You didn't invest into crypto... did you?

I was asked this today at lunch by one of the guests at lunch today, as we were tlaking about the current state of the economy and where it might be leading in the next 6 to 12 months. I only had one answer for him:

Damn right I am!

That must be painful! Isn't Bitcoin 50% down?

No, it is 70% down from the high, but it is still 400% up from the 2020 low.

For people who aren't in crypto, there "exposure" to it are the headlines they read and the odd story here and there, but rarely do those cover a timeframe of more than 6 months and they always look at the value compared to the most recent all time highs. This is obviously going to look bad for the investors, but it is actually about the same as buying Amazon, Facebook or Twitter at their most recent ATHs.

As I explained to the guy (very briefly) is that the volatility of crypto is what makes it so interesting, because while there are 70% swings down from the ATHs, that last ATH was 1400% from the previous low. It is because of these massive spikes that the drop is so extreme, because people who bought in at 5K are able to take profits all the way up to 65K, or all the way back down to 5K again - which means that if a person bought 10 BTC at 5K, and averaged the sell at about 40K, they are going to be 350K up in about a year - and if they bought their 10 BTC back today, they would still have 200K in pocket.

Sure, not many people might have been able to manage that, but it is likely that a lot of big buyers did, buying the FUD and selling into the hype along the way, knowing that the retraction was going to happen and they can get back in again.

But, the average person fears the volatility, because they don't want to wear the loss, because - what if they are buying the top? This is always an unknown, but many crypto people have bought the top and survived the drop, held all the way down and back up the other side, possibly a couple times. And, because there is "another side" they don't fear the fall in the same way as someone who hasn't experienced it - They just push out their timeline til retirement a couple years further and hold on.

I wish everyone would get into crypto, and not because it is some Ponzi that will push the value of my holdings up, but because it teaches through active participation, the experience of investing, trading, failing, researching, failing, the hype of the ups, the pains of the downs, failing...

There is a lot of failure...

But, it is a good lesson in emotional control and resilience, two traits that at least I feel are severely lacking in society today - which is part of the reason so many people are scared of crypto, because they hear the stories of people who have precious little patience or self-control, FOMO in and lose everything. But listening to the experiences of those people is like giving the controls of a plane while flying to someone who has never flown a plane before and then, using the outcome they get as the reason why not to in planes.

A pilot needs practice and experience, and in the same way that a good sailor is not made in calm waters, the turbulence of the markets helps people build skills that they might not get elsewhere. Not only that, it also breaks a lot of the conditioned beliefs about money, that so often create unhealthy relationships with it. This by itself takes a lot of power out of centralized currencies because once the emotion is gone, it is just another tool to use, or not.

And, the more people get into crypto, they more they tend to see the problems with it - but how the positives and potential outweigh the drawbacks. This experience inevitably leads to people seeing the massive flaws in the current economy and bit by bit, converts them into agents of change, just by having an increasing amount of their activities transacted on blockchains. Participation is very much a protest of current conditions, where the economic feet do the walking away from an abusive system. It doesn't happen all at once,

but it is a death by a thousand, then a million and soon a billion cuts.

In time, the volatility will decrease with wider acceptance and usage, as well as the growing number of businesses building and fleshing out a fuller economy. But for now, getting accustomed to the ups and downs is necessary for survival, otherwise "crypto insanity" sets in, which we often see exhibited in the Hive meltdowns.

Have you noticed that no one seems to rage quit at the highs?

It is just like that at the highs, the crypto skeptics who like to troll enthusiasts are very quiet.

But, for those who are in crypto, the volatility means an opportunity, where all kinds of moves can be made, which is part of the reason people are so engaged. Not just because of the potential to profit, but because they actually get to make the moves themselves, rather than relying on third-party managers to do it all for them. This is another experience that people need to get used to...

Self-direction.

Having to take responsibility might be one of the biggest fears for many getting in, because we are conditioned to be reliant. Breaking this reliance on centralized currencies and therefore those who control them, goes a very long way to improving the outcomes for billions of people on this planet.

The question should really be:

You aren't investing in crypto?

Taraz
[ Gen1: Hive ]