Coins, you are playing what I believe to currently be: The World's most dangerous financial game.
PS. To those who wish to reply "FUD!" or "I made 1,000x on this coin!" -- this is my standing response:
Fine, I believe you. Take your life's savings and continue trading and speculating on these Chinese Ponzi Coins. When you have made enough money so that you are able to retire to Bermuda and buy a lovely house overlooking the emerald-blue sea, send me a post card telling me what an idiot I was.
PSS. Go to NetFlix, watch "The China Hustle".