Do you want to make big money in cryptocurrency? This is something that everyone should ponder.
My personal view is that we are seeing the opportunity for large numbers of people to have life changing money. Naturally, what this means is going to vary based upon the individual. Nevertheless, cryptocurrency is a path into something that is truly revolutionary.
The question is are you going to take advantage of it?
Common sense says "yes". People will claim to be "all in" and that they are going to do whatever is necessary to achieve that outcome.
The problem is this rarely happens. Certainly, one could make the case of access and information as being barriers in the past. We know that many opportunities simply were not available to most.
We are seeing that changing. The Internet provides us with more information than we can consume in 10,000 lifetimes. This eliminates the excuse of not knowing.
And with cryptocurrency, anyone can enter. Hive is an example of simply getting an account and getting active.
Sadly, it is likely that most will not make big money in cryptocurrency. Let us dive into the reasons why this is the case.
Image from Didaktik Academy.
Lessons From Amazon
There is no doubt Amazon was one of the biggest success stories from the Internet era. Jeff Bezos became a household name, jumping to the top of the richest in the world list. Even his ex-wife ranks up there showing how much wealth was generated by that company.
People who got in early, even with a minimal amount of money, are now sitting on a fortune. This is how investing works. When those golden nuggets are found, loading up is not a bad idea.
Here is a chart of for Amazon from Yahoo Finance.
This look very impressive. There are, however, some crucial points to make.
First, from a layout perspective, the chart does not include the entire history. There are some important lessons from the early days.
It opened at 11 cents in 1997. During the Dotcom Bubble, it got up to $5.33 by the end of 1999. It then dropped down to 50 cents.
The idea of going from 11 cents to $130 is certainly appealing. Even riding it from 11 cents to $5.33 would be nice. Of course, the pullback to 50 cents, a loss of 90% was painful.
There is a second point to the chart.
The price of Amazon stock was the same in 2007 as it was in 2000. This means the net return was zero over 7 years.
What is the lesson here?
While we all can say buying AMZN in 1997 and holding for 25 years was a smart move, how many would have done that? Would each of us have held through a 90% pullback? Would we have endured 7 years of net zero move?
These are questions that are easy to answer in hindsight.
Cryptocurrency Moves
The point here is that long term vision is what got someone like Bezos to the level he achieved. There are a lot of years where he was not selling. He was a true HODLer.
What was just asked about Amazon can pertain to a lot of options within the cryptocurrency world. Obviously, we can find a lot that is down 90% from its highs. Even Bitcoin is 50% below its peak.
Do you think people lost confidence in Amazon over the time period we are discussing? How many threw in the towel when the price dropped the 90%? How many were optimistic during the 7 years of sideways trading in the stock when the overall market was going up?
Can you see how all of this applies to cryptocurrency?
We all want the ability to get into something in the early days and see it 100x over the years. The problem is that few are willing to endure the pain that comes with that.
Long term holding is not easy. There are a lot of detractors and naysayers. Human tendencies instill fear in us. Markets are a grand lesson in human psychology and how people are driven by emotions.
Does that mean every project will follow Amazon? Of course not. There are very few gems like this. That is why they stand out when we find them.
We can look at Bitcoin from the early days and see something similar. There are, naturally, some who were in BTC in 2013 or 2013 who sold out. They are kicking themselves today.
By the end of this decade, how many other coins are tokens are we going to be saying the same thing about.
Technological Advancement
Every generation of technology results in more wealth created. The electronics age collectively hit a level never seen before. This was far outpaced by the digital age. All the sectors tied to computing exploded. This was, of course, dwarfed by the Internet.
Web 3.0 is going to make the last 20 years look like poverty. The numbers that will come out will be mind-blowing. Just like people could not comprehend a $2 trillion market capitalization on a company in 2000, the idea of a $10 trillion coin seems outlandish.
If this occurs, we are dealing with the Amazon type gem. However, that is not the main benefit. What is more important is the fact that a $10 trillion coins means there will be a ton worth a $500 million. A decade from now, $100 million projects will be all over the place.
This is how technology works, especially in the digital era. Millions of people can be accessed through a single application.
Who Is Going To Take Advantage?
Those who are Ahab are going to take a different approach. The bottom line is no market presents the huge rewards without pain. Sure, we can all point to someone who bought at the right time, saw something moon, and sold at the peak.
It is something that doesn't happen often.
Instead, most of us get in, have something moon, get greedy believing it will go higher, and ride it right back to the bottom. This is compounded by the tendency to sell after the collapse.
To frame it with Amazon, it is like selling at 50 cents after riding it down from $5.
As much as everyone says they want the life changing money, are they willing to do what is required to get it? Those who are appear to be in the minority.
With cryptocurrency, the opportunity is being presented to anyone who wants it. The question is how many will truly take advantage of it?
Time will tell on this one.
None of this is to be considered financial advice. This article is for informational purposes only.
