Are You Committing This Crypto Investing Sin?
Another huge mistake many people make when it comes to investing in cryptocurrencies is not sticking in their circle of competence. This is ironic given the fact that this concept was popularized by Warren Buffett and he recently stated that cryptocurrencies will end poorly. Many people use this same concept to argue against Buffett, but we'll revisit that later.
Your circle of competence encompasses what you know and know well, rather than what you think you know. In cryptocurrencies, four primary factors contribute to the size of your circle of competence:
- Technology
- Investing
- Finance
- Economics
The more you know about each of these fields, the wider your circle of competence. Most importantly, when you invest inside of your circle of competence, you enable yourself to:
- Better measure risk
- Better measure the probability of success, defined as high ROI relative to risk taken on
The video goes into far more detail related to four fields listed above. If your circle of competence is small, it is likely best to stick with some of the major cryptocurrencies, namely:
- Bitcoin
- Ethereum
- Ripple
- Litecoin
Note that even these cryptocurrencies have flaws that I would encourage you to learn about. Bitcoin is slow and expensive, Ethereum has major competitors in development which promise better scale, Ripple is more centralized and competing with HUGE pockets, and Litecoin is often considered nothing more than a playground for Bitcoin.
Bubbles occur because people invest outside of their circle of competence - They have no choice but to trust others on when to get in, and no choice but to trust others on when to get out because they don't know any better themselves. For example, recently Charles Hoskinson of Cardano and Dan Larimer of EOS had a "debate" over some technical aspects of Cardano. Most people don't have the skillset required to weed out the BS and hence agree with whoever better aligns with their views: Shocker, right?
Expand your circle of competence and don't be the idiot who blindly trusts others. That's the jist of the video. Returning to Warren Buffett, many say he's talking outside of his circle of competence: I disagree. He knows better than anybody the psychology of markets, but it doesn't exactly take a genius to see how stupid this market is. It will end poorly at some point. The one part I disagree with is that this will be a permanent bad ending - In the long-run, there will be cryptocurrencies that make us rethink existing business problems & solutions as we know them.
What are your thoughts?
I really have been enjoying your you tube video's lately, and because I believe how you are using this platform in conjunction with that one I will watch them, and comment and upvote here.
No monalogue in complete, yours are no different. Everything you said is very good advise for the average person and generally sensible, but I did notice it missed many aspects that relate to myself, and yet not to you.
I am one of the people who lacks the tech competence at the cyptography/developer level, yet have been building my own computers since 8088 processors. I am not the most intelligent person, but I have other skill sets that compensate in different ways. I have awesome intuition and can gauge the character of other people well, I also know to listen to others, especially those who have skill sets I lack and express opinions I do not share.
I was fortunate to have used my skill set to listen to a programmer friend in late 2008 and to buy BTC in 2009, I also listened to Vitalik Buterin and Charles Hoskinson in 2013 and used some BTC to buy ETH in 2014.
My point is that we all posess different skill sets and they all work in different ways, so though I agree with everything you are saying in this content, it is somewhat incomplete.
I also admire your honesty about your intentions of being in this space for the money, but again I differ in this regard as well. I fully got into this for the change it represents and the potential freedom from fiat control it offers. I have not "sold" any of my holdings since aquisition, I have taken all those rides up and down and seen the portfolio numbers change for this whole 9 years. Many of those rides ( liek that 90% drop you spoke of) were gut wrenching, but each time I would ask myself "if you would have sold at the last top, what would you have sold them for?" and so far I have not found my answer. Fiat? That seems like saying one thing and doing another. I sold my fiat for bitcoin to get free of fiat, why would I sell it back to fiat?
So again your content misses the full spectrum. I am not a programmer, or a cryptographer, nor was I a cypher punk. I am just a simple man who does not agree with what centralized banks and governments are doing and how they are manipulating the people of the world. My net worth is of little consequence to me, those are just numbers. 99% of the people who know me think I am intelligent and poor, which works fine for me.
I have invested in many of the projects you name as super risky, EOS, ADA, BCH, and some you have not mentioned, LRC, BNB, BQX, SUB, QSP, even EDT. All because my intuition says they are at least aimed at the right direction and the intentions of those behind the projects have good intentions. All of them I have entered at ICO stage. I am, by your view, working way outside my competence, and yet have done incredibly well by using the skill set I do posess. I am, though one of those people that spends the 5 hours to compensate for the lack of skill to reach the results in 5 mins.
You are one of the sources I appreciate and listen too, partly because we do often disagree, but my intuition says your not a scammer and if any information you present misleads it is not because your intention was to mislead. I think you generally want to educate people while earning a fair compensation for doing so. I refer friends to you as a source all the time.
thanks, jax
Like someone would say over the internet, @jaxtaylor, you sir, deserve a cookie.
It's very rare to see such a well structured comment while disagreeing with the author of the video.
I believe that one of the biggest forms of respect is beeing able to disagree with someone, knowing and explaining exactly why you do, but also acepting their beliefs as their own and valid options for them. To each his own.
To be honest with you, as many, I'm in this for the money like most people.
However I do believe crypto currencies or any sort of digital currency is going to be our future, but not any time soon, not any decade soon in fact. That's why I will be cashing everything in fiat if I sense a massive market crash from some sort of factor that can come from Crypto becoming a problem to centralized institutions. Later I'll probably reinvest If I believe it has potential for money or adoption.
This is where I stand after...a really short time in crypto trading, Im no expert on this, to be fair, i think i'm quite the "noob". Also lazy and a true believer of people. Hard to go agains't my nature, so in my case, I adquire my knowledge from little research and more from watching opinions from people I know they know more than me, in this case, @cryptoinvestor. I also follow other youtubers like DataDash and Doug Polk Crypto, and while I don't believe everything they say, I believe I have a good sense of feeling genuinity. Knowing that what someone's saying is genuine is very valuable, to my eyes.
If I would recomend someone to a friend about crypto investing would be Crypto Investor just like you do. Why? Because he's one of the few people that you can feel his real emotions go through, he's very genuine and even by beeing in this market for so little time and not much money invested, I sort of believe the sucess to trading more than anything is beeing able to know your emotions.
It's quite easy to spot the lack or the high genuinity of statements from a lot of people who comment crypto, even from people like DataDash like I mentioned, it actually surprises me the ammount of people who can't do this.
Knowing what's genuine and what's not, from people who know more than I do, hearing the good and especially the bad things, is my way of coping with my inexperience and lazyness.
And so far my results have been good and bad, depending on the investments. I'm trading small quantities here, so I'm rather comfortable, it's like i'm training for when (if) I feel more comfortable actually investing 10 to 20% of all my personal money in.
Sorry for the long comment, to sum it up, I wish every comment online disagreeing with someone actually was this respectful and thoughtful
Thanks for this, I was just adding a bit of what I thought was missing while trying to respect what the content creator created, which I found valuable I might add. Honestly I think it takes a certian type of person, of which I am not< to put themselves out there on you tube to begin with. I have rode every single up and down move in both bitcoin and ethereum since they both began, as well as others. I have not been immune from the slew of emotions this has created in and around me. I have second guessed myself so many times I doubt I could count them, but in the end it has turned out to be far more profitable ( were I to cash out) then any other choice or series of choices I could possible have made. I have chased money, traded stocks, options, commodities, and bonds. I have day traded till it almost cost me my sanity. I want something else, perfect peace, uninterrupted joy and absolute love.
I hope I find something worth trading my crypto assets for, as it stands I just keep trading them to support other crypto projects in little bits as a sort of portfolio rebalancing.
The landscape has changed so much with so much newbie greed coming in. People I thought would be powerful voices for the cause, end up just creating more noise. I like @cryptovestor a lot because at least he has the balls to say what might be unpopular if he believes it is right! He isn't looking for moons and lambos, least not only moons and lambos? I just hope we can all get past the greed, there is so much abundance in the world if we can just get over this one hurdle. Just don't think it can be done alone, it must be together.
peace
jax
Jax,
Just like most "rules of thumb," these types of videos don't apply to everyone. I simply cannot encapsulate every type of person and it sounds like you weren't the target audience for this video. Note that if another YouTuber I followed made a video of this sort, I'd skip it because I already feel comfortable and aware of the content. I know many people who follow a similar path to you and have been successful, but it doesn't work as general advice because many people just aren't designed to work that way.
As I said in an earlier comment here, I respect people more with the opposite opinion as mine if it is well-backed in their own thoughts rather than people who parrot my same opinion. I am happy you have a respect for me and I can say with confidence the respect is mutual. Best of luck with your investing.
Best,
CI
thank you for taking the time to read and respond to my comments. I gained much from this video, even the parts that don't pertain to me teach me how others think and feel
peace
jax
As far as the tech analysis, even if you have a strong background in tech, it is not easy to do unless you have worked specifically with crypto tech.
I have a degree in Electrical Engineering and equivalent to a computer science degree from experience and I can testify that all tech is radically different from field to field that renders most experience useless as you cross into other areas.
Hi there . I've been watching your videos for a while and I find it refreshing to see somebody that's questioning everything in this space. Even though in most of your videos you sound sceptical, it kind of serves as a Voice of Reason among all of the hype. I think that is good it let's people think about it a bit more and then make Better Decisions. Or at least it should.
In this video I can see where coming from. You are obviously concerned about the well being of the entire market as well as the participants in the market. Being that the market is dependent on the participants, it is undoubtably far better to have smarter people participating. Because of this I can see you have a good heart, because you're looking out for people that are not looking after themselves.
But here's where I have to disagree. In this world you can't save everybody, especially those who are ignorant and basically do not want to be educated and therefore saved. Regardless of what you are trading or using [ Fiat or crypto ] people are using them as money and they will continue to use them the same way they always did. In every corner of the world, in every country, in all types of economies, they are people making stupid and smart business decisions. You will probably agree that most of the time smarter people come out on top, with the occasional few lucky idiots. However, being that we're all legal adults here and are required to be if we are using digital trading platforms, we should be able to face the risks we are taking and the consequences of those risks.
You mentioned that you kind of want this to happen, so it would be a filter of people you are making uneducated investments. I personally think that you can use it as a "I told you so" moment. Don't get me wrong, I agree with you 100%, but don't take on the burden and the responsibility of trying to save people who are not even concerned about their money and their lives as much as you are. In this game of Life you will see that life isn't fair. But if you're making stupid decisions it probably looks like it's not fair at all. In the end those kind of people will always find somebody else to blame, and the worst thing is it will probably be you anyway.
I am sorry if this sounds a bit harsh but I think you should hear this.
Anyway I'm looking forward to your other videos. Keep up the good work and God bless!
I attempt not to be the "I told you so" person, although I definitely think it so I guess deep down I am that type of person. I don't feel any burden to save people - I just like having a platform to voice my opinion on the sheer stupidity I see in this market. If it helps some people, that's great. But I already know a lot of the people who need the help either aren't in the audience of my channel, or think they are exempt (which has been made obvious to me from seeing people who agree with me in the comments, but then in the same comment illustrate they don't understand what I actually said and are just twisting it to agree with them).
I don't really think of it as disagreements, most of the commenters are voicing, I see it more as pieces of a whole. You created the content from your perspective and in so doing created a forum where others can add to that voice pieces they see from their perspective. What I see in your comment section vs many of the leading "crypto experts" are intelligent conversation and sharing of differing views in a positve way. What you are creating is a powerful thing. I can see it would be difficult to balance between keeping enough armor on to shield yourself from the cruel and negative comments of the ignorant and letting down the shield to allow for some genuine back and forth exchange. Followers can be brutal. I hope it only becomes easier to accept all the respect and graditude you are being shown in these comments for your content.
peace
jax
Very good post.
However, I would like to point out that the price on Bitcoin is not simply the brand. The Bitcoin brand is valued as much for a very unique quality that only bitcoin has in this space:
Governance.
While most other currencies are in their infancy and they change their code base basically at will... they rebrand, they even freeze or fork themselves. That isn't the case in bitcoin for the past years.
For a change to take place in bitcoin, the community needs to signal for it with more 90% of hash power, and nodes have to agree, etc, etc... Even the huge bitcoin2X propaganda move was not able to turn the tables on the "unruled" bitcoin. And that has a lot of value.
To make sure that the main property we are striving for, censorship resistant, is indeed maintained in the long run, there is no coin other than Bitcoin that has already shown a huge resistance to changes.
Being a "fast system" is only temporary, until they can proof that is not the case when they get bitcoin level transactions.
(IOTA basically failed at that, for example, and they had to "restart" their system a couple times with snapshots)
I think it’s time we all get off the lawn of Ripple, Stellar, just to name 2, i could name over 100 other cryptos. MarketCap or not, many of these coins/tokens are pointless unless they BETTER a system then we already have, REALLY. People in China are already transferring funds between one another through an App called WeChat. Yep, Ohhh, and by the way they are not even using Cryptocurrency Tech to achieve it.. Good old FIAT, to the rescue.. Yes, a real world user case with real users, OMG, MoonSHOT...! Not even Ripple is anywhere close to that, is any other crypto. Even good old Facebook could not crack that market, China. Are You Committing Investing Sin?, in general..!
We can all continue to fall down this rabbit-hole, as long as we like. What are we actually looking to achieve from all this, and why are we converting are hard earned money to this other medium.
To make a fast dollar, from gains we have never seen in any other market, in are own lifetime
Are we really in it for the tech..?
What is that Tech hoping to achieve..?
a. A faster more efficient transport layer, coupled with trust. Something like TCPIP, Generation 2 (A communication layer that is also a currency. So, we need to pay 12cents to send 200bytes.)
b. A more trusted and organised why for business and community’s to manage data, database design. (A database coupled with a currency..? A database we need to pay to have are information stored and retrieved.. WHAT..?)
c. A way of crowed sourcing funds to pitch new idea’s or new company’s direct to the consumer, with out the need of VC’s and other centralised tools like Kickstarter.
d. Decentralising banking system, so we all are responsible storing and transmitting are own money to one another (is this a free service we all contribute to, or a payed service, like we pay a bank already for..?)
It all seems like a way of cuppling a unit of value to services we all are using vertically for free, right now.. Please think about that, PLEASE.. The world should becoming more connect and free, not the other way around...!
I think I'm also in line with what you're saying here.
I don't think Warren Buffet knows a lot about cryptocurrencies because he hasn't really studied them. I say this because I currently work in the financial services industry (closing in on 13 years now). I know a lot about stocks, bonds, and the markets in general. Even so, I recently told my wife that me learning crypto is like a horse-and-buddy driver looking at a new Ford Model T. Some principles carry over. Others don't. It took me about 6 months of study before I even got myself to the point where I could invest a decent amount into any cryptocurrency!
However, I think -- as you said -- there will be a "shake up" in the industry just as there was a "shake up" in the financial markets during the Tech Bubble burst and the Subprime mortgage meltdown. There are a lot of coins out there that are out there because it's cool to have coins; I've already bypassed several ICOs because there isn't a uniqueness (or reason for use) and I'm putting more into some of the larger coin.
Ironically, I have begun to share my experiences -- especially during 2008 - 2009 -- with those in my Facebook groups. In my opinion, the most dangerous thing to an investor -- stock, mutual fund, forex, or cryptocurrency -- is emotion. Emotion will take a normal, everyday person and cause him to put in more than he can afford to lose or make a knee-jerk reaction and pull out -- at the worst possible moment -- during cases of extreme volatility.
From what I've learned, the cryptocurrency space is far more volatile than where I am in the mutual fund space. Hence, it will be even more important for people to plan, stick to those plans, and not let positive - or negative -- emotion cause them to make knee-jerk reactions.
I totally agree with you. I am just trading crypto in small quantities for a very short time and to me, it seems like 90% of the time I made a decision based on emotion, I made the wrong call. I bought into the Hype of some coins and lost some money on those decisions. I didnt bought into the discredit of some coins then they spiked. I sold ethereum for bitcoin because I was eager to have some altcoin profit and because I was scared that Ethereum wouldn't go above 0.07 BTC. It reached 0,1BTC. This was a blow on me because even though I made profit in other altcoins after trading to BTC, I'd have the same as If I would just freaking hold Ethereum...
Its actually conflicting to want ETH price to go down when most of my digital currency comes from mining ethereum, because each time I sell Ether for Bitcoin at "high values", it just increases higher. I'm actually uncertain about what my strategy should be with Ethereum beeing my reference, as 99% of people use bitcoin to compare and ethereums price action seem far more unpredictable than bitcoin's.
I believe this means I didnt have the patience and my fear clouded me from realizing that Ethereum was the only coin in this crazy market that's looking for the next profit that didnt 2X in 2018.
Emotions are your enemy here.
However, they can also be your ally, namely, other people's emotions. There was sometimes where I earned quite a decent profit from coins like Monero when people's hype for verge and ripple was big.
These are real lessons to me.
I'm better than that but the Tron crash to .10 got me to buy in, which I'm beginning to regret now.
Great video... can I add a couple things... 1. don't "invest" in vaporware. For instance, ethereum is an actual protocol, deployed into the world with people developing on top of it. So many of these other cryptos are just press releases. Maybe there's some alpha code, but past that there's nothing actually built. These could fall apart at any time.
and 2. store your coins on your own device. If you actually install the necessary applications to receive and store a cryptocurrency, it forces you to learn more about the tech, and also the skill, attention to user experience, etc. that the developers are putting into the project. Often times an idea sounds great, but the execution makes it worthless. Attempting to actually store a currency on your hard drive is a pretty good way of investigating that possibility.