Debunking crypto myths

So, this is my 7th year working in crypto, and I am amazed at the confusion that still prevails among those who are not involved in this industry. Starting with my own mother, who certainly has no idea about what I do for a living.

"He works with the flying money," she says to her incredulous enquiring friends. In this article, I won't go into details to explain what I do for a living, but rather explain why there is so much confusion when it comes to cryptocurrency and more broadly, blockchain technology.

As always, this is not in any shape or form financial advice. The best financial advice is always: "Do your own research."

There are a couple of initial points that I think it is essential to clarify. The first one is that this whole industry is primarily technology, unlike what many might think; it is finance. I would place finance — or decentralised finance — as a subset of the industry, not as the parent category.

Secondly, the industry is quite small in terms of market participants. You certainly know someone involved in the industry to a certain level, maybe also someone who works in crypto full time for several years, but probably — unless you yourself are working in crypto too — the majority of your network of people would not be involved in blockchain or crypto, except for the occasional trader who might have bought Bitcoin at some point.

However, we — those who work in the industry — tend to perceive it as much bigger than it is, especially because we attend events, gatherings, conferences, and we tend to mingle among fellow crypto workers. Yesterday night I went kart racing with a small group of friends. All of us work full time in crypto.

Having cleared the definition and the size, let me move to the next elephant in the room: is crypto profitable? The simple answer: it depends. Except for the magic imaginary world of the "flying money," there is no such thing as an industry that is always up.

Even real estate gets pretty beaten up at times. I had a quick diatribe with a salesperson at the Mall of Emirates last month. He was insisting that the price of the property he was trying to sell me would have gone up forever. "How much were you selling this for last month?

I asked him provocatively. "2.2M AED," he replied promptly. And today? "Sir, today it's already 2.6M AED."

So I continued: "What about next month?" He replied, "Maybe 2.8M, Sir," urging me to put down a deposit. But I persisted in asking what would happen next until he realized that I had put his ridiculous thesis in an inescapable corner of logic. There is no such thing as forever growth. Crypto is the same. Sometimes it is up, sometimes it is down. Nobody can predict it, except for supercomputers and algorithmic trading. And even those eventually get it wrong sometimes. So never let yourself be fooled by someone launching a new project promising that it will "certainly go up."

The only certainty is that there is no certainty.

Let’s look at some low-hanging fruits in terms of current certainties, meaning facts that cannot be disputed for the time being. Take Bitcoin $BTC. It has gone up and down countless times in its 15 years of life. Obviously, those investors who bought high and sold low lost money, while those who bought low and sold high made money. This logic is inescapable.

However, statistically, anyone who bought and hasn’t sold yet within a span of 4 years hasn’t lost any money yet. In other words, BTC can be a speculative asset to trade daily, but it could also work as a store of value for those looking at long-term appreciation. As I’m writing, BTC is hovering between $40k and $42k. Just a few months ago, it was still below $30k. Those who wanted to have a quick speculation could have bought BTC just 6 months ago and profited much more than investing in most of the other asset classes out there. Is that the norm? Of course not. Extraordinary profits beg extraordinary conditions. And as always, do your own research.