We know that navigating the Web 3.0 waters can be treacherous. There are a lot of things that can go wrong.
Cryptocurrency is filled with stories of hacks, rugpulls, and failed projects. The first two are unfortunately and people need to do all they can do to protect themselves. There are a lot of nefarious actors out there, those who seek to do nothing more than drain people's wallets.
What I want to focus upon is the third one on the list. Here is where we enter a different realm.
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Most People Do Not Belong In The Crypto Markets
This is something I said for years.
After watching the way people in crypto react, it is evident they do not belong in the markets. One disadvantage of having something that is inclusive is anyone can enter. This seems obvious yet is not always a good thing.
What got my attention is how people act during a bear market. Whether we look at the fungible side such as the 2018 crash or the popping of the NFT bubble, the reaction is the same.
Have you noticed how people get? What is their reaction?
Basically, these people lose their crap. They go nuts. We see them post things like, "I checked the market now I am too depressed to get out of bed".
Are you kidding me?
I stated these people are insane. They are completely out of touch with reality. Why? The reality of markets is they go in two directions. Market action can drive prices up and it can push them down. It seems these people expect markets to only go in one direction. That is insanity. Take a look at any chart reflecting any market. There are no straight lines up for extended periods.
All bull runs comes to an end. Fortunately, the same is true for bear markets.
Ultimately, many people lack the emotional intelligence to deal with markets. This is much different than intellectual intelligence. These people are often very smart. That said, when it comes to money, which is an emotionally charged issue to begin with, they cannot handle things in a mature way.
The sign of maturity is not how one responds when making money. It is when the chips are down where it shows through.
Look at the masses when the comes to crypto. What do you think the overwhelming emotion is? Do you think people handle it in a way fosters a growth approach?
Of course, because of this lack, these are the same people who get sucked in during the next run, buying the next shiny new object that becomes the flavor of the day (Meme coins?). They look at the promise of huge returns, looking for the quick hit. It is a great ride, until the market turns.
Rinse and repeat.
Thinking Like A Venture Capitalist
Markets are just one piece of the equation. There is also the "investing" side of things. By this I am referring to the focus upon initiatives based on building and business concepts.
Here we are not looking solely at price action but, rather, what is being developed. This is taking a more fundamental approach to the situation.
At this point, we are dealing with something very powerful. This is going to create an enormous amount of wealth. There are going to be some platforms that results in many millionaires, perhaps even a few billionaires.
Web 3.0 is going to produce its version of Amazon, Facebook, and Google. There will be entities worth trillions of dollars at some point.
This should excite everyone. Sadly, the reality is very few should be playing in this game. The evidence we have so far, based upon reactions, is most are not emotionally built to handle it. This is no different than the markets.
One of the key lapses is the lack of understanding of the technological realm and how investing occurs. Here is where thinking like a venture capitalist enters.
VC firms can make a ton of money. However, they also lose, quite frequently.
It is said the goal is to strike gold on 1 out of 10 projects. After that, breaking even on a couple others is sought. That leaves a total loss on 6-7.
They are not great odds. Yet this is the game. Start ups fail at a very high rate, especially with technology. Web 3.0 is no different.
Even in the best of circumstances, when the team is genuine while also having the talent, the success rate is low. Often times, funding is crucial, something that adds another layer to Web 3.0. Without that, success can happen yet it is often the result of team members providing the sweat equity, which slows things down.
That said, losses are going to happen. It is a guarantee.
Getting Upset When Things Go South
Have you noticed the people getting upset at projects closing up shop?
Let's be clear: nobody likes to lose money. However, if we are going to enter the waters, we have to accept the risk. It appears most want the major payout within incurring the potential for loss.
It simply does not work that way.
You can take the best team, with altruistic intentions, highly talented, and motivated to achieve great things, only to see total failure. In fact, this is the most likely outcome statistically speaking.
Even within that umbrella, not everything they are going to try will work out as planned. This is true of any business.
How often does a company open up a new location only to close it does a year or so later? We see new markets entered, only to experience a sea of red, resulting in a pullout. This happens all the time.
Why do we think crypto and Web 3.0 will be any different?
It isn't.
Once again, the great part of this is inclusion. Anyone can participate. The drawback is even though who are emotionally unable to handle the results can enter. There is no screening.
All of this reverts back to responsibility, something the masses do not want to embrace. Over my life, every single asset I owned was the result of me buying it. Whether it was stocks, crypto, houses, or even a business, I was the one who pulled the proverbial trigger. Nobody forced me into it. I did it of my own free will.
Since fraud was not involved in any of those situations (fortunately), I can say the onus for the results is on me. There were many instances where money was lost. While I could blame the market, that is nuts. The market doesn't even know I exist, let alone operate to please or upset me. I am a nothing to it.
If you are indulging in Web 3.0 waters, you are going to lose money. Projects are going to fail, at a rate many times greater than they succeed.
We have to accept this.
For those who cannot, perhaps something like Bitcoin is a bit safer. While there is volatility, it appears the long term forward path is up. Even with that, there is no guarantee.
Another idea is hunt for yield. Get a stablecoin that can be staked for decent yield and what the counterparty like a hawk. That is a way to improve one's chances.
In Conclusion
If VC firms, who have walls of people to research, analyze, and assess opportunities, lose 9 out of 10 times, why do we think we are going to be any different?
That said, there is one difference within Web 3.0 as compared to most opportunities.
With traditional start ups, we would have little influence. We could be a user of the application but that is about it. Whatever is created on the platform is not going to enhance us, financially.
This is not the case with Web 3.0. We can take many of these projects and enhance them. Here is where we can have an outsized influence upon what happens.
It is a rather unique situation whereby our individual contribution to network effects along with the basis of digital platforms capturing value shows up. Through tokenization, we have the ability to financially benefit if successful.
Of course, this is not guaranteed.
And failure is something that we will continue to see with regularity.
After all, how many today utilize Webvan.com?
History is littered with technology corpses. Web 3.0 is going to be no different.