# Reflections one year in

**Published by:** [Semui](https://paragraph.com/@itsme.semui/)
**Published on:** 2022-08-29
**URL:** https://paragraph.com/@itsme.semui/reflections-one-year-in

## Content

Happy anniversaryIt has been almost a year since I found myself in the weird, wild, wonderful world of crypto and NFTs. It has been one of the most intense, intellectually stimulating years of my life. I come away from this experience not only having lost sleep, fractured my attention span, and made a fair amount of mistakes that involve money. I also come away with a deep yearning to learn more, to tinker with new protocols, and to stand witness to the next stage of the digital frontier. Looking back, I actually don’t have many regrets. I think it’s because I always have an offsetting “dodged-the-bullet” experience to balance things out. Sure, I regret not buying a Proof Collective membership when I saw it for sale at 2 ETH in December. But I am also glad I didn’t buy a Monaco Planet Yacht for 0.3 ETH when it was rumored to be the next big thing. Yes, I missed buying a Goblin for 0.2 ETH, but then again I also avoided Winter Bears. I could have sold ENS at $75, but I also avoided buying OHM on it’s long way down. I had a few rules that I stuck to that have served me well. These likely made my journey a boring one, but they’ve kept me safe.Only buy NFTs that you are willing to hold foreverNever transact from your vault walletRealize profits and set funds aside for tax along the wayIf you see tweets from anyone other than a project team, you are lateIf you can’t articulate your reasoning, don’t do itNothing is ever free, no stranger is ever helpful for no reasonAdmit it’s more about luck than skillAs I enter my second year maybe it is worth taking more risks with small amounts, but my seven rules will remain for the majority of my portfolio. I’ll go into detail on each below.Only buy NFTs that you are willing to hold foreverOne of the things I realized early on was the permanence of the blockchain. My accounting background probably helped with this; in an accounting ledger, you can’t erase things. An error can only be reversed by entering an opposite entry; it cannot be deleted. Any dumb mistake is left in the ledger for your successors to marvel at for as long as the accounting system is in use. If you cannot sell an NFT, you are stuck with it, forever. Your choice of buying it in the first place, your inability to sell it when you no longer wanted it, are all recorded in a public book of record. I have a record of what this felt like when I first noticed; https://twitter.com/iamSemui/status/1437696308769280002?s=20&t=7vGpzs3fvruPhiWrnclv_w With this in mind, my decisions naturally oriented towards the long term. I decided I would not buy an NFT unless it was perfect. This applies to pfps, to generative art, to 1/1s. The traits, colors, the vibe. If it is not a hell yes it is a hard no. And so as a result of this rule I sit here in a bear market, floating in the uncertainty of whether or not my jpegs can ever be resold. But thanks to this first rule, I don’t really care.Never transact from your vault walletI wrote about this before, and it is a subject very close to my heart. It must have been a week or two into my NFT journey when I saw my first NFT theft post mortem thread; the ones we see far too often in this space. The theft in that case was in the six figures, but with the attack vector being unknown, felt real enough to me to buy a hardware wallet right then and there. The rules on how to handle your seed phrase can sound crazy to folks outside of crypto. Don’t save it in a text file, don’t take a photo of it, don’t type it anywhere. But don’t lose it, because once it’s gone there is no password reset to save you. The attack vectors that you hear of are also crazy. A scam site that steals your private key and uses it to sell any tokens you have set an allowance for in an NFT marketplace. NFT trading platforms that look legitimate but will drain your wallet if you connect. Teams of people working together to social-engineer targets into making transactions they will regret. And let’s not forget about those days where something is happening with wallet after wallet being drained, and the technically savvy among us are troubleshooting live on Twitter? I have never connected my vault to a marketplace, or set allowances on any tokens. I will never do so in the future either.Realize profits and set funds aside for tax along the wayCrypto and NFTs are filled with taxable events. Swap a token? Taxable event. Buy an NFT with ETH? Taxable event. Sell an NFT for anything? Taxable event. Coin airdrop? Taxable event. NFA, but you get my point. The tricky thing about crypto is that the value from a taxable event can plummet in pretty short order. You could sell an NFT for 10 ETH when the value of 1 ETH is $3,000, and then the value of ETH could drop to $1,500. Sorry, but you owe tax on your gains made when ETH was at $3,000 because that is when the taxable event was triggered. On the flip side, this scenario in reverse can sometimes work in your favor; selling NFTs for ETH when the value of ETH in fiat terms is lower than when you bought it will result in a tax loss. As a rule, I have set aside fiat for tax when I have had a taxable event. This may mean selling ETH for stables/fiat on the same day, or it may be setting aside fiat from my regular paycheck to ensure I have enough come tax day. I do not try to generate any return on this; it just sits in the bank account, waiting for its intended purpose.If you see tweets from anyone other than a project team, you are lateI don’t think it is a dealbreaker and I have bought into projects very late in the game, but if you see a project making rounds on Twitter, it has already gone through the first pump. That is okay, because you can still evaluate if it is something you would want to buy. However, what is important is to keep in mind that you are late at this stage. It may go up, but likely it will go down in the short term because the folks that were truly early would be doing their second-hand selling to recoup their initial investment. We are at the next stage of the game. If I am honest, the only time I was early to anything was the Doodles whitelist, and even then I was not early enough to have been in the discord before it was closed. Maybe in this bear I may have the opportunity to be early to something, but in the meantime I have resigned myself to this; I try not to be late, and maybe that is early enough.If you can’t articulate your reasoning, don’t do itBefore buying into any coin, project, NFT, I always ask myself why. What is the reason to invest $XX into this, at this time? If I can’t give a good enough reason, I won’t do it. It doesn’t have to be a complex reason or particularly clever. It just has to make sense.I will buy this PFP because I like it very much, it is by a well known artist, I like the aesthetics, the price doesn’t break the bank, and I can imagine there would be a potential fanbase if it ever becomes known to the masses.I will buy this token because the price doesn’t break the bank, it is needed for XX protocol to work, and that protocol may become important because we will always have multiple blockchains in the world and there will need to be an intersection where these different coins can be exchanged.I will buy that NFT because there is something unique built into the metadata, there is a lot of hype around it, and the price is low enough that I can absorb the loss of it going to zero, I will sell it if it goes up by 50% or goes down by 25%.I will buy this artwork because I love it, I love it I love it I love it I love it.In my mind these are all valid reasons to myself. And they only work if I am the one saying them. I own all my Ws and Ls.Nothing is ever free, no stranger is ever helpful for no reasonI have never trusted easily. Not quite sure where I got this from, but I am mistrusting of friendly strangers, anything given for free, and generally all “helpfulness” unless I see the incentive behind the person being helpful. These characteristics have served me well in crypto, and I have steered clear of many dangers and scams. There is not one influencer that I do not take with a pinch of salt, not one person who can provide “alpha” that I would act on without thinking for myself, not one community I would trust with an amount of ETH I could not stomach going to zero. Now the flip side; there are many people that I like, that I learn from, that I believe to be good. I can also verify their wallets to be sure they are a community member, that they have skin in the game, that they are and have been active participants and thus have social capital that would be put at risk if acting in a malicious way. Don’t trust, verify.Admit it’s more about luck than skillThis last rule is the one I think is most important: I acknowledge that where my portfolio is today, owes more to luck than skill. I funded almost all of my crypto/NFT activity through taking profits on Doodles and a Moonbird. I was lucky enough to be noticed early-ish in the Doodle journey with a wacky animation expressing my desire for a Discord invite. I was lucky enough to win a Moonbird allowlist spot, which I was also lucky enough to sell at the height of the hype in April 2022. I was lucky to have had enough liquidity right at the time 6529 Gradients went on auction. I was lucky to have been able to sell-off underperforming NFTs before they hit zero demand. In all of these cases I had my ear to the ground to be able to act. But the start of it was always luck, and I am thankful to have been as lucky as I was.The end of the beginningI have to pull myself back to reality after this stroll down memory lane. A lot has happened, and a lot will surely continue to happen. Here we are in the bear market, the Ethereum Merge scheduled to happen in a little over two weeks. Recent events have called into question whether the base layer of Ethereum can remain permissionless and censorship-resistant. The global economy continues to limp along. Uncertainty everywhere. I have a stack of ETH and some JPEGs. Who knows what any of this will be worth in the future, although by continuing to hold these I’ve already shown my hand. I believe in the right to own digital assets, and I believe future generations will view them as real as any physical item in their ability to hold meaning and retain value. We are still at the digital frontier, and so much has yet to unfold. At the end of my rookie year in NFTs, I’m still standing here, with my seven rules, ready for whatever comes next.

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