Should you invest in s***coins?

In today's Exponential Investor…

Bitcoin's Netscape forum
Gold vs bitcoin
Is there anything aside from bitcoin?

Dear reader,

When I first found out about bitcoin it was on a forum aptly named Bitcointalk.

This was a very basic forum that allowed users to jump on and talk about bitcoin. Back then there was a lot of technical discussion, people asking about trading things for bitcoin – it was very much like a strange digital bazaar all centred around bitcoin.

Then over the years, Bitcointalk began to emerge as something far more than just "bitcoin talk".

Particularly in 2012 and 2013 Bitcointalk fast became a place where "alt-coins" could be discussed. Or more typically new alt-coins would be launched with big announcements, details about them, technical explanations, white papers, all the links and contacts needed about the project.

Bitcointalk was where you went to find out about the newest and latest crypto that wasn't bitcoin. Often you'd find threads about the latest alt-coin hundreds of pages long.

You also should note that this forum was about as basic as the first versions of Internet Explorer or Netscape. You can head there today and see for yourself, the format hasn't changed in over a decade now – and you can still find plenty of alt-coin discussion.

However, although this was a meeting place for like-minded people learning and developing the crypto revolution, it was also (and continues to be) a fierce place for crypto tribalism.

That tribalism is no longer just limited to Bitcointalk though. It has seeped out into the world. For investors that aren't used to it or don't know how to handle it, it can be a major disruption to your crypto investing journey and it's something you need to know how to deal with.

Extreme tribalism

Tribalism isn't anything new. You only need to head down to a football game to see it on its most visceral and obvious display.

What I've noticed particularly with the rise of social media is tribalism seeping into the financial world.

You often find a devout group of followers singing the praises of the company they've invested in. Anything else that even tries to take the limelight away is struck down with often mindless chat about how much the other company sucks.

I know a lot of people head to these forums to see what people are talking about when it comes to their stocks, or crypto. There are usually four kinds of people that end up on these forums.

Shillers – those who incessantly pump up the investment regardless of what happens.

Downrampers – those who incessantly downplay the investment regardless of what happens.

Innocents – those who try to talk about legitimate aspects, but are usually just attacked by downrampers.

Observers – people who watch, never post and try to gauge the sentiment for a particular investment.

This mix of people is like a football game. You've effectively got two opposing sides, some neutrals and then the casual observer.

It can lead sometimes to productive discussion, but usually does more harm than good.

Furthermore, you will often then find this tribalism exploding off forums and into the public domain.

One of the most powerful examples of tribalism in the financial world is the very public spats between what you would refer to as "gold bugs" and "bitcoin maxis".

We often find that bitcoin maxis (maximalists) and gold bugs clash quite aggressively. There are many (not all) who simply believe that one is far superior to the other and that in no circumstances should you own the other.

This particular tribal war has been going on since bitcoin's fiat-converted price first passed the price of gold back in 2013. And ever since we've seen immense tribalism from both bitcoin holders against gold, and gold holders against bitcoin.

If you're a casual observer, this can be confronting. It can also very much turn someone away from one, or the other, or both. That's a mistake.

I think that all investors should at a bare minimum consider having some exposure to bitcoin.

But as much as I think bitcoin is a better investment than gold, I also believe people should consider having some exposure to gold as well. There's no need to be so "our way or the highway" about it all. There's no need for extreme tribalism.

In a world where fiat money is continuing to prove itself as a failed monetary network, it would make some sense to hedge your bets a little in terms of the digital answer and the physical answer.

You can certainly have a preferred one, but in terms of smart portfolio management, it would make sense to consider both as part of an overall wealth plan.

It's also not just bitcoin vs gold that you're likely to come across.

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The s*coin debate**

You will also find increasingly heated tribalism within the crypto markets when it comes to bitcoin vs all other crypto.

The term "shitcoin" (sorry for the expletive, but it's necessary) is something you're likely to come across in the world of crypto. That's what someone will refer to when there's a crypto they don't like.

They might have an argument as to what that might be, and their argument might also be flawed. And their own tribalism gets the better of them and closes them off to other potential opportunities and crypto developments.

For example, you'll see a lot of "bitcoin maxis" describe Ethereum as a "shitcoin". Again, this is pure tribalism in play rather than a rational approach to the bigger picture about decentralised networks disrupting traditional centralised authoritarian systems.

The point is that bitcoin has its place in the world, and will continue to do so much longer than you or I exist on this earth. It's also very likely that other crypto will as well – crypto like Ethereum and a whole host of others.

To label them otherwise because of devout tribalism is a mistake. Instead, time taken to understand, learn and look at the bigger picture is necessary.

Development and innovation in crypto tells me there will be a number of successful networks that will thrive over the coming years. Bitcoin I believe will be one, but it is not alone – it is not the only crypto that will take us to a new future.

I believe those who think it's the only answer are as naïve as those who continue to think that we're all still in one (decade-long) tulip mania bubble.

Regards,

Sam Volkering
Editor, Exponential Investor

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Senin, 18 Januari 2021