Do you think Cryptocurrency investing is a zero sum game?

in Banking and Finance2 years ago


I was reading an article about Bitcoin dominance and Bitcoin returns and the author made a convincing argument for investing in Bitcoin. Then I read the comments and one question was: If Bitcoin is doubling every year, then why invest in anything else and should we get rid of the nearly 2000 other Cryptocurrency projects or altcoins, meaning all coins which aren’t Bitcoin?

This question made think long and hard about Cryptocurrency investing, and stock market investing also. So I asked myself, if I think Apple is the greatest stock ever, or Amazon or Netflix’s, why invest in anything else? Why root for anything else? Does Apple’s success depend on Amazon’s failure? Does IBM’s success depend on Microsoft’s failure? What I am really asking is, can all of them succeed?

I think the answer is yes, because the stock market is big enough for more then one winner, and the stock market sectors are big enough for more then one winner. So what about the cryptocurrency market, is it big enough for more then one winner? I think the answer is yes. I think when we look at the New York Stock exchange alone we see trillions of dollars invested, and that’s just one stock market exchange. When we look at sectors we can find 10 to 20 different companies doing well in the same sector. In short there appears to be enough investors and money to make several thousand companies successful. There are various index’s listing top stocks, the S&P 500 lists 500, the NASDAQ lists 1000, the Russel lists 2000, etc, etc, the lists go on of nearly 10,000 successful companies on US Exchanges alone. The look at other exchanges across the world and you see thousands of successful companies. In other words investing shows us that entrepreneurial success isn’t a zero sum game; I win and you lose. Instead it is what I call a multiple winner game, as in multiple companies are successful and reward their investors.

On that note I look at cryptocurrencies and our current tribalism, where we enthusiastically promote the positive aspects of our favorite coin and some feel the need to enumerate what’s wrong with other coins, as if tearing down the others built up or upgraded their favorite coin. I think we need to discard this behavior and instead promote the cryptocurrency industry first and our favorite coins, but leave out the attacks on other coins. We need to look at the millions of dollars in this investment sector and realize there are billions more dollars, euros, etc that can enter this sector. There’s plenty of money for many coins to be successful. The truth is that very rarely does one coins success depend on another’s demise.

The point I am making is it isn’t a zero sum game. The success of one Cryptocurrency does necessarily doom all others to failure. We are early in this Cryptocurrency investment niche lifespan. The oldest project Bitcoin is still to young to drive a car, certainly can’t smoke tobacco or drink alcohol. The coin projects will live or die based on the viability of their computer code, just like a babies survival depends on their genetic material. Let’s realize that there can be multiple winners and there are multiple winners. It’s not a zero sum game, it’s a multiple winner game.

✍️ written by Shortsegments


Title: Do you think Cryptocurrency investing is a zero sum game?


Derivative trading on Cryptos would be zero sum... technically Investing shouldn't be zero sum. If there is underlying value in the asset then this prevents it from being totally zero sum

Exactly this. Asset prices are ultimately based on underlying value.

The stock exchange indexes buy companies that produce goods and services and expect to generate value in the future, so people are willing to pay for them now. If you believe productivity increases over time, this increases the goods and services the underlying companies can generate in the future. This means people will buy the company stock and this increases prices for the stock today.

This means that the stock market gets bigger. It's when a pie bigger, there are more slices for everybody. More slices for everybody and it is not zero sum game!

Crypto is similar if you believe that crypto improves productivity in some way. If crypto increases productivity the value of the pie gets bigger for everyone and the game is not zero sum. When crypto-based productive services increase in value, the people using those services need to spend crypto to use those valuable services. To get that crypto to spend on the valuable services, people will have to buy crypto and that would increase the price and therefore increase the value for everybody.

So your question is where does that productivity come from? The answer is decentralization. Decentralization makes things that were once hard for everybody to do and makes it equal for everybody. Things like payment, publishing, creativity, trading, banking were once really hard. Crypto is another step in giving the power and profit from these things into the hands of the individual. Thus improving the productivity of its users.

Increased productivity, bigger pie. More pie, more slices. More slices -> Not zero sum :)

So as a community we need to find more applications for Crypto so that it gains asset value in society

Apart from that huge craze 3 years ago, we hardly hear about crypto in the mainstream world.

Tbh you got to pick and choose what you want to take serious and continue with it.
Bitcoin is at the top
But so is ethereum and litecoin

Good read and informative, Thanks

It kind of seems like "real" investing should be better and have better returns.

This artical is very beautifull

Heck, when Charlie (Munger) said, in relation to trading bitcoin, that “It’s like somebody else is trading turds and you decide, 'I can’t be left out'.” I can only assume he was comparing the Bitcoin market cap to the $150 billion global fertilizer market. And if he's giving that kind of value to just Bitcoin, I can only extrapolate that he's pretty optimistic about the rest of the be damned. So here’s to Charlie, welcome to the movement brother :)

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