In the last four years, I have been closely interested in crypto and received a bachelor's degree in philosophy. Inevitably, connections formed in my mind between philosophy teachings and crypto investing. In this article, I will present my ideas on how we can benefit from the teachings of Rene Descartes, Galileo Galilei, Nasreddin Hodja, William of Ocram, and Lao Tzu in the field of investment.
Rene Descartes and Cogito Ergo Sum
The skeptical tradition in philosophy goes back to antiquity. For example, Parmenides, regarded as the founder of rationalism, claimed that nothing changes in the universe. According to him, the reality is One in the absolute sense; it is permanent, continuous, not created, and cannot be destroyed. To make such a claim requires doubting even what we see with our own eyes. French philosopher Rene Descartes, who lived in the 17th century, is known as the person who developed methodical skepticism. As a mathematician and scientist, he thought we should question everything known to be true. The famous Cogito Ergo Sum states that we can certainly know that we exist based on thinking about the word.
Thinking through what our eyes see can give us significant advantages when investing. A group of people may become very excited about a particular coin. Prices may be in an uptrend for a long time. People we find reliable may argue that the uptrend will continue for extended periods. If the coin we invest in does not benefit the world commensurate with its value, the bullish trend will expire sooner or later. The same can be valid for a coin whose price has fallen for a long time. If an asset with a falling price creates added value, its price will stabilize sooner or later.
Galileo Galilei and the Teeth of the Horses
Most of us know Galileo, an Italian astronomer, physicist, engineer, philosopher, and mathematician, for his contributions to astronomy. The persecution of the Inquisition is also frequently discussed. Galileo raises the question of how many teeth the horses have to criticize the intellectual understanding of the middle ages. And he says the following words: "Instead of looking at Aristotle's books, it is necessary to open the horse's mouth and count its teeth. The explanation of natural phenomena should be based on observation and experiment, not Aristotle's books."
While skeptics recommend being suspicious of even what we see with our eyes, empiricists like Galilei emphasized the importance of using data. Since we live in an era where everything is rapidly digitized, we have easy access to data. How many people use the blockchain we plan to invest in? What about the trading statistics? Is there an uptrend? Questions like these will show us whether dreams of a bright future have a basis.
Nasreddin Hodja and the Cauldron That Gives Birth
Nasreddin Hodja, a Turkish folk figure, is known for his stories and anecdotes. Nasreddin Hodja was a wise person who lived in the Akşehir district of Konya, an Anatolian city in the 13th century. He is known for his quick-wittedness and humorous approach to things. We are not sure whether such a person really existed. Nasreddin Hodja may well be a virtual character created by the people collectively.
A popular Nasreddin Hodja joke:
Nasreddin Hodja asks his neighbor for a cauldron to meet his urgent need. When he's done, he puts a small saucepan in it and returns it. When his neighbor sees the saucepan in the cauldron, he asks, "What is this?" Hodja answers:
"Good news! Your cauldron has given birth." This news had pleased his neighbor. "Okay," he said, taking the saucepan. The following week, Hodja asked his neighbor for the cauldron again, but he did not return it for long. When the owner saw that the cauldron had not returned, he came to the Hodja's house and asked for the cauldron. Hodja said with a sad expression, "The cauldron is dead!" His neighbor wondered, "Does a cauldron ever die?" "You believe that the cauldron gave birth, but why don't you believe it died?" Hodja replied.
We can replace the cauldron in this joke with dog coins and other speculative cryptocurrencies.
William of Occam and Occam's Razor
The 14th-century English philosopher, William of Ocram, laid down the principle that the simplest explanation of a problem is correct. Occam's razor indicates the need to be skeptical of complex answers. On the other hand, this principle implies that the simplest of possible explanations is usually true. There is no claim to certainty.
Those who build prediction models know the importance of Occam's Razor principle. Because by increasing the complexity of the model we created, we can better explain the data set. However, such a model would be insufficient to explain other datasets. In other words, it will not be generalizable.
Ecosystems with highly complex financial processes are likely to be pyramids. It is also unlikely that ecosystems, which we have difficulty forming an opinion on the utility, have a bright future.
Lao Tzu and the Principle of Joining the Flow
The Chinese philosopher Lao Tzu wrote his book Tao The Ching around 400 BC. Written 2500 years ago, this book was the best of the books on eastern philosophy I've read. The Tao The Ching is philosophically and theologically considered the foundational text of Taoism. Although I feel closer to western philosophy, I find the advice in the Tao Te Ching meaningful.
Lao Tzu often referred to the flow of the river in his book. Considering the importance that Taoism places on the path and the flow, we can take this for granted. The Tao The Ching has a lot of advice about going with the flow, not trying to go against the flow. Although these advices are about life in general, it is possible to apply the principle of participating in the flow to the field of investment. We all know that moving in the direction of the trend facilitates success.
Conclusion
I want to summarize the ideas I have listed above in this section.
- Being skeptical of the current situation and trying to predict how long the current trends can continue can protect us from risks.
- Rapidly developing information technologies have made access to data more accessible than ever. Therefore, we must benefit from data in our decisions today.
- We can be ready to believe in miracles. Even miracles can happen, as in the case of the Shiba Inu. If we are after high profits in the short term, we should not complain when the opposite situation occurs.
- Occam's Razor principle states that of the possible explanations, the simpler is usually correct. It carries high risk if an investment vehicle is defended with overly complex explanations.
- It would be appropriate to consider the motto "trend is your friend" when investing.
Thank you for reading.
Image Source: Midjourney App