Before we begin this journey together, I want you to understand what brought me to the table. Three years ago, my cousin Garrett Woetzel (a finance savant) linked me to a variety of articles on this thing called “blockchain.” As an undergrad getting a degree in finance and computer science, the appeal of this packaged deal of digital currency, decentralized ledger technology, cryptography, economics, and all the investment hype drew me in. I was like an eager bee ready to taste the mysterious nectar known as “blockchain.”
As I joined a variety of projects in the space and began to invest, a lot of commotion occurred. Prices skyrocketed nearly 700 percent for a variety of cryptocurrencies — and subsequently plummeted. Communities I had engaged with had people who turned into millionaires, and shortly thereafter were utterly broke. Parents who enthusiastically jumped in because their kids recommended it walked away defeated. What was perhaps even more worrying was the many warning signs that cryptocurrency (as an investment) was potentially a bubble were entirely ignored. Blockchain as a technology had a significant amount of maturing to do with both adoption and functionality. And yet collectively, retail investors dumped money into a high risk asset that couldn’t guarantee a return in any capacity. The investment train went full speed ahead towards a financial bubble.
But what precisely characterizes a financial bubble? What types of buzzwords can we look for in our crowd mentality that signal we should step to the side before following the cattle off the cliff? While any variable listed below in isolation is no guarantee of a bubble, a combination of a couple of these should set off alarm bells in your investment journal and qualitative investigation.
First time investors entered into the most volatile asset class on the planet with no investment principles, strategies, quantitative models, qualitative research, or investment experience. I was part of this wave, and I learned painful lessons about behavioral finance through not only others, but also myself. What I learned along the way was that if you fail to plan your buying and selling strategy you face the possibility of losing money. Anyone can tell you this. But what is the deeper lesson? What do you learn when you get lost on a proverbial titanic and finally find your way out? For me it was this: If you fail to actively plan against your lowest human instincts, then you face the guarantee of deep investment regret. Investment wisdom isn’t cheap and it often has a price tag known as “a big mistake” attached to it. The sooner you take responsibility for the levity of your own decisions, the sooner you will be on a path that veers away from failure.
As I consumed all the literature I could get my hands on in the cryptocurrency and blockchain space, I found that none of the books struck a balance between the pessimism of investing fundamentals with the enthusiasm for what could be unlocked in the near future with blockchain and cryptocurrency.
That is what set me on this journey. This is what drove me to read hundreds of research papers written by some of the most brilliant researchers in the world. Over the course of three years, I built for myself a rock-solid understanding of blockchain and cryptocurrency with the goal of making this emerging technology understandable for everyone. That is what this work is: a comprehensive dive into this emerging technology in a simple fashion by equipping you to understand, explain, and invest in blockchain technology.
In this article series, I share excerpts and stories from my book, Building Confidence In Blockchain — Investing in Cryptocurrency and a Decentralized Future. I hope you enjoyed this post — if you enjoyed it and want to connect you can reach me here via email firstname.lastname@example.org or connect with me on social: (twitter) https://twitter.com/l_woetzel or (LinkedIn) https://www.linkedin.com/in/carter-woetzel-16936b136/ .
Also, you can also find my book on Amazon — here is the link to buy it: [Amazon Link]