Love and greed have so much in common. Aside from being an undeniable part of human nature, they’re both controlled by our innate urge to satisfy yearning. Being engaged in romantic love is precious–maybe the best feeling we, as people, can ever experience. Yet, in our search to satiate our desires, love and greed can lead to a clouding of the mind and/or submerge us in the negative results of our impulses.
Love and greed can also yield the same results when they mingle with cryptocurrency. The first decentralized cryptocurrency, Bitcoin, was only founded less than a decade ago (2009, to precise) and still, it has already provided voracity and desire with a shiny new face. The first step in comprehending the market is to understand why it dominates conversations: Money began in bartering of silver and gold that was once controlled by the owner, but now, every transaction we make is partially commanded by politicians. Value can be swayed however which way banks, bureaucrats and elected officials like. The concept of a decentralized currency is the supposed answer—a free market where no banks (controlled by world powers) can keep tabs.
Anyone who reads the headlines has heard some version of the story–someone bought two pizzas for 10,000 Bitcoins in 2010 and unknowingly made someone else a multimillionaire. Or what about the news that 50 Cent recently remembered he had a stash of over 700 Bitcoins? Being exposed to these stories makes it easy to see cryptocurrencies as a source of instant gratification. The formula–buying low, selling high, and becoming rich–seems so simple.
Yet, like everything connected to investment in cutting-edge technology, nothing is as easy as it appears. Entering into the cryptocurrency market is much like starting a relationship. But should we pursue the cryptocurrency investment as a one night stand or a serious relationship?
Let’s start with the cryptocurrency version of a one night stand: Again, biology has programmed us with specific urges–physical urges to be exact. We’ve all been at home alone, feeling especially lonely, ravenous for intimacy by someone, by anyone. An investment into a cryptocurrency can be something of an urge, a strong itch that needs to be scratched. The crpyto market may have worked for us once, maybe we know someone who it has worked for, or we’ve read about it working for another person we only know in the headlines. In any case, most would-be investors end up in a state of mind where they want to jump in and consequences be damned.
Sure, love is great, but lust is fast and strong. After that lonely evening in, a night out can be led by the search to meet someone, share a drink (or too many), following by a long gaze that somehow communicates if we’re equally attracted enough to have sex as soon as possible. The morning after is a cordial enough goodbye. Why wouldn’t it end on kind terms given the exchange of pleasure without the strings attached? You know that metaphorical itch we described earlier, well, that sexy night can result in an actual, less satisfying itch–with redness and burn–because we forget certain safety procedures when we want it bad enough and fast enough.
Similarly, our first cryptocurrency does indeed come with the promise of immediate gratification. Seriously, investment is just a click away: A person can invest a sum and easily make a 10 percent profit in less than 24 hours via exchange sites like Kraken. Why not a 20 percent in a couple of days? Sure, no problem. Hit the market wave at the right moment and it is possible to double the investment in less than a tick of the clock. The investor can be completely oblivious to the particular nature of the cryptocurrency they are investing in. Like the passion of a one night stand, the impulse is important and it has to be acted upon. Otherwise, there is only loneliness–a wallet without profit–when it comes to passing on a cryptocurrency investment.
Still, the same approach comes with its price. When does the investor pull out with their profit? Sure, the investment sum has risen by 200 percent now, but it could be 300 percent before the end of the week. Or 1,000 percent soon after. However, the market can swing in the opposite direction. Our initial investment is failing, but what if we invested more money in another cryptocurrency? Should we pull out entirely from the market? The same difference can happen in the aftermath of a one night stand; Thoughts start swirling with, “Maybe we can meet up one more time?” or “Could we make this a regular thing, naturally, without any unnecessary feelings?”
These approaches are based on a strong initial need but lack a solid basis. Without it, the initial impulse has a small chance of growing into something long-term and successful. In the immediate future, the approach works if the investors and lovers have a clear idea of what they want. If they don’t, the chances are that the ensuing relationship will end badly. During 2017, many learned about the boom of Bitcoin and Ethereum. Yet they lacked thousands of dollars to make a big investment, so they turned to so-called altcoins.
These smaller cryptocurrencies were a lot cheaper, but for those who knew nothing about them, provided the same chances of success. Anything can become the new Bitcoin, so why not invest $100 in things like Dogecoin? This cryptocurrency was created as a joke and it carries the symbol of the Doge meme. Its own creator stated that the altcoin bubble had to burst and suggested to investors that they should be careful.
But many failed to listen, bringing the market capitalization of Dogecoin to almost $2 billion at the start of 2018. As of February 4, its market cap dropped to about 570 million. A similar thing happened to all other cryptocurrencies at the end of January 2018. In that period, over $100 billion was lost from the overall market cap. There is no doubt that right then, many one night stands with cryptocurrency ended abruptly, with panic selling.
For investments, this is the equivalent of that bitter argument after a series of one night stands where one person wants a relationship and the other doesn’t. When this happens, the set-up breaks down and a win-win situation becomes lose-lose.
Then their is the slow, steady route: Unlike the one night stand approach, there is the pursuit of a long-term relationship. This is a path that comes with less immediate gratification and more problems, especially in the beginning. Like one night stands, it too can fail. But unlike the first option, it carries a bigger chance of ending up with something worthwhile. With cryptocurrency investment, the first necessity for a successful relationship is the ability to understand the tech. Though, as much as we can compare bit coin and relationships—there is nothing to hold—to prove that there is someone (or in this case) something tangible to hold us tight at night. Bitcoin and all cryptocurrency is essentially digits traveling in the ether. Diving into the deep world that is blockchain technology–the public ledger that records and monitors any crypto transaction–means understanding the possibilities that the future can hold and that requires a lot of preparation and even more imagination.
Of course, turbulent times are bound to happen, even with the most promising of relationships. The value moves up and down as quickly as logging in and out of our gmail account, meaning the more people mining and trading the 21 million Bitcoin to ever be in existence, the higher the value of Bitcoin is that day. Packing up and leaving is the easiest solution, but it might not be the best one. In these situations, investors, like lovers, have to figure out what they are willing to risk. Like the most promising relationship, a cryptocurrency can take a nosedive thanks to minuscule details. A rumor about a government regulation can put the cryptomarket in the double digit red zone, just as a relationship can stop once a person learns how their partner voted. There is no bulletproof way of making sure either a relationship or an investment succeed, even when using tried and tested best practices. This is why everyone must be prepared to fail in a way that will not be crippling, either emotionally for relationships or financially for investments. If we approach a cryptocurrency ecosystem using a win-or-bust mentality, we’ve lost already.
And even if all is fine and dandy, just as in a relationship, we’re all subject to temptation for the next best thing in cryptocurrency. Portfolio are can be diversified, but there is, again, risk for some nasty (pricy) results. Sticking to a single cryptocurrency, like sticking to one person, is the smartest strategy for new investors.
Bottom line? Just as there is no amount of self-help books to make us all-knowing in the game of love, there is no amount of research that can make us fully fluent in the battle for cryptocurrency. It is a suggestion that anyone can balance the expectations and desires in a way that does not end in disaster. Love might slip away, cryptocurrency may become worthless, but no one has direct control over that. The only matter we truly control is the knowledge we can garner through factual evidence and lessons learned from others. With that control, anyone can decide if they are looking for quick pay-off or a lasting connection.