The cryptocurrency marketcap is taking a big hit right now with governments in China and elsewhere getting serious about shutting down exchanges (or threatening them enough to shut themselves down) under the always-comical pretense of "protecting consumers" until they can get more regulation in place. They are trying to control something which is uncontrollable by design.
Good luck with that.
People will continue to use decentralized exchanges like BitShares/OpenLedger.
As I watch my spreadsheet holdings tank, I started thinking about short-term vs. long-term goals in this space. I got to wondering, do we have misaligned motivations between traders and investors/HODLers?
I'm all about people making huge profits. No problem with that, as long as they are operating in voluntary ways and not harming anyone else. That said, traders are making profits off of volatility. They do well if it goes up or down, if they know what they are doing and how to short the market.
Again, I have no real problem with that, but it potentially creates contrary actions for people with similar goals. Long-term investors lose out in terms of the time value of money. They are hoping for mass adoption and prices in the $10k, $100k, and $1M range per bitcoin. It could happen. It's not out of the question.
However, when traders push the price around, we see a further delay in mass adoption such as most of 2014 and 2015 where the bitcoin buzz died down after it crashed from the all-time-high around $1,200 to around $250. As I've said before, I didn't sell but held, and I'm glad I did.
So, in a way, traders may also be hurting their own long-term profits if they are hindering mass adoption by participating in volatility. For every investor who buys and holds, we get a larger market cap and one step closer to stability and more adoption by those who want stability and an alternative to fiat scam money.
What do you think? Are the short and long term incentives of traders and holders misaligned? If so, what should be done about it? Should holders learn to trade to ultimately increase their holdings, even if that means mass adoption is pushed further into the future? Should traders restrict their own profits and HODL more often as that may be better for their long-term interests given the time value of money and how beneficial mass adoption will be for everyone?
It's possible there is no simple answer, and we'll just have to wait and see what the emergent properties of many individual decisions ends up being.
For now, I'm holding and will continue to look for buying opportunities as my budget allows.
Some further reading, if interested:
- Are You Waiting to Buy Cryptocurrency?
- The Big Question: Should You Sell or Hold During a Market Correction
- Understanding Blockchain Freedom — Why So Many Smart People Are Wrong About the Value of Bitcoin
