We just had another rug pull on the Internet Computer Protocol, and the token this time was BIL. I want to talk about the number one lesson to learn from it and a little bit about how this happened. If you look at the ICP tokens, BIL had a pretty big market cap. It traded on EXE, and maybe it's still going, but it's not something I'm going to participate in. It was hyped up for a while as being a real proof of work coin on ICP. The basic idea behind the tech is actually pretty sweet: you burn EXE and you get miners, and the miners mine BIL.
But here's what happened. If you look at Luke's ICP status, a hacker identified a vulnerability and was able to mint a hundred, two hundred, a whole lot of BIL. They created a whole bunch of BIL, and then they were able to dump that entire market. They basically used that vulnerability to create a huge amount of BIL and then crashed the price to zero. People started buying it right back up, and then the price crashed again.
The more tokens you hold, the more risk you carry
To me, the key lesson here is that the more tokens you invest in, the more risk you're putting on yourself. And when you have something that goes to zero, something else has to double just for you to break even. Especially over the last few days, I did a video where I said I hate meme coins. What sucks about crypto, in my opinion, is all these tokens on the Internet Computer Protocol. Almost any of these smaller tokens could go to zero at any time, for any reason. That's why I care so much about finding the lowest risk place I can put my crypto.
Now, there isn't any zero risk option. Bitcoin is absolutely not zero risk. At this point, I'd say Bitcoin has as good a chance of going to zero, for one reason or another, as the Internet Computer does. Even though ICP is newer, it has a huge team behind it. All kinds of things can happen. There's no coin you're guaranteed to never lose everything on. But a lot of these coins that get created, especially on smaller projects, are extremely risky.
Why losses hurt more than gains feel good
Not only are these tokens risky, they're distracting. The human psyche is wired to overemphasize loss. For example, if you lost money on the BIL token, here's how your mind works: if you lost $100 on BIL and you made $1,000 on ICP in price appreciation, your mind would probably be far more upset that BIL went to zero than it would be happy that you made $1,000 on ICP.
I see this in practice with my kids. If I fine them a dollar or I give them a $10 bonus, they're much more upset about losing the dollar than they are happy about the $10 bonus. This makes sense in a primal, reptilian-brain kind of way. You're wired to prioritize danger and negativity over just having a peaceful environment. In prehistoric times this made sense, where there's a tiger or a bear coming up to eat your young, and the brain says, okay, we're going to quit paying attention to how serene everything is and focus on this bear. That same wiring is now firing over a token like BIL.
Pick a handful of projects and research them to death
The lesson I take from the BIL token is that I don't want to be in any of these coins except ICP and maybe one or two carefully chosen others. The main way I've gone wrong in crypto, and the way almost everyone goes wrong, became clear to me again recently. I talked to some people in person last night, and they're telling me XRP is going to go to $10,000 and that they bought the Trump meme coin. I try to tell them the tech is crap on those others, the market cap is already huge, and it's like they can't hear me. It's like I'm speaking another language. I'm talking about things that matter, about reality and huge amounts of research, and they're talking about one video they saw, some guy saying XRP is going to $10,000. That's locked into their mind now.
So what we can learn from the BIL token going to zero is that you need to pick your projects extremely, extremely carefully. Don't just buy something without doing a stupid amount of research on it. New projects like BIL should take a lot of time to prove themselves before most of us invest. By this point, OpenChat is my second largest position. It's proven itself, but it's still dumped quite a bit since I bought it too. Honestly, I'd have been better off buying ICP than OpenChat, because the price against ICP has dumped quite a bit. But the difference is this is a real project, and it was around 0.05 when I started buying it.
Default to skepticism: a token is worthless until proven otherwise
So the key takeaway from this BIL token, for me, is no more than a handful of tokens for most of our portfolios. We do technical analysis, we talk about the most recent news, and I do try to look at whichever coins are the most interesting and keep an open mind. But I think a lot more of us in crypto need more skepticism and more disbelief that any token has any value at all. To me, a token should be considered absolutely worthless by default, unless there's enough evidence, beyond a reasonable doubt, that it's different. In the ICP ecosystem, and the same as in the rest of crypto, almost nothing passes that test for me except the Internet Computer Protocol itself. And then OpenChat is my next biggest position.
I think the best part is that if you did lose money on BIL, it's a good chance to reevaluate your portfolio. Some of you said that after you lost money on BIL, you dumped everything else back into ICP. And yes, in the short term, some of these meme coins, if you were in on them super early, would have made you more money. But if you watch these coins over the long term, ICP is usually beating them. If you want to go deeper on the projects I actually hold and trust, you can follow along through my ICP Crypto playlist, where I work through this thinking in detail.