Having Realistic Expectations About Crypto

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We often encounter miraculous results in the crypto market. Moreover, these miracles do not only happen during bull market times. Splinterlands' governance token SPS has gained 80% in the last two weeks. Furthermore, this rise was predictable based on previous announcements and the token economy.

We can easily talk about 10-fold or even 50-fold price increases in the crypto market. It comes as no surprise that such increases occur during bull markets. For example, the value of Hive increased 15 times in 2021.

The downside of the crypto market is that it gets us used to these miracles. Famous science fiction author Arthur C. Clarke once said, "Any sufficiently advanced technology is indistinguishable from magic." Could the technologies that enable digital assets have reached this level?

Interpreting Exponential Growth

Futurist Ray Kurzweil published an article in 2001 called The Law Of Accelerating Returns. The paper's central thesis was that exponential development could not be interpreted with traditional thinking. In the article, Kurzweil focused on the history of technology and showed that deterministic laws could explain technological developments.

Technology leads to exponential development because inventions create synergies when used together. Therefore, each new technology added to the pool provides benefits beyond the added value it will create.

The Law of Accelerating Returns has been demonstrated with data by Kurzweil in the IT field, where we can measure outputs. Features such as processor speed, storage capacity, and data transmission speed are developing exponentially. We are observing the results of these developments in the last 20 years as digitalization has become prominent.

After summarizing the 100-year history of developments in the field of IT, Kurzweil states that technological accumulation became more evident in the 90s. Kurzweil's article was written in 2001. So in the previous millennium, the consequences of exponential development were not obvious. (Moore's law only covered processor speeds.)

We rarely encounter examples of exponential development in our daily life, so we assume that things will evolve linearly. We need a conscious effort to imagine exponential increases.

Exponential Growth In Crypto Prices

We visualize long-term crypto prices through logarithmic charts. This situation reveals the exponential nature of crypto. Monetary sizes, the number of users, and the number of transactions is increasing exponentially.

The most critical question in the crypto world is whether the value of the crypto asset class will continue to increase exponentially. My opinion is that the exponential rise in crypto prices will continue. I even think the real big bull rally of crypto has not happened yet.

As Kurzweil's article mentioned above shows, unit costs for information technology metrics are decreasing exponentially. This advancement makes blockchain-based infrastructures no longer a luxury, and more use cases are becoming feasible every year.

Easy monetization of value differentiates crypto from traditional tech businesses. This dynamic helps to increase the value of digital assets exponentially. In addition, since digital assets are information in their essence, they are not subject to the raw material restrictions of the traditional economy.

For the past ten years, the value of crypto assets has doubled every year. In 2019, analysts thought that this increasing trend had come to an end. Valuations in 2020 and 2021 showed that this was not the case. Some analysts claimed that the value increase of crypto assets has slowed down again this year. I think that there is no evidence in this direction yet.

Unrealistic Expectations

The performance of crypto assets to date shows that the land we are on is fertile. However, this does not guarantee that every dog ​​coin produced by changing the logo will reach high values.

Although NFT is a revolutionary technology, it is not enough to add value to the barely distinguishable profile photo collections.

It is reasonable to have several Uniswap clones on each EVM-compatible blockchain. Because each clone can bring innovation to the DEFI field that others cannot think of. On the other hand, we know that the number of dexes needed in the market is limited.

I guess you understand what I mean. Investors need to learn to distinguish what is valuable so that the market can function more effectively. I made two of the three mistakes I stated above. We learn to navigate this new world by falling and getting up together.

On the other hand, unrealistic expectations are not just for imitation projects. We expect blue chip coins like Ethereum and Hive to show the same performance in the new year after gaining five times the previous year. Hive earned 15x last year. This year its value has dropped to a third. Moreover, this is a good performance compared to other coins in the Hive scale.

Crypto Education

Buying Bitcoin, Ethereum and HODLing may be a sensible choice for the average investor. When we go beyond that, we need a solid crypto education. People join crypto during bull rallies and buy the fashion coins of that era. For example, last year's popular coins were Terra, Avax, and Solana. Each of them has lost at least 80 percent this year.

To get our share of the fertile land of crypto, we need to have a basic notion of risk management. In this way, we can limit the damage caused by our mistakes.

Having a general knowledge of the crypto ecosystem, some technical analysis insights, and being able to interpret the token economy seems essential to creating a healthy investment strategy.

Platforms such as Hive and Leo Finance are well suited for crypto education as they allow us to connect with other crypto enthusiasts.

Conclusion

Crypto investment requires courage, intelligence, and imagination. First, we need to understand what we are investing in and then take action.

Setting the risk-return balance well is the main success factor in crypto investments. Achieving this balance is possible with crypto education and experience.

Easy achievements are often not permanent. To be successful in crypto investing, I think we need to study well in our crypto lessons. When conscious investment is combined with a long-term perspective, the probability of success increases several times.

Thank you for reading.

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Buying Bitcoin, Ethereum and HODLing may be a sensible choice for the average investor. When we go beyond that, we need a solid crypto education.

Agree.
I initially thought that all cryptocurrency are the same.
It took me few loses and a lot of reading to realize that it is not. But I believe, that the loses I incurred served as a fee for the lessons I learned. One of which is to Never trade or invest in something we don't fully understand.

!1UP


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Over the last 12 months or so, my expectations have changed from looking for a 10x in price, to earning a sustainable APR on my stack.

I don't want to ever have to sell my underlying investment.

I just want to be able to use it to earn a wage and skim off the top.

Sustainability is key.

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