‘Bitcoin is like digital gold. It’s the first and it doesn’t have an unlimited supply:’ The wild ride of a 30-something investor during the crypto crash — and
Vinny Zane has a taste for life — and an appetite for risk.
The 38-year-old teacher and father of a 2-year-old son on Brooklyn’s Coney Island got into crypto in 2017 with $4,000 worth of Bitcoin, and jumped into NFTs, or non-fungible tokens, last year.
“It was a learning curve for me,” he told MarketWatch. “We’re still fairly new in the cryptocurrency space even though it’s been around for over a decade. I started FOMO-ing into all these little coins, and everything was doing well at the time. I was, like, ‘Whoa, it’s incredible. I’ve no idea what I’m buying, but I’m going to keep buying.’ My $25,000 ballooned to $63,000 super-fast. I was like, ‘OMG, this is amazing.’”
Zane experienced his first crypto bear market in 2018 when the Securities and Exchange Commission made noises about regulating the space, and he has had a wild, crazy ride ever since. Cryptocurrency is still the Wild West of investing with multi-million-dollar hacks, which in some cases Zane has managed to dodge by the skin of his teeth.
Like many other crypto enthusiasts, he is feeling his way through the latest slump in digital currencies, a bear market wrought deep by red-hot inflation, interest-rate hikes and geopolitical uncertainty. Cryptocurrencies were heading for more dramatic losses over the weekend. Bitcoin, the world’s No. 1 digital asset was last trading below $20,000, down more than 70% from its peak of around $65,000.
As investors reevaluate their investments in risky assets with talk of recession growing louder and the stock market heading for another week of red, Zane is holding firm. He has, after all, already watched his investments implode in 2018. It was not pretty. “It was dropping by $7,000 to $8,000 a day,” Zane said. “After about two weeks, I was basically even. I thought, ‘Screw it. I’ll leave it there; maybe it will come back up.’ Over the last two years, I have had a huge loss.”
“‘It was dropping by $7,000 to $8,000 a day. After about two weeks, I was basically even. I thought, ‘Screw it. I’ll leave it there; maybe it will come back up. Over the last two years, I have had a huge loss. ‘”
“That original $25,000 investment was sitting at $6,000 for the majority of those two years,” Zane added. “In 2019, it went up to $12,000, then at some time in 2020 when it was at $19,000 to $20,000, I jumped into my portfolio and sold off all the alternative coins. The majority of them were down 80%. I sold off whatever I could. I just kept Ethereum
Zane found himself at a virtual crossroads. “Do I cash out now and be done with crypto because it’s been a rough two or three years, or keep going?” he said. “I decided to keep going. I eventually invested about $60,000 in total. That $60,000 went all the way up to $150,000 in 2021 when Bitcoin
was crushing it.”
That was before the current crypto crisis. “There have been tons of ups and downs in 2022,” he said.
And so he started dabbling in NFTs last September, buying digital art and other collectibles. Today, he holds about $50,000 in crypto and bought $70,000 in NFTs — with earlier profits made on his crypto-portfolio money.
After years of highs and lows, Zane has — more or less — doubled his money. Out of that original $60,000 investment, he now has $120,000 in total, he told MarketWatch earlier this month. Of course, crypto has been on a downward slide in recent days.
He has a high risk tolerance for making a fast buck, but Zane also believes in the long game of compound investing. He puts $500 a month into a Roth IRA, and has a 529 plan for his son. “When he’s 18, he will hopefully have no debts for college if he chooses to go,” he said. He and his partner have life-insurance policies each worth $250,000. He is also dollar-cost averaging — investing a fixed dollar amount on a monthly basis — with Vanguard’s S&P 500 ETF
and Vanguard’s Total Stock Market Index Fund ETF
Zane remains optimistic on the stock market, despite its current woes. “From time to time I take a look,” he said. “But like I said, I haven’t really looked in a while. You don’t want to get discouraged. There have been good days and bad days. The same with crypto.”
First comes crypto, then come hackers
Dramatic price fluctuations are not the only problem. Wallet hacking is a persistent threat among platforms that host crypto and NFTs. Zane has come close to losing it all.
When you “mint” NFTs, you’re allowing your wallet to connect to that website. “With hackers, instead of giving you an NFT, they’re draining your NFTs,” he said. “By the time you’ve figured it out, it may be too late.”
“The scary part of the crypto space, more so with NFTs, is that you can so easily get compromised and hacked and lose everything,” Zane said. “I have had a couple of close calls, and I had to act fast. Very often, the hackers will post fake minting sites, pretending to be an admin, and people will click on that link and give permission to access their wallet and download.”
When Zane was an NFT newbie, he fell victim to a phishing scam on the Desperate ApeWives NFT Discord server when a hacker sent him a direct message (DM). “I was driving when I got the notification. I thought it was in the official announcement section of the Discord, rather than a DM. I clicked on it and sent them $500 and didn’t get anything in return, and I realized I messed up.
He changed his wallet, and moved everything over. “You can always start a new wallet” Zane said.
Zane tracked the hacker’s wallet. They made about $150,000 in Ethereum in about two hours, he said. That’s a lot of people falling for that $500 phishing scam. The takeaway: “You have to shut off your DMs, and don’t answer any DMs unless you know them personally.”
He also clicked on an erroneous link on the Floppy NFT Discord server, realizing moments later that it was a hacker. He jumped into action. He navigated to Revoke.cash, a site dedicated to reversing such transactions.
“Every time you revoke that access, you pay a fee. That gets a little expensive,” he said. “But it’s worth it, if you really have valuable assets. It’s such a useful tool in this space. I realized I got hacked within a minute. It was a little suspicious. Nothing updated. I thought, ‘All right, something’s off here.’ They quickly made an announcement that they got hacked. Thankfully, they didn’t take anything.”
“‘One of the things that you can do on Ethereum is set up an allowance so that someone else can spend funds or NFTs on your behalf. As you can imagine, it can also be dangerous.’”
Rosco Kalis, the creator of Revoke.cash, said his site relies on donations, but making a “smart contract” on Ethereum — as Zane did — incurs a fee paid to the Ethereum network.
“One of the things that you can do on Ethereum is set up an allowance so that someone else can spend funds or NFTs on your behalf,” Kalis told MarketWatch. “As you can imagine, it can also be dangerous to have a lot of those allowances.”
Transaction fees have skyrocketed along with crypto’s popularity, Zane said, so while revoking an allowance may have cost $0.02 in 2019, there have been times where it cost more than $20 in 2021 “because so many people wanted to send transactions at the same time.”
Not everyone is as fortunate or quick-thinking as Zane. Earlier this month, a hacker stole $360 million worth of NFTs from Bored Ape Yacht Club, according to Yuga Labs, the parent company of BAYC. “Our Discord servers were briefly exploited today,” the site’s Twitter
account said June 4. “The team caught and addressed it quickly. About 200 ETH worth of NFTs appear to have been impacted.” It was the third such attack on a Yuga-run account in recent times.
Bored Ape Yacht Club said on Twitter that it never offers surprise mints or giveaways. (A spokesperson for Yuga Labs declined to comment beyond what the company said on Twitter.)
“Double-check the official links,” Zane said. “Double-check to see if that’s the site you used to mint originally. If you’re patient, you’re going to see people fall for it and complain about it. There are thousands of people who use Discord. The ones who get compromised will expose it. These hackers are very, very sneaky.”
Attempted takeover of a T-Mobile SIM card
He had an even scarier experience when he was browsing on his phone at 11 p.m. one Sunday in late April and lost his T-Mobile service, even though his Wi-Fi was still connected.
“Sometimes, cell phones get glitchy,” Zane said. “I thought nothing of it. I shut off my phone and powered it back on, and I started getting emails. I see an email in my junk from T-Mobile. It says your SIM card number was changed from this to this. I didn’t speak to T-Mobile. I didn’t do anything.”
He was lucky he was up late, because that’s when the hacking began in earnest. One more lucky break: He used his girlfriend’s mobile phone to call T-Mobile. “We don’t have a landline,” he said. “I don’t think anyone has a landline these days, except my parents.”
Zane had two-factor authentication on his accounts, but his prompt was not a text message or a phone call; it was a Google
authentication app that generates a six-digit passcode every 30 seconds. That choice of two-factor authentication was no accident, and it may have saved his bacon. “When hackers take over your phone, they only access your texts and calls, not your apps.”
“Zane had two-factor authentication via a Google authentication app that generates a six-digit passcode every 30 seconds rather than a text message. That choice may have saved his bacon. ”
“Somebody got in touch with T-Mobile and accessed my account. I got an email that my Coinbase
password was reset. I’m like, ‘This is scary.’ Then my Hotmail password was reset. Right away, I start panicking. I didn’t want to do anything rash.”
The first thing he did was change the password on this Coinbase account. “I called T-Mobile and explained everything to them. They suspended my account.” The next day, he checked his bank accounts, and everything was fine. He went to T-Mobile store the next day and got a new SIM card.
One lingering puzzle: Zane said he doesn’t know how someone managed to change his SIM card without he himself authorizing it. “It doesn’t make sense.”
A spokesperson for T-Mobile told MarketWatch that the company would review what happened in Zane’s case.
Zane suspects the attempted hack that quiet Sunday night was related to an investigation launched by T-Mobile in August 2021 after reports that a hacker was allegedly trying to sell the personal data of more than 100 million T-Mobile customers. Vice’s Motherboard first reported the incident, in which a hacker on an online forum claimed to be selling private data that included names, Social Security numbers, addresses, phone numbers and driver’s license information.
The T-Mobile spokesperson said the company has seen “no evidence of SIM swaps or account takeover fraud linked to the criminal cyberattack on our systems last year. When the incident occurred last year, as a precautionary measure, we provided a number of services and tools to protect customers who were impacted.” The spokesperson said customers can also reference T-Mobile’s online-safety site.
Elsewhere, headlines like “Hacker Steals $1.4 Million in NFTs From Collector In One Sweep” are by now depressingly familiar. For crypto and NFT investors like Zane, keeping one step ahead of hacks — big and small — comes with the territory.
“I had my Instagram
hacked a month before that,” Zane said.
In a surreal development, Zane actually video-chatted with his Insta-hacker, who was calling from a Nigerian-based number, on WhatsApp. “He was a 19-year-old kid.” The hacker wanted more than $500. Zane declined, and opened a new account.
When the original Instagram operated by the hacker was repeatedly reported and blocked, Zane’s friends started unfollowing his former account. Eventually, the hacker lowered his ransom to $20. Zane told him where to go.
The complex art of choosing NFTs
But these experiences have not deterred Zane from dabbling in NFTs. He knows it’s a gamble but said that no one — Wall Street included — can predict the future.
“At first, I was buying random things and taking losses, as I didn’t really know what I was doing,” he said. “I slowly started learning, and buying things I felt were going to do well. I got a better eye at spotting things that were going to do well. A lot is not so much about how good the art is, but how big the community is behind it. How big is their network, what is the engagement in the community, how big of a buzz are they getting? I started having some success with it.”
Among his first NFT purchases: A collection of Desperate ApeWives NFTs. He bought the collection for about 0.08 Ethereum and ended up selling it for 0.8 Ethereum. “This was before the bear market hit, so Ethereum was over $4,000 at the time. That was a nice chunk of change,” he said. “I probably made about $3,000. You have got to factor in royalties, open-seat fees, plus the artists themselves.”
He also bought The Token, a piece of digital art created by the digital artist Del that changes every 24 hours for a set amount of time before repeating the cycle. He paid 16 Ash, another relatively volatile cryptocurrency created by Pak, a pseudonymous artist or group of artists, and sold it for 700 Ash.
(Last December, Pak’s digital artwork “The Merge” sold for $91.8 million on Nifty Gateway, with 28,983 collectors buying 312,686 total units of mass or NFTs. Zane bought 4 units.)
“‘I’ve gotten burned holding on too long before. I’ve learned to just take profits. The goal is never to seek the top. If you aim for the top, you will get stuck holding it for too long.’”
Zane has one cardinal rule for investing: Don’t wait for the peak. “The question every trader has is — when do you sell?” he said. “I’ve gotten burned holding on too long before. I’ve learned to just take profits. The goal is never to seek the top. If you aim for the top, you will get stuck holding it for too long. If you are happy and content with the profit you have, don’t get greedy; just sell it. That’s been working out for me. I try not to look at what I’ve sold after I’ve sold it. You don’t want to be that guy [saying], ‘I could have got another $1,000 if I held onto it for another week.’ You will start second-guessing yourself.”
He likes to spread his risk and stay nimble. “If you put out a good product for free — if you market it well, and there’s a lot of volume, and people are excited about it — you’re getting anywhere from 2% to 10% off every single transaction and every single sale,” he said. “It’s a lot easier to pump out a free product than just to overprice something at mint and there’s no volume. I started seeing all these cash grabs with ridiculously high mint prices on NFTs; they end up tanking. Meanwhile, they could have gotten 5% or 10% if they put out a much cheaper product. If you want long-term success and growth, you gotta start cheap, and the rewards really come in.”
As his crypto and NFTs rise and fall in value, life goes on. Zane has been working as a functional-needs teacher for 10 years, and he set up an agency to farm out teaching jobs a few years ago because because he was being offered more work than he could handle. “I thought, ‘Why let all this business go?’” he said. At first, his side gig earned him a few extra thousand bucks here and there. “Last year, it was an extra $20,000. A supplemental income is always nice.”
As for the current bear market in crypto, he’s taking it in stride. “It’s funny that the Floppy NFT is called Floppy because it’s been a flop.” But he is patient about waiting for a return. “As long as you don’t panic,” he said, “you’ll be alright. I’m not worried about the prices. I’m more concerned about the end game.”
He has high hopes for the future of crypto’s leading currencies. “The reward for mining each block of bitcoin — which is done every 10 minutes — halves every 210,000 blocks,” according to Coinbase. That’s roughly once every four years. As of 2022, the reward per block had diminished from its initial reward of 50 BTC per block in 2009 to just 6.25 bitcoin.”
“We could be looking at $250,000 per Bitcoin and $20,000 per Ethereum,” he said. “Bitcoin is like digital gold. It’s the first and it doesn’t have an unlimited supply. When there’s no more left, its value is going to skyrocket.”
Vinny Zane is on Instagram and Twitter.
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