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My parents sold an apartment in China and allocated a portion of the sale’s proceeds for cryptocurrency (“crypto”). In China, crypto exchanges are illegal. Not wanting to go for the blackmarkets, they transferred that portion to their bank account in Australia, intending to purchase from Australian exchanges.

This is the story how the purchase eventually failed in 2 months, and why it is a positivie signal for other potential buyers.

To help you imagine, $70,000 worth of crypto is this much.

What buying a large volumne of crypto is like

I’ve traded crypto since 2011, and I use an OTC account when I need to trade. (An OTC account is an exchange account with a large volume.) Earlier this year, I met Matthew Kwan of CoinTree while attending Sydney’s Emergence Conference 2019 — he offered me CoinTree’s OTC Desk’s service. We shook hands and conversed. I confirmed with Matthew that foreign residents like my parents could open an OTC account. Afterwards, I introduced CoinTree to them.

In my mind, a handshake is an expression of confidence and trust, so shaking the exchange employee’s hand brought a much-needed sense of comfort to me.

In 2011, I started trading with Intersango — a failed exchange offering Bitcoins. First, their customer support staff stopped replying to inquiries; then, their website went dark. These events made me realize that I didn’t know anyone working at Intersango. On top of that, I lost about 100 Bitcoin to MtGox. At the time, it was the largest exchange on the Internet, so I thought it unnecessary to be acquainted with anyone there. And as time would tell… my thinking was flawed.

Having learned a costly lesson, I would only trade with exchanges that are managed by people I know personally. Call it Know Your Exchange if you like. For instance, I have an OTC account in Kraken because I met their staff, in person, in Singapore. I also use Coinut, because I know their team members through conferences.

What happened to my parents purchase

My parents, after using CoinTree for a few weeks to satisfy the KYC — Know Your Customer requirement, became a “verified high-volume customer.” With this obstacle surmounted, they reached out the OTC Desk with AUD$70,000.00 transferred to CoinTree. Just when we thought we were on the home stretch, we were told that the OTC account needed to be shut down as a “business decision in line with the terms and conditions.” “The AUD$70,000.00 will be refunded,” the OTC said, without more.

Melbourne based CoinTree may or may not be quick, simple and secure as they advertised, but what mattered to me was seeing the faces of people behind the logo. Having lost 130 bitcoins to various exchange in the past, Trust is bigger than all three.

This development resulted in considerable trouble and loss of opportunities for us, so naturally, we wanted to get to the bottom of why it came to pass. When we asked about it, silence followed. Without warning, the username and password ordinarily used to access the CoinTree website no longer worked. This all reminded of my unfortunate experiences with Intersang and MtGox, which in turn made me think about my handshake with Matthew.

We did shake hands… right?

Yes, we did… so I emailed him. We passed a few emails back and forth before we discussed opening an OTC account. I wrote something along the lines of, “We’ve met in person, we’ve talked… just let me know what’s going on.”

Silence.

To be fair, I waited 2 weeks for a reply, so I think it’s safe to assume they ignored my attempts at contacting them. I also tried connecting to the OTC Desk Manager through Linked-In, but to no avail.

The following week, I visited the Sydney Digital Currency Exchange and was fortunate enough to meet its director Rico Zhang at its Sydney office. Our encounter started normally; we shook hands and got down to talking business. The director’s previous work at ASX (i.e. the Australia Stock Exchange) is not unlike my days as the blockchain architect for the Commonwealth Bank of Australia (Australia’s largest bank). He and I are both Chinese, which made me feel more comfortable during the conversation — I figured that if a situation similar to that with the OTC Desk unfolded again, I could ask him, “ We’re both Chinese… between you and I, what’s really going on there?” I’ll admit that one can never be sure about these things, however.

But I am sure about one thing, my fellow readers and crypto investors: what happened to me, can be good for you. Why do I say that?

Because my experience has shown that many people who want to enter the market, for one reason or other, aren’t able to do so.

I may never learn the real reason CoinTree closed my parent’ account, and it testifies that buying crypto is still a perilous journey.

In the early 2010s, crypto was a viable investment only for those who has the heart of a lion, the nerves of steel and the patience of a Siberian tiger. One has to be committed to spend the time and effort, take the counter-party risk, and wait in agony. Been there, done that. Trouble doesn’t surprise me, but this saga alerted me that buying crypto is still quite uncommon today.

Among my friends who regret not investing in crypto, only a few failed to do so because they had no money. Most failed by not being able to complete the purchase, just like my parents.

Not everyone with capital to allocate can successfully investment in crypto. One has to be patient and strong-willed like this Tiger. — Museo Civico di Storia Naturale di Milano’s collection.

Crypto used to be a viable investment only for those who has the heart of a lion, the will of steel and the patience of a Siberian tiger. It is still so for the vast majority.

Think about it. I’ve traded cryptocurrencies since 2011, personally dealing millions’ worth of crypto a hand while professionally working as the blockchain architect in Australia’s largest bank; and today managing AlphaWallet with a focus on tokenisation. Despite all my practical experiences and professional credentials — which is available to my family — they couldn’t safely or efficiently buy crypto. Isn’t that ridiculous? If they couldn’t do it, how then could some ordinary investor capitalise on the impending global liquidity explosion by allocating some crypto?

I bought some property in Australia last year. Its onerousness aside, the process was well-organised and risk-free. A conveyancer orchestrated everything, from the inspection to the settlement of the property’s title. All that was left for me to do was sign on the dotted line. The process is facilitated over the Internet and the Post — I didn’t meet the conveyancer, the property’s vendor, the rental management company, or the tenant. Certainly no handshake happened. Nevertheless, I was certain that once the process ended, the property would be in my possession. At no point was I concerned that the conveyancer would suddenly vanish, or that any other key participant in the process would flake on me.

How, then, could the purchase of $70,000 crypto — being smaller in value and more straightforward in nature than a real estate transaction — carry considerably greater risk? Why am I visiting a crypto exchange’s director’s office just to negotiate a family crypto deal, when I didn’t need to meet anyone involved in buying property ten times that value?

Why am I visiting a crypto exchange’s director’s office just to do a 70K crypto deal, when I didn’t need to meet anyone involved in buying property ten times that value?

Though crypto may be regarded as ‘digital gold,’ the market still isn’t ready for it (yes, even 10 years after its creation). If you think it’s too late to invest in crypto, think instead about what happened to me. Then, think how easy it is to buy property, and compare it to how difficult it is to buy some crypto.

If you invested in crypto right now, you’d still be considered an ‘early investor.’

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