Uncool side of Crypto
In this blog post, I’ve tried to pen down the anomalies around cryptocurrency so if you are someone who doesn’t know what cryptocurrency is? Checkout this article here. This is my best shot at explaining anomalies in and around cryptocurrency.
Trust
Money is such an entity which involves having a certain amount of trust which can be leveraged to invest into crypto. And trust is not something which can be gained by some red/green graphs but by some proof of work or by evidence of some sort. This proof of work is different from what you get rewarded in bitcoin. Joe invests in stock and equity because he sees that the company he invests in is actually selling a product and people are buying it gladly, he also sees that company is investing in R&D which says that they are thinking about the future as well. What about crypto? What’s the product? Until unless Joe sees at least one good real life impact of bitcoin & eth, Joe is not putting his money in.
Courage
Let’s talk about India here, across all the startup founders, Angel Investors and other wealthy people. A lot of them are first generation to make money and gain wealth in their family. It’s easy to say “I believed in technology” once you’ve made the money but ‘what if’ you didn’t? It takes pure courage to invest for the future. It’s not easy but it’s not super difficult either. It’s about finding patterns in ever changing human behavior, identifying their wants and desires. Well researched investments are not risks in itself. If you do good quality research then you will come to a conclusion whether that entity is worth your money or not.
Learning Curve
Crypto involves a bit of a learning curve in understanding the technology part and trying to make sense of the impact it might have on the world. Crypto conceptually is easy… for tech bros but not for doctors, lawyers, dudhwala, paperwala, house help, etc. They aren’t obliged to research for What? How? Why? of crypto but it’s onus on the creators of crypto to clearly explain it to average Joe the risk involved, the benefits at global and local level. Creators should lay out the tech information in such a way that anyone can understand the core value proposition easily.
Patience
This goes without saying but just like any other regular equity investment, patience is required to see the gain in crypto investments too. All these stories floating around of people making $1M by investing nothing but just 1cent in crypto are just a bunch of outliers. Now since they’ve made the money all they would do is showoff and use jargon but the reality is even they didn’t know if it’ll ever grow back then. There exists very few who have done thoughtful-deep research and then made an investment. Look at bitcoin itself, the price of 1BTC in the year 2011 was $1 now in 2021 (at the time of writing this article) it’s $39K. That’s a mega return over a 10 year period.
Uncertainty
I know that $100 I have in my pocket will hold the same value tomorrow and next month. But I also know that it will get devalued and reduce in purchasing power over a period of time but it happens in terms of years. But for 1 BTC that I hold, I don’t know if it’ll be 0.9 BTC or 1.2 BTC next minute. This ultra volatility is of massive concern and too much of a risk associated in the context of currency. With all this uncertainty my investments can become a ford from Ferrari.
Decentralized but Centralized
Cryptocurrency and the technology on which it’s built is decentralized but the influence is very centralized due to which in the past there have been instances of prices dipping or rising all the way to the moon. Leader’s in crypto will need to find some way to reduce this massive massive influence or find a way to curb this influential volatility. The essence of ‘decentralization’ dies when a tweet fluctuates the prices.
Dependency
Price of the cryptos is still talked about in terms of dollar value which is? A physical currency. As long as the crypto values are traded in physical currency the ecosystem will not completely shift to crypto transactions. Now this leaves a certain amount of dependency on existing currencies. Also, $1 is 0.000025BTC (at the time of writing this article), how does a human do day to day transactions using currency value up to 4–5 places after decimal?
These are the few anomalies which I’ve found, I might be wrong or right or I don’t know, there might be more anomalies out there but all these anomalies will pave the way for future technological advancements and improvements for the benefit of mankind. I don’t know if crypto is the future but I do know that technology is the future.
To conclude, I’ll leave you with a question: Since anyone can create a cryptocurrency of their own. What if companies announce that they’ll accept payments in their in-house created currencies only?
