Maybe this is a little sarcastic but i do honestly think this argument has a lot traction to especially younger people. You can yell to your red in the face about how its all a scam, its immoral, its built to crash, but I think a non negligible amount of people still think its a better ride than any other options available to them. Its not right or wrong, just is what it is.
You're absolutely right and this is the part that many do not understand about crypto culture.
Its players are fully aware of most of it being a casino. They play anyway. They do not want to be "rescued" by your moral preaching or regulation, they willingly take big risks, often lose it all, and then do it again.
Crypto, as they see it, is the only asymmetrical bet of their lifetime. The only way to "make it". And making it doesn't even have to mean millionaire status, it could just mean any type of life improving wealth.
So "adults" preaching about why they can't just be "normal" and financially sane, are deeply out of touch. "Normal" as in...student debt, stagnant wages, unaffordable housing, healthcare costs that can bankrupt you, double digit inflation, one crisis after the other (9/11, financial crisis, COVID, war), job insecurity, climate change, political boiling pot...that kind of "normal"?
Many if not most young people cannot get ahead by doing "normal". They can't even reach middle class. If doing all the right things leads to a miserable result, any escape hatch is embraced.
Crypto, as they see it, is the only asymmetrical bet of their lifetime
this is the part that makes me feel the most cynically incredulous about some of the claims and aspirations not just from my friend but others who have bought entire box cars on the web3 hype train, andit's probably my own biases and notions about the world, but:
is it really all that asymmetrical? I presume you mean in the same spirit that the people who jumped in on the GameStop wagon did so not only because they saw dollar signs, but they bought into the notion that there had been some discovery, an inefficiency to exploit and they were "sticking it" to the institutional trading system by refusing to sell?
If that's not what you meant, feel free to stop reading, as my skepticism is borne out of completely misunderstanding your point (and I concede the misunderstanding on my part).
On the other hand if so....
I don't see the asymmetry, really. I just see a new set of thumbs on the scale. That's the cost of admission isn't it? Is that what I've been so oblivious to in my own apoplectic shock at all of this?
The asymmetry is not in information but in the potential gains and losses. Even if the overall EV is lower than 1, it's about risking £100 for a potential £10000 or other much larger figure, 10x/100x/10000x.
I didn't say people don't care, but that the EV is not relevant for calling it an asymmetrical bet.
The EV may also be under 1 for the value but may be >1 for utility. That can easily be true for things with more moderate returns than the extremes of lotteries.
Say you have 10K USD. If you don't know what you're doing, take extraordinary risks, have poor timing or just bad luck...you'll lose all of it. If you do know what you're doing, you can turn it into 20K, 30K, 50K, 100K.
The potential upside is many multiples of the downside, hence it's asymmetrical. There's no asset I can think of with this potential upside on such small timescales.
Isn't it risky? Yes it is. Like I said, -100% when fully incompetent. Against many multiples of potential upside. That's what makes it asymmetrical.
This suggests that crypto investing/daytrading is entirely random, which is a ridiculous thing to say.
Further, explain to me how sport bets have greater odds of success? If you want the upside of crypto in sport bets, you'd have to place your bets on the absolute worst odds, as only those pay out a high upside. Meanwhile, in crypto during a bullrun you can buy any garbage coin and it will go up.
1) You’re assuming sports betting is completely random, then assuming I’m comparing this completely random thing to your supposedly not random thing.
2) Cryptocurrency is 13 years old, give or take. The idea that there’s a predictable cycle of bull runs and bear markets based on such a short timeframe is nothing more than hype and fantasy.
3) They’re all speculative tokens, so I’m not sure which ones you think are garbage or not garbage.
PG wrote an essay quite a while back about filtering out solutions in search of problems, which would include almost all of the cryptocurrency sphere (e.g. Web3), but I’m not sure what else there is outside of money trees.
Running out of reply nesting, so replying here to your other reply. First, appreciate the toning down, few would do that.
I'm not a very deep crypto expert, but I can share some thoughts on cycles.
Most of crypto has no cycle at all, as in...most are shitcoins. They die in a single cycle, as a short pump and dump. However, after their death new ones pop up when a new uptrend arrives. And then die again. These tokens lack "fundamentals", favorable attributes beyond speculation.
Simply put, BTC dictates the pace of the entire crypto market, whether you believe in cycles or not. Every other token moves in extreme correlation with BTC price action. You can easily verify this claim by putting the charts side by side. They synchronize down to the second, which indicates algorithmic trading.
Bitcoin's "cycles" supposedly are based on its once-every-4-years halving of block rewards, making supply increasingly scarce, against an exponentially increasing demand (which long term is true, despite short term selling). In turn, a 4 year cycle is cut up into a bull and bear part.
This theory has been true-ish for 3 cycles, whether a sound theory or just by accident. But the model is kind of breaking in this current cycle. Some cope with this by calling it "cycle lengthening".
The way I see it, crypto's entire existence has aligned with a period of funny money. Lots of cheap capital available for high-risk bets. So indeed you might as well theorize it has been a single super cycle.
For shitcoins this theory doesn't matter, they get taken out every "small" cycle in any case. It only matters for BTC and ETH. I'm convinced BTC will easily survive but it might stay down for a long time, years even, not aligning with the usual cycle, if it ever existed.
1) I didn't say sports betting is random. I said that if you want a 10x - 100x upside in sports betting, you'd have to place your money on the player almost surely to lose. As in, 99 people betting against that player versus just you. Those odds are not comparable to crypto.
2) I agree. Cycles are unlikely to continue forever. Doesn't mean there can't be still some to come. Time will tell.
3) There's tokens with actual utility, but most have none.
There's no need to go into some kind of anti-crypto mode. I wasn't selling crypto. I was explaining the dynamics behind it being asymmetrical.
I appreciate that, sorry if I got.. er.. pitchforky.
Coming back to (2) - what I mean is that it's unclear to me if there's ever been a bear or bull cycle in that market in reality. It's such a short span of time that you could still, even now, be in the tulipmania phase of a speculative frenzy that hasn't yet run it's course (and I'd argue that is the case for a bunch of reasons).
Your point is well met, and it makes sense, I can follow your logic much more clearly, even while I probably still won't venture as far as to take on as massive risks with "web3" as some people I know have, I completely get the logic you were trying to make now. Thanks for expanding further and helping me understand your point
Welcome. I would definitely avoid taking on massive risks in crypto. I roughly see two situations.
1. The "nothing to lose" situation I described. Low wealth individuals putting "everything" at it, yet everything is very little. I don't advise it, but I understand it.
2. People in a reasonable/sound financial position. Whom can obviously just avoid crypto altogether, but some may want to get in with a portion of their wealth.
For people in group 2, it's not as simple as a fixed percentage of your wealth, say 10%. If you have 10K in savings, putting in 1K in crypto is useless, as you're now in the range of 9K - 15K savings after your run. It will suck your energy whilst it does not generate meaningful wealth even in the best of cases. Just don't bother.
That's why I believe you need a minimum stake of at least 10K. You need skin in the game. Doing a 3x-5x on 10K starts to get interesting whilst losing it all is survivable. If you master the game for two cycles, you might even turn 10K into 40K into 100K. That's meaningful life improving money.
But in any case, indeed, don't bet the farm. Unless your farm is a cardboard box.
totally agree with you, but I wonder if things would be different if the players of the casino were aware that the jackpot winners were plants, fakes, renting lamborghinis or worse, actually profiting on money laundering schemes while passing it off to their instagram followers as being a good day-trader.
just shaking my head that anyone thinks putting their life savings into an alt-coin has any chance of going well for them
There's two camps here. On Crypto Twitter and Reddit, the space being ridden with scams and fraud is widely acknowledged and even accepted as part of the game. Some take it even as far as to congratulate the scammer, although most don't. There's also people actively researching and documenting scams, and doing good in warning people. But overall, one can say that this public outlet of crypto is very much aware. They know in what type of casino they're playing.
We won't ever hear of camp 2, the silent majority that bought into the scam and lost their money.
"just shaking my head that anyone thinks putting their life savings into an alt-coin has any chance of going well for them"
There actually is a chance that this goes VERY well for them, which is of course the fatal attraction. During a bull run you can buy almost any altcoin and it will rise with the tide of the crypto market as a whole. Watch Bitcoin's trajectory in a 1 minute chart and compare it with almost every other chart, it's nearly identical, because it's algorithmically traded.
You're still right though that you should only put in what you can afford to lose.
