Let’s Understand what Unit Bias is
Unit Bias is a situation when a person would rather have a complete whole unit than having a fraction. This is because Human nature gets satisfaction from a complete unit or a whole unit. This is also goes down in performing a task. Humans like to complete a task to get this satisfaction of a completed task.
This can be found in eating everything on your plate, finishing a movie and reading a novel.
So let’s relate this to CryptoCurrency investment :
I for instance, had $3,000 to invest in crypto. But bitcoin was $4,600 and Etherium was $97, if I buy Bitcoin with my $3000 I would have 0.652 BTC. But if I buy Etherium with my $3000 I would have 30.92 ETH. Because of my Unit Bias,I wanted to have 1 whole Unit of Bitcoin, i didn’t want a fraction. Rather than have a fraction of BTC, I bought ETH, even if Bitcoin rise was way higher and better than ETH at that period. I derived more satisfaction in having a whole unit of 30 ETH than having a fraction of 0.652 BTC.
For some some reasons (including unit bias as one of the reasons) it just feels better to buy whole unit rather than fractions, that’s why people focus attention on cheap coins because it cost less to buy whole units than buy ETH or BTC.
Relating to Shitcoins
Shitcoins are extremely cheap, with $10 you can buy more than 10 million unit of a shitcoin. Now imaging having a unit bias and wanting to spend $100 on a crypto and these are your options:
- One gives you a fraction unit of probably 0.00004 unit for $100
- Another gives you a whole unit of probably 90 unit
- Another Option (Shitcoin) gives you a unit of 10,000,000
Imagine more retails traders thinking of option 3, and actually investing their money it. They feel better when they say they have millions and billion quantities of a particular token ( being in their telegram channel gave me this idea). It serves better especially when the coin has a great team behind it, like safemoon, FEG, AquaGoat etc.
When Retail traders keep shifting their attention to Shitcoins because of unit Bias, and subsequently the price starts getting higher because of the law of supply and demand. It’s gets better when the shitcoin starts having a utility and having purpose.
From my personal opinion and also being guilty of this, I think this is the reason Shitcoins are Rising really fast.