Cryptos Are Stupid

I wrote this response to this comment on CoinDesk - http://joxi.ru/Vrwy4WPTKln6O2. Here's the link to that article - https://www.coindesk.com/crypto-peoples-revolution-says-investor-mike-novogratz/.

Hi Joe,

I decided to write in response to your comment.

I am a blogger and I am starting up in writing on crypto.

I am not sure that it's correct to say that crypto as an industry is "stupid". Yes, there's always a certain portion of people who do stupid actions, like investing scams. But, at the same time, when they do that, they don't think that they are being stupid, but they are trying to do the "right thing".

"Doing the right thing" is at the core of human behavior. People never look at their actions as "stupid".

Steemit is not "stupid"

I am starting to blog on crypto and I've decided to go on Steemit. I am just scratching the surface of many sub-fields, but I am actively reading up on all things crypto.

I am writing posts on Steemit. The value of these posts to the general crypto-community is rather low, since I am just starting up. It's not a problem because I want to work in crypto for the next 10 years.

Steemit offers the chance to deposit some money and get some "steem power". If you get Steem Power, you can vote for other people's content. The more steep power you have, the stronger your voting power is. When you vote, that person gets a bit of the cash tips. I don't know where the cash comes, when I tip them - it does not come from my deposit. The more people vote on your post, the stronger anybody's voting power gets. For instance, if I have the deposit of 100USD and I voted first on your post, you would get only one cent. But, if 100 people have already voted on your post, and then I vote on your post, I would tip you for the amount of 2-3 cents.

So, basically, I want to deposit 1000USD and do some posts on the things that I want to write about. Writing about things helps me improve on my writings skills and internalize insights.

If you deposit cash in Steem Power, then the withdrawal request has a 3-month lag time.

As you can see, I am not that stupid, but I completely deliberately wish to invest 1K into this "scheme", because it makes sense. Whenever something "makes sense" to you personally, it means that the goals that you have and the goals that the system in question has are aligned.

Perhaps, the biggest problem that the general public has when they try to understand crypto is that these are very use-case-specific applications, these are not "dollars" or "rubles". These are apps.

Specific apps for specific target audiences

I have been learnings English all my life and I know blog in this language. I know, for sure, that there are some cool applications on Google Play that help you learn English. I downloaded them, tried getting any sort of value from them, failed and deleted them. They bring no added value for me, because they do not meet my needs.

Nytimes is the best resource to help me continue learning English as of right now. It charges money from readers. So, I need to invest, say, 10 dollars a month in order to read it. In return for my investment, I get the ability to read the articles and post comments.

As compared to Steemit, I can buy either 100 months of subscription to nytimes or make that 1K deposit at Steemit.

Accounting for the fact that i) I blog in English on crypto, ii) actively compare the value that various actions bring in terms of comparative and absolute advantage theories, iii) have the money to invest, this should be a strong proof that I am not acting "stupid" in this case.

When will I "cash out" my stake in Steemit?

Your positing that the early adopter and stakeholders will be looking to a particular level, cash out and trigger a drastic decrease in prices was surprising.

As far as I understand, people who do freelancing and business in general know that whenever you've managed to establish a strong business model that enables you to derive profits, you should move to another business model only when the original business model broke down or you are triggered to migrate based on extraneous rationales.

Why?

Because nobody would want to buy from you the business model that doesn't work. And nobody would want to pay you the 10-year equivalent of future profits. So, it's much easier to find an administrator, delegate general management on them and retain the asset.

This means that if Steemit grows a lot of exes in 3 years, I would probably still prefer to retain the stakes because I wouldn't see the points in cashing out.

Why?

Because if Steemit grows a lot of exes in 3 years, by that time I would have already gained significant exposure to blogging on crypto and it would be possible for me to find jobs that pay good money in order to sustain myself without cashing out. This means that in the majority of cases whenever people go over the "minimum sustainable allowance level", they prefer not to sell the assets that they were lucky to have gotten into in the first place because they know that it's quite hard to do.

Cryptos are IT projects

9 out of 10 start-ups fail. And that's totally OK, otherwise there would be too many of them. There would be 77 Facebooks and it would be a mess.

So, we should base our thinking on the assumption that A LOT of cryptos are going down. That's just how life works. These are not "real people". Whenever a business fails, "real people" get drunk and move on to the next endeavor. Dying businesses do not mean people getting homeless and begging you at the corner.

Cryptos are not for user, but organizers

It's quite possible that at this stage it's much more important to lure organizers rather than users. If you attract 10,000 smart developers who will switch from frond end or back end for ordinary businesses and dedicate their time to crypto and blockchains, this industry will have better chances to progress faster and come to replace the ordinary currencies.

Ethereum is testing itself out

We all know that there's a lot of scammers right now. They steal our money and evaporate in thin air.

Although some people believe that it's pretty darn bad, I think that it's just a mechanism to see whether Ethereum can stay impartial and resist from censorship.

If Ethereum starts to "disconnect" bad ICOs, it means that we failed to create a decentralized and censor-less system. This means that, once again, we would have a central organizer (a group of people), who would decide whether something is a scam.

Although they might seem as a good thing, it's not. I am from Russia. We are currently living under the authoritarian regime. All demonstrations are banned. Because of the state's effort to ban Telegram, Asana doesn't work on my IP, so I need to use VPN. Just imagine - I CAN'T LOG IN INTO ASANA, BECAUSE ASANA WAS KINDA BANNED BY THE RUSSIAN FEDERATION.

If you don't want to get into the same stuff like that with your pre-dictator, then you'll need to come together and decide that Trump was the wrong path for you, guys.

This is what Ethereum might be trying to teach us all. Nobody's going to "police" crypto any longer. If you don't like a crypto, it's up to you, me, my dad and my nephew, to say " yucky". So, we might see Augur coming to the forefront, helping us to come together and say "no" to bad ICOs.

If we learn to do that, this will help us to - collectively - find the right path. We won't need Trump or Putin to tell us what's good and what's bad for us. The best person to answer that question is you yourself.

Cryptos might be a scheme for organizers to make money

You said in your post that cryptos might be a way for the developers to make money. But there's nothing bad about it, you know. Nytimes "developers" are also trying to make money on "stupid readers". The woman having the excess of milk and selling it to the neighbors at a mark-up is also trying to make money on them.

So, it's quite possible that the industry would attract A LOT of people, then there will be a huge correction and then all those people would migrate to some great projects and work there. Then we will start getting extremely beneficial cryptos that will help us make a difference.

Please do not ban people from entrepreneurship. This was tested by the communists in the 1930s. I'm not going to get into the details, but it was no fun. Since entrepreneurship is the foundation of the society as we know it. If you take it out, famine comes in and people die.

Banning something is a very bad thing because it creates a functional underground economic sector. And you don't want to come in contacts with people who control a functional underground economic sector. I know such a person from Moscow. He's clever and "surgical", meaning that he knows what he wants to attain and goes for it. Since he operates in the underground sectors, he cannot be guided by the laws on the ground because he will be squeezed out by his subordinates and/or competitors since the laws of competition and of supply and demand work like wherever. So, what I am trying to say is that it's much more preferable to keep all the industries on the ground where you can see them and where you can try to understand their inner workings.

That's why I personally believe that the best option for the US and elsewhere is to legalize all drugs - cocaine, heroin, everything + pay "drug addiction support" to all drug addicts, with the caveat that they talk to the counselor once a week. As far as I understand human psychology, drug addicts are drug addicts because they don't know that they are.

If they talk to another person about the fact that they are drug addicts, they would mean that they recognise this issue. This would mean that they would be able to address it in the future.

Sorry for writing so much, but I just decided to say what I think.

It would be great to hear what you think.