It should come as no surprise that most people view die-hard cryptocurrency supporters as irrational and unable to see reality. This is true for the most part, because as a community, we are forward-looking and ever-optimistic. But as we edge closer to a new cycle that could draw more participants in, this is time for the community to adopt a pragmatic approach by seeing the world for what it is.
What’s the best approach for ensuring that those who enter this space enter with a good understanding of the risks and trade-offs? Do you think everyone here has an ethos that falls in line with the concept of decentralization and censorship-resistance, or that people were lured in by the thought of high returns on an extended basis?
Even if cryptocurrency is nascent and is yet to accrue true value, it is irresponsible to peddle these assets as those can generate “life-changing wealth”. Yes, this may be true, but what these influencers fail to realize is how susceptible the average Joe is to the phenomenons of over-allocation and capitulation.
It’s time for a strong dose of reality. Cryptocurrencies are risky. The entire industry could fail. We could see all this innovation go down the drain if people actually do trust governments, and a semi-distributed sovereign digital currency seems more enticing to the masses than censorship-resistant payments and value accrual.
As a risky asset with no regulator and rampant volatility, the dangers for a retail investor cannot be understated. Many people entered in 2017 and 2018 only to be shaken out after netting a tremendous loss. Several people lost an astounding amount of wealth. They have themselves to blame, that is undoubtedly true. Anyone who invests without understanding the true risk opens themselves up this kind of situation. But those that promote this thinking for people to go “all-in on crypto or Bitcoin” are equally irresponsible.
Pragmatism has been lost. No Bitcoin maximalist – or rather, a very tiny portion of them – will admit that Bitcoin could fail. For if they do not concede to the inevitability of a “Bitcoin society”, they are shunned by their “peers”. Off late, many people have hit back at the “everybody needs Bitcoin” argument, which mostly comes from over-emotional influencers. We need more of this.
Cryptocurrencies may not be going anywhere, but let’s not rule out the fact that they still can fail. I cannot emphasize enough on this. If you’re allocating 50% of your net worth to cryptocurrencies, you best understand exactly how much risk you’re taking. And you better be ready to write off that entire 50% as a loss, if the worst situation occurs.
Too many people have been burned and won’t be coming back until there is a legitimate, widespread utility in this industry. So let’s hold off on the shilling until there is actually something to shill, besides a new protocol upgrade, acquisition, or partnership.