Most people that understand crypto and most people that don’t understand crypto do have one thing in common. And it’s that the cryptocurrency revolution is about technology.
The global cryptocurrency revolution is actually about how understanding this concept will help us make better long-term investment decisions throughout 2022 and beyond.
The most common thing that all of us new to cryptocurrency missed out on was those sweet, sweet ridiculous gains from being an early investor in bitcoin.
Bitcoin at a dollar, at 100 dollars, at 1,000 dollars, and even at 10,000 dollars. Why did we miss those gains? Because it was new, strange tech that wasn’t easy to understand or grasp. Early investors used bitcoin for transactions, fun, or as a potential speculative investment.
At the time, most of us didn’t realize the importance of a decentralized blockchain-based monetary system.
And that’s fine because most people still don’t even understand the importance of a decentralized, transparent, immutable monetary system over a decade later.
However, you know what some bitcoin maximalists missed out on? Those sweet, sweet ridiculous Ethereum gains. Why?
Because they didn’t understand or grasp the potential and power of smart contracts on a decentralized blockchain-based ecosystem.
And guess what? Ethereum maximalists missed out on the more recent sweet, sweet ridiculous Solana, Avalanche gains. Why? Because they didn’t realize the need for and power of cheap, affordable, high-speed transactional capabilities on a decentralized smart contract ecosystem.
Are you starting to see a pattern here? Absolutely. So how can we use this past investment behavioural pattern, so we don’t miss out on sweet, sweet ridiculous gains in the future?
By understanding why we missed those gains, which is the misconception that the cryptocurrency revolution is about technology. So, what makes blockchain tech & crypto revolutionary?
It’s not the technology or the decentralized, transparent, or immutable aspects of the technology, it’s not the math, physics, or science of the underlying technology, and it’s not the sweet, sweet ridiculous gains either.
What makes crypto revolutionary is how it’s massively changing the way people can create and structure new economies in such a way that massively disrupts how economic output within those economies is distributed. And what the heck does that mean? Let’s break it down. What is an economy?
An economy is a fancy word that describes how goods and services are created, consumed, and distributed among people. Let’s explore a simplified analogy of an economy.
In this example, let’s imagine a classroom as an economy. One teacher is designated to create, produce, or provide knowledge for a group of students to receive, consume, or learn to convert that knowledge into grades for moving up in the classroom economy.
Example, and ultimately converting that knowledge into creating new goods and services consumed and distributed in society.
So schools have their economies of sorts, cities have their economies, states and regions have their own economies, countries have their own economies, industries have their own economies, and cryptocurrency ecosystems like Ethereum, Solana, and Avalanche now have their own economies.
The negative aspect of the creation, organization, and structure of economies we are a part of is that we don’t have any control over how it’s created, organized or structured and how goods and services are distributed.
For example, in the United States, we don’t get to decide how much taxes we have to pay the government from the income we receive by creating, producing, and consuming goods and services.
We don’t get to decide who or what entity receives welfare from the taxes we have to pay the government. We don’t get to decide who gets stimulus checks or what companies get bailed out with our taxes.
We don’t get to decide who qualifies to receive capital to build new businesses or produce new goods and services in the economy.
We don’t get to decide how much power the government has and how many government officials get to decide all of these things get paid, how long they remain in power, or what rules they have to follow.
So you can see how a small, centralized group of elites have decided how the US economy was created, organized, structured, and ultimately how goods, services, money, and assets get distributed.
And more broadly, their power over the US economy dramatically affects and influences other countries’ economies and the global economy at large.
So, now that we understand what an economy is and how only a small, centralized group of people get to decide how they are organized on behalf of the entire world, let’s think back to blockchain tech and crypto.
The technology allows a massive paradigm shift in how we all can create, organize, and structure our own economies and decide how goods and services produced within them are distributed to other people and entities.
So how can we use this knowledge and apply these concepts to our investment practices to decrease our chances of missing the latest and most significant sweet, sweet ridiculous gains ahead?
We need to understand and embrace the fact that the value of any cryptocurrency project will be proportional to how much and to what extent it helps facilitate this massive paradigm shift of allowing us as a society to organize our own economies and distribute value.
And just to put into perspective how revolutionary this concept is, the last breakthrough in how the value was distributed within an economy was in the 17th century when Dutch East India Company designed and launched the first publicly owned entity.
For the first time in human history, this allowed many people to access larger pieces of the economic pie. So instead of just wealthy people fully owning companies outright, this was the first time people could own shares of a company in the form of stock.
The invention of publicly owned entities helped to distribute economic power, which allowed for more wealth equality within societies. Still, since that time, not much has changed some 500 years later, until now.
Blockchain technology and cryptocurrencies are lowering the entire global population’s barrier to participating and benefitting from new economic systems outside of the control of a small, centralized group of people.
It’s the best available solution to social, wealth, and economic inequalities because it allows for creating new economies with more equitable value distribution.
So applying these concepts to what we discussed earlier, the creation of bitcoin allowed anyone worldwide to claim, send, receive, and store value digitally.
Then the creation of smart contract platforms like Ethereum allowed anyone worldwide to start building applications on top of blockchain technology that allowed us to start designing new open economies.
The more easily people can become a part of a new economy in the cryptocurrency realm and transact within it. The more fairly distributed value is within that economy will determine which projects are more valuable than others.
For example, applying that concept to proof of work versus proof of stake projects, you can see how proof of stake blockchain ecosystems through staking mechanisms are more inclusive, more distributed, and therefore, superior platforms for creating new successful economies.
Anyone around the world can participate in staking within a proof of stake ecosystem. In a sense, they are receiving universal basic income from the staking rewards within that economy.
It will take our current government systems years and maybe even decades to implement any universal basic income if they do at all.
As the technology continues to develop, the most pressing problems we are encountering now have to do with scaling the networks and cost-effective and fast transactions, not necessarily decentralization and privacy.
Because currently, the decentralization aspects and privacy concerns are not impeding the fast and efficient development of these new economies, scaling and transactions are creating bottlenecks.
With this in mind, we may consider keeping an eye out for crypto projects that facilitate scaling and cost-effective, fast transaction speeds right now like MATIC, Avalanche, and Algorand, than privacy-focused projects like Monero or Dash.
So instead of getting caught up in ICO’s, IDO’s, which project has the superior-tech, who’s doing an airdrop, or other hype cycles, keep an eye out for the next wave that will take us closer to economies that massive amounts of people can become a part of.
Create and consume goods and services on and equally distribute value over the long term.