goodmoneygoodlife
New member
One thing that bugs me about a lot of crypto content on the internet is that they just take one side:
"Crypto is great"
"Crypto is make-believe and is bad"
The reality is not black and white, but rather gray. I hope to very briefly outline the good and bad things about crypto.
Good things:
Crypto helps the world become more independent of the USD. I live in the US and we generally weaponize international trade. For example:
1. The SWIFT system, which is required for all international wiring is always exchanged via USD. Hence, USD is crucial to international trade process.
2. For decades, US has been piling up debt as far as massive imports and low exports. This causes many big countries to be dependent to US as a customer. And if US stops being a customer, then a lot of countries go into an economic crisis.
3. Dependence on the US means if the USD does poorly, the rest of the world does poorly.
This is good for the US, but bad for the world. In other words: the world economy isn't really diversified since it all traces back to the US.
Crypto helps solves this. If there's an international exchange or a means of transferring money / trading without a centralization or a government controlling trade, then it helps make a lot of trade independent to a certain currency. This means many countries can shift away from having tons of reserves in USD, for example (in the long-term).
Crypto helps equalize the world. The world has a lot of wealth disparity. The rich get richer. The poor get poorer. This is not politically driven, but data driven, and is true. But both with the existence of the internet, as well as crypto, the wealth opportunity is more equally distributed. Imagine in the old days, pre-internet who would do better:
1. The person with a lot of money resources and means to start a business, or
2. The person in a small town and no resources to start a business?
The answer is obvious. Nowadays, who do you think will do better?
1. Some person with rich parents, with access to the internet and crypto, or
2. Some person who is poor, with access to the internet and a deep understanding of crypto?
I'd say the latter. As an example, I wrote a crypto arbitrage bot that prints money generally (not working the past few days, so I need to fix the bot...but I digress). All I needed was the internet and a lot of patience in Googling how to do stuff. And then I did it. After maybe ~1 month of coding I had a bot arbitraging trades. Consider the all the things I needed to do this:
1. The internet.
2. Patience, time, hard work to the tune of ~18 hours of intense coding and reading / day.
Yep, that was it. I didn't need capital or money or any wealth resources to do this. Unlike regular businesses, crypto can be taken advantaged of (for the moment) if you are a tech nerd. And you can be a tech nerd with just the internet. And unlike regular businesses, you don't need massive capital or take massive risks to get started. Hence, crypto equalizes the world because it provides the same opportunity to everyone if they have the patience to read through hundreds of hours of documents and code for another hundreds of hours.
Crypto is transparent. All transactions are shoved in the blockchain. This means that you can easily trace an individual's trades, even if it's a decade old. This transparency of information makes money laundering impossible and makes financial security / crimes a lot harder to get away with. This is contrary to popular belief.
Bad things about crypto:
Scams are very easy to execute. I got scammed myself in a Ponzi scheme and lost 21k. There are tons of coins that are published on dextools/defi that are scammed and will get rug pooled. Think ICOs if you remember that era. Look at Token Sniffer and see for yourself how many new scam coins there are out every day. You must do immense due diligence when investing in crypto. Most people can't read Solidity / contracts and audit the code. Hence, it's very easy to be tricked into getting rug pulled or scammed.
Crypto is inherently volatile. And carries extreme risk. It's new technology, so the market psychology is erratic. We can be remarkably bullish one week and very pessimistic another. The market -- when it comes to crypto -- is like a clinically bipolar patient. It's up 80% on some months, down 50% in others. Extreme volatility means higher risk, which means the Sharpe Ratio is lowered. You should only invest in crypto with money you are OK with going to $0, as it often will. The general mentality of investing in crypto is this:
1. Protect my losses by investing a very small % of my income / net worth into it.
2. If I get lucky and something goes 100X, I am rich from the very small % anyway.
In sum:
Crypto technology is promising. And can help a lot of economics in the world. Especially when fees are lowered (like with ETH2, or currently with Cardano or Solana). And I believe crypto will win in the 2-3 decade period.
But investing in crypto right now is remarkably risky because we don't know who will win.
"Crypto is great"
"Crypto is make-believe and is bad"
The reality is not black and white, but rather gray. I hope to very briefly outline the good and bad things about crypto.
Good things:
Crypto helps the world become more independent of the USD. I live in the US and we generally weaponize international trade. For example:
1. The SWIFT system, which is required for all international wiring is always exchanged via USD. Hence, USD is crucial to international trade process.
2. For decades, US has been piling up debt as far as massive imports and low exports. This causes many big countries to be dependent to US as a customer. And if US stops being a customer, then a lot of countries go into an economic crisis.
3. Dependence on the US means if the USD does poorly, the rest of the world does poorly.
This is good for the US, but bad for the world. In other words: the world economy isn't really diversified since it all traces back to the US.
Crypto helps solves this. If there's an international exchange or a means of transferring money / trading without a centralization or a government controlling trade, then it helps make a lot of trade independent to a certain currency. This means many countries can shift away from having tons of reserves in USD, for example (in the long-term).
Crypto helps equalize the world. The world has a lot of wealth disparity. The rich get richer. The poor get poorer. This is not politically driven, but data driven, and is true. But both with the existence of the internet, as well as crypto, the wealth opportunity is more equally distributed. Imagine in the old days, pre-internet who would do better:
1. The person with a lot of money resources and means to start a business, or
2. The person in a small town and no resources to start a business?
The answer is obvious. Nowadays, who do you think will do better?
1. Some person with rich parents, with access to the internet and crypto, or
2. Some person who is poor, with access to the internet and a deep understanding of crypto?
I'd say the latter. As an example, I wrote a crypto arbitrage bot that prints money generally (not working the past few days, so I need to fix the bot...but I digress). All I needed was the internet and a lot of patience in Googling how to do stuff. And then I did it. After maybe ~1 month of coding I had a bot arbitraging trades. Consider the all the things I needed to do this:
1. The internet.
2. Patience, time, hard work to the tune of ~18 hours of intense coding and reading / day.
Yep, that was it. I didn't need capital or money or any wealth resources to do this. Unlike regular businesses, crypto can be taken advantaged of (for the moment) if you are a tech nerd. And you can be a tech nerd with just the internet. And unlike regular businesses, you don't need massive capital or take massive risks to get started. Hence, crypto equalizes the world because it provides the same opportunity to everyone if they have the patience to read through hundreds of hours of documents and code for another hundreds of hours.
Crypto is transparent. All transactions are shoved in the blockchain. This means that you can easily trace an individual's trades, even if it's a decade old. This transparency of information makes money laundering impossible and makes financial security / crimes a lot harder to get away with. This is contrary to popular belief.
Bad things about crypto:
Scams are very easy to execute. I got scammed myself in a Ponzi scheme and lost 21k. There are tons of coins that are published on dextools/defi that are scammed and will get rug pooled. Think ICOs if you remember that era. Look at Token Sniffer and see for yourself how many new scam coins there are out every day. You must do immense due diligence when investing in crypto. Most people can't read Solidity / contracts and audit the code. Hence, it's very easy to be tricked into getting rug pulled or scammed.
Crypto is inherently volatile. And carries extreme risk. It's new technology, so the market psychology is erratic. We can be remarkably bullish one week and very pessimistic another. The market -- when it comes to crypto -- is like a clinically bipolar patient. It's up 80% on some months, down 50% in others. Extreme volatility means higher risk, which means the Sharpe Ratio is lowered. You should only invest in crypto with money you are OK with going to $0, as it often will. The general mentality of investing in crypto is this:
1. Protect my losses by investing a very small % of my income / net worth into it.
2. If I get lucky and something goes 100X, I am rich from the very small % anyway.
In sum:
Crypto technology is promising. And can help a lot of economics in the world. Especially when fees are lowered (like with ETH2, or currently with Cardano or Solana). And I believe crypto will win in the 2-3 decade period.
But investing in crypto right now is remarkably risky because we don't know who will win.
