What if I told you, all of your profits are lies?!
No…I’m not sipping whatever the CEO of JP Morgan, Jamie Dimon, is drinking, or am I thinking that cryptocurrency is a scam…
…but…
…I do believe that most people are looking at it in the wrong light, especially when it comes to determining how profitable you are!
So…let me tell you a bit about my background…
I come from a finance & software development background. I’ve traded everything from Stocks, Options, Futures, Forex…and now Cryptocurrencies. You can even add Pokemon cards if you really wanted too.
I’ve been in the crypto space low-key for a few years but haven’t really taken it seriously until this year.
I’ve held a small amount of Bitcoin and Litecoin when it piqued my interest right after it crashed in 2013.
I believed in the whole concept, from the blockchain, to having a public indestructible ledger for finance, to decentralizing currency in general.
In the process…i’ve seen many claims of people making money in cryptocurrency. I actually like watching some of these videos online. Most of the time, these are fun loving individuals who brand themselves for knowing where and what to invest in.
If these places are “actually” safe to invest in is another story…and beyond the scope of this post, but I’m pretty sure you can find some of these people promoting a program which may, or may not actually be a legit operation…nor have actually proof of the operation being real…but once again, beyond the point.
So let me get to my point…
I think there is a fundamental flaw with how we look at how much we are making in profits.
In majority of cases, we look for the FIAT currency value as an indicator to let us know how profitable we are on a daily basis…and there’s nothing wrong with that…
…except that, if you truly believe in a decentralized system, then using FIAT to value cryptocurrency is pointless and invalid.
By using FIAT as our main indicator, we technically centralize what was intended to be decentralized.
For example, and I am going to use USD because I live in New York but, if 1 Bitcoin goes from $5000 to $10000, we’d all jump for joy…but what if the value of $1 is worth $0.25 cents because the banks just decided to print more money to use as toilet paper…then we have a problem.
If we continue to use FIAT as a gauge of profit and success for Crypto, we will eventually fall right back into the dependency of FIAT.
...of course, it's a bit more complicated than that...but my point is, once you bring in any centralized aspect to cryptocurrency, you essentially remove what is the most powerful aspect of cryptocurrencies, decentralization!
So how should we look at profits?!
There are actually a few better ways to go about doing this, but this involves a more evolved ecosystem for cryptocurrencies…but that might not happen, for a good while...
…but the simplest way would be the same way we operate in FIAT today…you gauge your profits by having more of the currency than you did the day before.
If I had $10,000 USD and I made a couple of trades and end up with a balance of $10,150 USD…then my profit is just that, the increase in the amount of the currency I have…in this case, $150 USD…
…the same should apply for cryptocurrencies. If I have the equivalent value of 1 bitcoin, order to claim that I made a profit, I would have to end up with a higher equivalent value of 1 bitcoin…in this case, anything over 1 bitcoin…and not worry about its extrinsic value of that bitcoin from a FIAT currency.
Of course, all of this is easier said than done...since we live in a FIAT society, but it's just something to take into consideration as soon as we have a better ecosystem for using these cryptos!
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