This is very relevant to cryptocurrency. Who you take advice from matters. What you believe matters. How you come to your beliefs matter a lot. Most people believe many things that are not true. For example, you may believe that your wife is faithful. Statistically, she is probably not faithful. If you have a religion, since there are currently over 2000 religions in the world, statistically, if any of them are true, your chance of being part of the true one are 2000 to one against.
And so it is with cryptocurrencies. Most people still don’t know about them. Most of those who do know about them, don’t know much, and most of those who voice opinions about them either have their own agendas, or are wrong or lying about their opinions.
Start from Scepticism.
If we believe something because we’ve been told it or read it, we have come to a premature conclusion. Thus, looking for good opportunities, start from scepticism, do not confuse belief with truth, and examine the evidence. Pure Diversification is NOT the point.
Most people who back new cryptocurrencies get it wrong. They think diversification is the pure point, pouring money into ICOs no matter whether they have a good chance or not, because, hey, anything could take off! And whilst it’s true that if you are going to put say fifty bucks into an ICO you can probably afford to take a lot of chances by backing a couple of random ICOs a month. But it is more true that if you do a bit of study beforehand and ask the right questions, every time you put fifty bucks into an ICO, there is a lot more chance of that money making you more money. Sometimes, it’ll make you a fortune.
The Majority are Wrong.
But remember, most people get most things wrong. Murderers are almost always great neighbours. Convincing con-men are very likeable. Corrupt ICO designers put together the best case for their new token. We ourselves often get things wrong about the things that are most important to us. We trust people who later prove untrustworthy. We love people who did not deserve out love. We keep making the same mistakes, repeating patterns because we keep getting things wrong. And at the same time we miss opportunities out of fear. And sometimes we continue making mistakes because we fear change or are just comfortable the way things are. Some people would rather live mundane lives than try for the extraordinary. Every day is a mistake for someone working in a job they hate.
The Big Question.
So who do you believe, and how do you make your decisions? How do you make your dreams come true?
And bearing in mind that most people get things wrong, how do you think in a way that counters the trends and yet still win? Trends are important, because trends tend to continue. Not always, but as a rule. So if you obtain cryptocurrencies, working from pure logic, and you follow tokens/coins that have an upwards trend, and that trend has a good history behind it and is not just a fad, you have a logically good chance of backing some winners. But since a lot of people get a lot of things wrong, some of those trends in cryptocurrency will reverse, and some of them will permanently reverse.
The answer lies in scepticism and self-education. Never believe a great story. You may read about a great team behind a new ICO. A team with a lot of success in their individual histories. However, anyone can make a phone call, ‘consult’ someone about a new ICO, and that person, involved or not, could be listed as a consultant—financial, business development, or whatever.
Who is really involved? Who is running the ICO? What is that person’s real history? Where is the ICO based? How much of the money raised in the ICO will go to fund the new tokens that will exist after public release?
Do the Math.
All too often, if you add up the allocation of the money raised in the ICO, 15% will go to the team, and it’ll make millionaires of the founders, 10% will be put aside for development. 20% may be put aside for contingency, like bug fixing. 15% for sales and promotion. 30% could be for liquidity. and 20% for miscellaneous expenses. Or similar…
So what does that leave the people who have bought into the ICO? Do the math! Nothing is what is left.
Winners and Losers.
And yet, whilst it remains true that most people get things wrong, it also remains true that there are always winners and losers, and the winners, in most cases, are those who have two qualities: persistence and the ability to calculate chances carefully and only place winning bets.
- It’s a matter of adding things up. I think it’s fair under these circumstances to discount what other people think, and do the thinking yourself. Looking at ICOs again, has anything been achieved, or are there just promises of what will be achieved?
- Are the people in the team who are supposed to be in place actually in place, or are they sitting on the fence waiting to see if things take off before they commit?
- Can you contact each individual on the team and ask them questions? And do you get convincing and intelligent answers, or are they only contactable by email, or not even contactable at all?
- What is the ICO plan, and is it really viable? Does it have a really convincing case or is the case merely speculative?
- Who outside the ICO team is really going to support the case for the ICO? If banks are involved, do the people named actually have the authority to make things happen? The same with the gaming industry and others.
- A quick look at some of the current top ICOs is revealing. Before doing a deep look into ICOs it’s possible to do a top-of-the-head summary.
Some up-and-coming ICOs
Appcoins has potential, but I can’t figure out if it depends on both Google and Apple adopting it as a way to buy their apps. Seems unlikely if that’s the case for the best potential.
Globitex GBX. Scaling Bitcoin Economy – Linking Digital Currency to Global Trade. A hard thing to pull off, but if it works it could be huge.
Simply Vital Health (HLTH) Introduces blockchain technology into healthcare. Augments current customers’ infrastructure using existing data, but at a cost. I feel this is a big sell, as any change in healthcare infrastructure always will be.
The next stage in looking at these would be to ask all the six questions above. Positive answers to ALL of them, would make me feel good about their long-term potential. I’d probably invest. It is possible to make a lot of money with a small investment in a good ICO.
Any negative answer, on the other hand, would make me pass on that particular opportunity. There are plenty of others to explore.
Cryptocurrency Investment is not a Game of Darts.
So I suppose that’s my point, and it’s a positive point. You CAN find good ICOs or alt coins to invest in. But perhaps sixty percent of those available are NOT great opportunities. Thus, if you want to win more than lose in the game of ICO investment, you must do some research. Otherwise you might as well throw darts at a board and invest wherever the darts land.
Disclaimer: Don’t take my word for anything. I’m not a financial advisor. Some studies have shown that throwing darts at a list of stocks is a better way of choosing winners than taking any advice, following charts, or asking a financial advisor what to do… And remember, don’t bet what you can’t afford to completely lose. Unless you want to end up on the street when you can’t keep up with your debts. Or broken legs!
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