How The Term ‘HODL’ May Be Massive Transfer Of Wealth To Elites
Litecoin, a cryptocurrency that gained notoriety due to being the most affordable Coinbase offering, is now worth half of what it was worth one month ago. But there might be a devil in the timeline’s details that many people are simply too afraid to publically speak about.
When my local bartender forcefully told me to “HODL” when he caught me peeking at my HODL app that displays the top 5 cryptocurrencies, I asked him, “why?” He said, “you always ‘HODL.'” Fortunately for me, I’d been selling for profits the entire time, so I wasn’t panicked when the great crypto crash, or correction, began to take place. However, I did begin to think about the massive implications that one incorrect word spelling might have on our entire society.
Is “HODL” one big massive transfer of wealth? And did one man know the crash was coming and use “HODL” as a way to keep a house of cards standing?
First, let’s discuss how a transfer of wealth could use a financial house of cards to fleece the middle class. (scroll down for info more relevant to the headline if you already understand this concept).
The theory would work like this:
- The term “HODL,” meaning to “hold on for dear life” during Bitcoin’s infamous volatility, is likely to be studied by intellectuals for centuries. The term implies that you should never sell when cryptocurrency is down. While there is sound investment logic in such thought, it also serves to eliminate another logical investment strategy which is the “stop loss,” a predetermined point that you will no longer accept losses. This point may or may not still have you profitable, but it essentially sells off you shares, or in this case coins, when the price of the coin drops below a point you just can’t accept the loss. The “HODL” agenda indoctrinates the herd that selling at low or high prices (taking profits) is misguided. It applies FOMO, or a Fear Of Missing Out on something bigger and better down the road, which causes people to always feel they can’t cash in their chips. This keeps their money on the table.
- Because HODL offers a base of investment money into crypto, the system, while volatile, has a difficult time submerging to 0. The elite are able to take money at every peak price point while the herd “HODLs.” Once the elite take the peak prices for cash by selling, the price drops back.
- The herd is told to “buy the dips” after massive peaks. Remember, the herd HODLs, so they don’t sell the peaks and make profits. The herd, when buying dips, helps to stimulate new price surges. The elite buys the peaks, again, repeating past actions.
Consider that the current state of crypto is a massive crash of revenue. Billions have been wiped from the table, yet, there are loads of social media post and memes encouraging the herd to “stay strong” and “HODL.” The crash is being attributed to North Korea and China’s potential crackdown on crypto exchanges, however, the rich are cashing out and taking usable currency, such as dollars. The herd is told to maintain position and watch as their investment monies dwindle.
The question is, does this situation go beyond the news of North Korea and China and is mostly just the result of a rigged system that targets the middle-class who dream of “making it big?” Let’s take the case of Charlie Lee as a potential supporting argument for just that.
Did Charlie Lee Fleece Litecoin Investors?
A former Coinbase engineer created Litecoin in 2011. It would eventually go on to garner lots of public accolades, such as being a faster option and more affordable option to Bitcoin, before reaching a high price point of $365 last December. Many crypto investors had purchased Litecoins for less than $50 a coin mostly due to the coin’s superior affordability. When Litecoin reached $375, those who cashed out made away with great profits. One those investors to sell off Litecoins happened to be its creator, Charlie Lee.
Lee Justified his selling of Litecoin interest as being a move to detach himself from Litecoin’s interest. He claimed to enjoy Tweeting publically about Cryptocurrency but reasoned that his public diatribes may, as a by-product of who he is int he crypto space, affected the price of Litecoins.
“If I tell you it’s going to go up and it doesn’t, you’ll be upset,” Lee said in an interview.
Lee was able to sell his Litecoins high. Today, Litecoins are a victim of the crypto crash and struggling to reach $160. And worse more, the crypto crash may just be getting started.
The entire saga gets murkier when you consider that Lee also held and sold Bitcoin Cash at the time it was accepted into Coinbase. Coinbase, the largest most mainstream crypto exchange, gave little in the way of warning that Bitcoin Cash, a fork of Bitcoin, would be placed as a tradable asset into Coinbase. If you were able to sell, Bitcoin Cash exploded price wise, but Coinbase became slow and unusable for many who wished to sell Bitcoin Cash off the surging interest. Lee was able to sell.
So did Lee intentionally participate in insider trading and use his influence and connections to Coinbase in order to achieve the best possible sell positions? Furthermore, is the entire crypto space a simple wealth transfer from the middle-class to the elites?
An anonymous writer who uses the Twitter handle, @Bitfinexed, seems to feel that Lee did exactly that. The anonymous writer put up a scathing piece on Medium.com which calls out Lee, essentially, as a scammy inside trader. When you combine the fact that Lee sold his Litecoins at all-time highs and was able to unload Bitcoin Cash essentially at the worst possible technical times, the anonymous piece makes scary sense. Yes, I say “scary” because it challenges my hope for a cryptocurrency future.
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Here are a few excerpts from the piece (something I highly suggest everyone read in full when you get time).
Problem 1: Charlie Lee was an employee of Coinbase when Coinbase added Litecoin, a crypto-currency he ‘created’ by simply copying Bitcoin and changing the name and adjusting a few variables and a hash function taken ‘scrypt’ from another crypto-currency.
Problem 2: Charlie Lee likely had significant holdings of Litecoin while he worked for Coinbase, and therefore may have asked many times for Coinbase to add Litecoin. Being an engineer at Coinbase, he may also be responsible for implementing the code to add Litecoin to Coinbase.
Problem 3: The Litecoin community was essentially dead prior to being listed on Coinbase, on reddit. The only people who wanted Litecoin listed, were people hodling their Litecoins, and presumably, Charlie Lee.
This are signifigant, compelling points. Lee was able to essentially just copy Coinbase’s prominent interest, Bitcoin, and get it listed in the exchange without much processing. His crony influence, in this case, is a bit overtly transparent. Lee has admitted to holding a stockpile of Litecoins after the fact and admitting publically to selling them (source above in article). Litecoin hardly had a chance without Coinbase listing it. If you don’t believe this to be the case, simply look at the amount of people who purchased Ripple/XRP in hopes that Coinbase would inevitably list it and therefore, drive the price of it up.
Did Lee realize a sell date way prior to his actual sell-off?
The article goes on to counter any and all arguments that Litecoin was going to rise without a Coinbase listing, debunking myths that the Coinbase addition of Litecoin hardly moved financial needles. That should be obvious without the writer pleading the case.
On April 5th, 2017, Charlie Lee conducted a fictitious conversation ‘asking’ his boss to add Litecoin, I call this conversation fictitious simply because Charlie Lee, working as an engineer at Coinbase was likely responsible for integrating Litecoin with Coinbase and he already knew in advanced that it was ‘approved’.
The move essentially thrust Litecoin into a relevant coin, which also popped the price.
The writer goes on to detail that Lee left Coinbase right after the addition, claiming he needed to “focus on Litecoin.”
On May 3rd of 2017, Litecoin became a Coinbase tradable digital asset. Lee left Coinbase that following June. He’d be extremely rich the following December when Litecoin exploded to $375 and he was able to sell his interest in it. Today, Litecoin is struggling with most every other digital coin in the space, including Bitcoin. The crypto crash may not be attributed to Lee, but did he know it was coming? Did Lee manipulate the system to allow him to pump a coin to meteoric financial heights and then sell it just before it declined, eventually suffering in a massive crypto crash?
Does this sound geniuine?
We may never know if crypto is, by design, a transfer of wealth to the rich. However, new revelations such as this one regarding Lee should certainly have us more on guard. One thing is for sure, holding investments through thick and thin has its place, but be aware of anyone who tells you to “HODL” in every case.
Author: Jim Satney
PrepForThat’s Editor and lead writer for political, survival, and weather categories.