Confusing Luck with Skill
This continues my series aimed to help crypto newbies avoid costly mistakes. Know some people new to crypto? This should be helpful.
Let's face it: most of us who have made gains in cryptocurrency have had some extreme luck. Whether you mined bitcoin when it was worth nothing and somehow managed not to lose your private keys (or sell at $10), or hit it big with an ICO, it's a bad idea to presume you earned money because you are a smart and skillful investor.
There's a tendency to believe narratives about ourselves. One temptation I fight is to look back at my purchases of ethereum under $3 and say, "I knew it would be awesome." The future is never known! Did I think there was a good chance ethereum would be successful? Yes, that is why I bought some, although I never imagined it at $400 18 months later.
That was luck.
Remember: there are a great many factors outside of our control: market conditions, black swan events, founders' well being, DAOs, and so forth. Those who held ETH during the post DAO period will recall the dearth of crowdsales and low participation rate. The DAO almost killed ethereum, and we're fortunate regulators allowed market forces free reign.
That was luck.
Personally, I sold most of my ethereum in January, to pay off some debt I had accrued over the holidays. I hate having a balance on a credit card or a loan. It was a wise move, because paying 10% interest on anything that doesn't return greater than 10% returns post tax is stupid. I fully expected to begin buying ethereum at the $10 I had sold it for within a couple months...until the price began to rise rapidly.
That was bad luck.
Call it a lesson in investing. Either way, I try very hard to not think of myself as a skillful investor. This spring made it possible for anyone with a pulse to make a lot of money, so long as they were long crypto even a little. Even garbage coins and tokens had some meteoric rises (and falls) as new participants entered the market and whales manipulated prices of long dead alt coins.
So. In one of the best insults I've ever heard in my life, Bill Murray allegedly called Chevy Chase "medium talent" backstage at SNL. True or not, I love the term, and I consider myself the medium talent of blockchain writing and investing. For top talent, I'd point to Evan Van Ness, Jimmy Song, Nick Szabo and plenty of others far more intelligent and capable than I will ever be.
Stay humble. Stay grateful.
[1] I am not a financial adviser. You should consult a finance professional before you buy any cryptocurrency. I hope this information will cause you to think and make your own decisions...not blindly buy something and blame me. Dave Ramsey has some great information and advice about how to pay off your debts, and he's much smarter than me.