The macro logic of investing in cryptocurrencies
Since the birth of Bitcoin to the present, the development of digital currency has been more than 11 years. Although it has not been a long time, this field has iterated for several rounds, and a large number of new tracks have emerged (such as the first generation of digital currency, smart contract public chain, DeFi, etc.). Countless stars have emerged in these new tracks. Some of these stars have been standing at the forefront of the stage (such as Bitcoin, Ethereum), and some are like meteors in the sky, disappearing quickly after a bright light in the sky.
Why is there such a big difference between these projects? Will the reason behind this appear in the new project and new track? I think that as investors, we should often reflect on these projects, learn from them and quickly iterate our cognition and thinking, so that we can better guide our future investments. Find your own treasure in the new track.
The time I have invested in digital currency is not long compared with many seniors, but fortunately, I have gone through at least one round of complete bull market and bear market, witnessed the ups and downs of many projects with my own eyes, and accumulated some feelings and experience from it. experience.
In my opinion, when investing in this field, the most important thing is not to make directional and strategic mistakes when selecting projects. To avoid such mistakes, we need a set of macro logic suitable for this field.
Next, I will share some experience in this regard with you from time to time.
In the early days of Bitcoin, many hackers and volunteers selflessly and enthusiastically promoted it. The slogan they often used was: Do you know Bitcoin? It is a new currency that is not spam, censorship resistant, and private. The most intuitive feeling revealed by this slogan is its decentralization, resistance to censorship, and a heartfelt longing for freedom and privacy from the holders. Coupled with the mystery of Satoshi Nakamoto coming and going without a trace, this puts a veil of mystery on Bitcoin even more.
Since Bitcoin is the first digital currency based on the blockchain, and now it is the digital currency with the largest market value, all the marks on it will not only be its own but also the brand of the entire digital currency. It can be said that this imprint has become the inherent gene of digital currency to some extent.
What an ecology will develop into and in what direction it will develop are inseparable from its internal genes. If a new thing that appears in this ecology does not have this gene, it is destined to not be able to survive in this ecology for a long time.
My strongest experience with the big ecology of the entire digital currency field is decentralization and freedom.
The decentralization here does not mean no need for people, no teams, no management, but a kind of great tolerance shown by the project team, an extreme anti-monopoly shown by the project structure, and a kind of anti-monopoly shown by the project development. Extreme grassroots power, the combination of these elements will allow us to see a bottom-up revolution, a powerful vitality that can start a prairie fire from a single spark.
It is this vitality that makes Bitcoin from a kindling to a raging flame, from a humble experiment to the holy grail of the new world.
On the contrary, in my opinion, some projects do not have these qualities, so they can only fade away and dissipate after leaving a momentary halo on the world like a meteor.
EOS is an example of an established project. The biggest selling point of this project at the time of financing is its high TPS and strong performance, and it has indeed achieved it until now. But where is its problem? In my opinion, it has lost the inclusiveness and anti-monopoly that blockchain-native projects should have, which is what we often call decentralization.
In my opinion, there is essentially no difference between this system that can control the entire network with 21 nodes and a platform built by a company with 21 servers.
It cannot allow an unknown user to buy a mining machine to join the system silently in an unknown corner like Bitcoin and Ethereum, so it loses its grassroots nature; Tens of thousands of nodes jointly maintain and participate, so it loses decentralization; it does not communicate with you or even accept everyone's collisions in various media and communities like V God, so it loses tolerance.
NXM in the field of DeFi insurance in the new project is a typical example.
The most eclipsed part of this project is the KYC and strict project entry threshold. KYC has led to very few people who can participate in this project, so it has lost its grass roots.
Strict project entry thresholds lead to the current participating projects are all old-fashioned projects with low risk. Insurance in the blockchain field must be open to all projects, inclusive and free. Old-fashioned, low-risk projects have been tested by time, and the risks have been much lower. What's the point of adding insurance to such projects?
This is why I am fundamentally not optimistic about this project and think it is only a temporary leader.
I believe that decentralization, anti-censorship, and grassroots are not only the fundamental characteristics that must be possessed by past projects but also future projects to be successful.
