They started talking about something called Bitcoin - The Story of Huntingisland

2.000 BTC for $20 USD and other no-brainers in trading

Hello DeFiers,

Most of you will be familiar with Huntingisland. He’s known for his active participation in DeFi Twitter and enjoys a reputation as one of the big DEX traders.
In this special two-parter of My Two Gwei by Huntingisland tells us his story…

Enjoy reading edition #6!

The Story of Huntingisland

How it all started

In 2010 I was active in an online forum called LessWrong of which Hal Finney was a member. And in this forum, they started talking about something called Bitcoin. I thought to myself that it probably wouldn’t go anywhere, but just in case I tried to invest – I was offered 2.000 Bitcoin for $20 USD.

I had to generate a public key that I then needed to send to them in the mail along with a cheque for 20 dollars. Unfortunately, I couldn’t get the software to run and I ended up not investing.

While I was still vaguely interested in Bitcoin, I became increasingly unhappy with our financial system and how it was being managed by the central banks. So, I invested in some precious metals, like gold and silver.  That investment went quite well, but over time I realized this can’t be the answer either. We’re never going back to gold!

Ethereum people are spammers

Bitcoin had continued to do very well, the latest bubble peaking over $1200 and then collapsing in 2013. It was now 2015 and I decided to seize the opportunity and put some of my precious metals into Bitcoin.

Around this time there was the Bitcoin block size debate. I had a very clear position in this, that Bitcoin needed more capacity, it was however decided that the block size would not increase, and I wasn’t at all happy about that.  

In early 2016, I encountered this spammer in the Bitcoin subreddit, he was advertising Ethereum and private messaging everyone who had ever posted to r/Bitcoin or r/btc. So, I went over to the Ethereum forum to tell them that they were a bunch of spammers, but they were so nice and apologetic that I started really getting interested in learning more about Ethereum. Also, I was happy the community wasn’t having this whole civil war going on.

As a software developer I was intrigued by the programmability of Ethereum and first invested just a little but then quickly traded most of my Bitcoin for Ether. 

There are always opportunities

A few months after that I started noticing price differences across markets. That means you could buy or sell Ether on Coinbase Pro at a different rate than on Kraken for example. The price differences were significant – sometimes 10% and more. It was a no-brainer: Buy on the cheap exchange and sell on the more expensive one – no risk involved!

So, I started arbitrage-trading between different exchanges, and I made some good money for a while.

I believe that the exchanges then put in place their own arbitrage bots. Not to make profit I think, but to keep the prices in line. Thus, today, when you go to the centralized exchanges there is almost no price difference between them and there is no chance of making money anymore doing arbitrage trading.

In 2018 when the big crypto collapse came my business wasn’t really profitable anymore trading on centralized exchanges. That’s when I started looking into Maker and the Oasis Exchange. What I found was that you actually had arbitrage opportunities between Oasis DEX and the centralized exchanges. I saw the opportunities were still there, they had just moved.

A feeling for the markets

Today I almost exclusively trade on decentralized exchanges and what I really like are the low fees. On CEXes they have increased a lot. Coinbase Pro used to be free if you were providing liquidity, but then they changed that and no matter how profitable my arbitrage was I made more money for Coinbase than I made for myself.  

I know a lot of people doing liquidity providing on Uniswap and so on, but that’s just not what I am doing right now. I’m providing liquidity more of the old-fashioned way- putting orders into the order book and waiting for those orders to get executed against. When doing this, some days you don’t have great opportunities but when the price moves a lot there can be enormous profits out there. You just have to know what’s going on and strategies that work well on one market, don’t work well on others - after time you just develop a familiarity with the markets.

From trading to marketing

… There is just so much happening in DeFi and almost all of it is on Ethereum and still, Bitcoin gets so much more attention…

In part 2: How Ethereum should be marketed and what Huntingisland is doing to make this happen.

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