Are people taking to cryptocurrencies yet or are they still weary of the technology and its applications? We asked 2 members of the team at Geode Finance if they felt people were becoming more comfortable investing in crypto. Here are their respective responses and reasoning.
Cryptopher Robin Feels People Are More Comfortable Investing in Crypto
How Would You Define Cryptocurrency?
To understand if people are really comfortable investing in crypto, it’s important to first understand the most basic part of standard fiat money that most people are used to, as this plays into a common lack of confusion of skepticism from the general public. In short, money is essentially just a physical or digital way that we keep track of debts and exchanges between parties, typically expressed in paper form.
In the simplest terms, cryptocurrency is just a digital version of physical currency. The public has gotten quite used to digital currency with the advent of online banking, credit cards, and payment transfer services like Venmo, Paypal, Zelle, CashApp, and others. Cryptocurrencies are not too much different in that aspect, however, things get more complex the more you look into them. And it goes without saying that more complexity equals more confusion.
Considering how new the technology is, the concept of cryptocurrencies might not sync up to the standard view of a currency like the US Dollar, as there have not been too many physical, real-world use cases for paying bills or buying items with crypto. That’s what people are used to and that’s not the direction the technology has taken us just yet. However, that is changing day by day.
Breaking Through
To break through to the average person about the concept of why cryptocurrencies and how they are “worth anything” or have some kind of use case, I love to use the example of precious metals. We know (or believe) that gold has some inherent worth and we attribute some value to it. Everyone knows gold is desirable and expensive. However, try and walk into a grocery store and buy a cart of groceries with a 1oz gold bar.
The cashier knows gold is worth money and probably way more than the groceries but there is no easy way for them to easily measure that value and extract the necessary amount to make the purchase. The average retail institution simply isn’t set up to accept that form of currency. And that’s where we’re at with cryptocurrencies right now. So for the most part, cryptocurrencies are a digital representation of perceived value, just like other world currencies and physical items as well.
Different Cryptocurrencies Types of Note
There are actually different types of cryptocurrencies worth noting because the crypto market is more complex than standard monetary exchanges the average person is used to, ie paying for groceries with cash or swiping their debit card. I’d say overall there are 4 main types of cryptocurrencies (with a bit of overlap).
1st there’s Bitcoin, which at this point, is seen and used more as a store of value rather than an actual currency like the dollar. Again, I would compare this to gold – a physical store of value with a finite supply. As desire increases and the lack of availability diminishes, the price goes up, just like precious metals.
Next, there are native blockchain currencies like Ethereum (used to pay for transactions on the network), stablecoins (tokens pegged to the US dollar that are considered to be one of the most secure methods of holding crypto assets), and tokens issued from the various projects (protocols) built on top of the blockchain networks. These tokens, often issued from DAOs, are similar to stocks issued by a traditional company, offering an investment opportunity to take part in company profits, while also offering holders the right to vote on company proposals and direction.
Are People Becoming More Comfortable Investing in Crypto & Digital Currency? If Not, What is Holding Investors Back From Getting Started?
Cryptocurrency and the emerging decentralized finance market have spawned a huge amount of innovation and captured the attention of some of the brightest minds in the world. And because of that, the space has become extremely vast and complex with new projects popping up constantly that attempt to innovate and connect the dots to encourage ease of use and adoption. Meanwhile, all of the whispers since its inception have turned into loud roars and people from all walks of life are starting to pay attention. With that comes FOMO (fear of missing out), as more and more stories come out about overnight millionaires and the enticing proposition of being able to make passive income while you sleep.
So yes, people are becoming more comfortable investing in crypto digital currencies, but the biggest problem is that the average investor who buys crypto has no clue what products they’re even purchasing. They’ve heard the name so they go for it. And that’s rarely a good investment strategy. In the crypto market, it can be a REALLY BAD strategy because so many projects are doing so many different things in the space.
The Average Person Doesn’t Don’t Know Enough Yet
As more news stories are put out into the public space and more people talk about it and more commercials appear on TV and more high-profile celebrities get involved and more traditional payment processors accept it & more of their friends tell them their success stories, the more the concept of investing in crypto becomes an attractive investment opportunity. It’s a waterfall effect and it’s easy for clueless investors to get sucked in.
So yes they’re comfortable investing in crypto but for all the wrong reasons. They’re taking risks and don’t even know why they’re taking them or what they’re “betting on”, and in this market, there are a lot of ways an inexperienced investor can end up realizing huge losses. And this leads to my next point… the negative press.
Success Stories & Horror Stories
While there are a million success stories, there are plenty of horror stories as well. Many of the big ones make the news and those make the skeptics shy away or become very vocal about the dangers, potential for fraud, ease of theft and money laundering, etc. Bitcoin and Ethereum especially have gotten huge amounts of bad press because of the amounts of energy they consume to run their chains and process transactions. This is especially true with the rise of NFTs. So if you happen to be an environmentalist, this may be another reason to avoid participating in cryptocurrencies.
Finally, there are the people who are simply too broke to put out the money to make what could be life-changing investments. Those are always a real shame, especially when they look back on 5 years of struggles and realize that the $1,000 they spent on fixing their car could have made them $500,000; thereby solving their financial problems.
We’re Not Quite There Yet
Thanks to the spread of knowledge via articles, videos, walkthroughs, and a very helpful community of crypto enthusiasts, anyone who’s truly interested in learning more and adopting cryptocurrency technology has an easy way in. And the more people learn and understand, the more they get truly comfortable with it. In turn, the more the average friend or family member can explain to others on a one-on-one level, the more people are able to see the values and wade through the muck. So the more people who get involved will foster further growth on a grassroots basis as well.
Ultimately, I think what’s holding most people back is a lack of knowledge and a fear of change. Let’s face it. New things are scary and it’s brave to take a risk and get involved in the unknown. For others, they may never be ready and others will begrudgingly join in twenty years down the road when they feel like it’s impossible not to participate.
What Other Trends Do You See in Crypto Investing?
Inflation & Crypto
Right now, the cryptocurrency market is completely collapsing due in part to a number of factors. The rise of inflation in the normal economic markets has caused the Fed to raise interest rates, thereby making money harder to borrow and more difficult to invest. With costs rising on necessary items, less disposable income means less money being pumped into the market as well. Furthermore, greater amounts of the investments in crypto may need to be pulled out (frequently at a loss) to pay for bills and other necessities.
War & Peace
Then there’s the conflict between Russia and Ukraine. War often puts the financial markets on edge and investors become more conservative, especially when it involves international superpowers and the related supply chain issues we’ve seen. All of this feeds fear & uncertainty and continues to create a cycle that usually ends poorly. And we’ve seen the stock market feel the pinch as well. My point is that there are a lot of real-world problems affecting the crypto market right now.
Catastrophic Failures
But here’s the kicker… One of the biggest projects in the crypto space (which actually controls 2 of the biggest cryptocurrencies in the world) recently took a huge hit – one that they may never recover from. And because of this, millions of investors have lost BILLIONS OF DOLLARS literally overnight. As I write this, the assets are still crashing as everyone still left holding scrambles to recover whatever money they can.
Think of it like a bank run during the great depression. Soon, all the people who expected to earn money on their investments are seeing a 99% loss of their funds. Life savings have been lost. People are threatening suicide. The entire market has been shaken over the past few weeks, and now with the collapse of LUNA & UST, it’s lost nearly 1.5 TRILLION DOLLARS. If you own crypto right now, you’re hurting BAD!
Short-Term Crypto Predictions
So where do I see the future of crypto investing right now? First off, a lot of people have lost everything. They may never return and I don’t blame them. Some casual investors (usually the ones who invest only on centralized exchanges, will be turned off and may not come back at all or return during the next bull market. Others who were curious may hear about this and it can scare them away for good, while other naysayers will be laying the “I told you so” speech on everyone who will listen. So all of those investors are likely lost before they even become investors.
Furthermore, if the market continues to tank, more people will pull more money, leading to a similar effect to the stock market crash during the Great Depression. Many of the cryptocurrency projects will fail and we’ll be left with a much smaller, consolidated market, most likely with 1 less blockchain to build upon. This means fewer projects to invest in and less diversified opportunities for investors who choose to remain
Meanwhile, some of the stronger projects will remain but growth will stagnate and it will stunt progress for a long time. NFT markets will collapse and investments in NFTs will dry up as well. We could also see a greater amount of government regulation attempts in all parts of the world to control the effect of the crypto market having resounding effects on other financial markets. It’s going to be a mess for a while and investments will dry up.
Long-Term Crypto Predictions
We could see another 2017 crash that halts the market for years to come. However, when most people wrote off crypto in after the 2017 collapse, the innovators made their way over and began to build silently for over 3 years. Behind the scenes, a small group of savvy investors was poised to strike it rich because they believed in the tech. They saw the opportunities within.
When it comes to crypto investments in the future, I believe right now will be a defining moment for the crypto space. Any weak projects will be lost to time. On the other hand, real innovators with strong teams and a vision to institute real change have a HUGE opportunity for growth. We’ll see small projects with a plan go from nothing to MASSIVE market players. Consequently, any investors who do their homework and choose to remain in the decentralized finance space will be handsomely rewarded. They’ll be the next “overnight millionaires”. So for anyone who has the funds left to invest right now, market downturns are the best time to stock up on valuable assets that have essentially collapsed for no reason. That’s a common practice in the stock market as well.
Making Money Moves
It’s the people who make the moves in uncertain times that end up in the best positions when things pick back up. And they will. But for now, I’d say the crypto market may fade into obscurity again for a while before returning triumphantly once again.
Things will be bigger, better, and more impressive. More people will hear about it, more people will take crypto investing seriously, and the market will absolutely explode as floods of people enter the space for the first time. All I can hope is that the concepts will be easier for the average person to grasp and projects will be safer to invest in. Only time will tell.
SuperFlyTNT Agrees That More Investors Feel Comfortable Investing in Crypto
How Would You Define Cryptocurrency?
Cryptocurrency is one of the most exciting new financial technologies and investment opportunities to emerge in recent years. Not only has it created an alternative to traditional financial institutions and their investment infrastructure, such as Wall Street, but may also be the first true alternative to fractional reserve banking, and fiat currency as well.
This is due to the underpinning technology which serves to guarantee transactions, and remove the concept of trust, by utilizing vastly complicated cryptographic & mathematical computer software systems, rather than simply employing a trusted middleman (as is done in traditional financial systems).
Are People Comfortable Investing in Crypto Now?
When this technology first debuted over 10 years ago in the form of Bitcoin, most people put little trust in this concept, concerned it had a hidden fatal flaw or security issue, or that people simply would not adopt such a technology in the long term.
Now, a decade later, even with the drastic ups and downs of the markets, it’s clear people are more comfortable investing in crypto. In fact, it’s looking ever more likely that cryptocurrency (and the blockchain technology which enables it to work) are less flash-in-pan trends, but instead represent a seismic shift in investor demand: natively digital currencies, 24/7 markets with rapid transaction settlement, easy cross-border payments, and issuing less trust to institutions.
A Bumpy Ride
However, as with any new technology, the path to widespread adoption is going to be fraught with difficulties. In the case of cryptocurrency specifically, these difficulties are manifested in issues like exchange hacks, token scams/rug pulls, and of course the ultimate challenge for crypto, regulatory hurdles.
Although crypto seems to have walked the tightrope thus far, and survived this onslaught of challenges, it creates quite a pronounced side effect regarding market sentiment on the macro level. That is to say, a single news story can drastically change the price action at any given moment. For example, a faraway land declares cryptocurrency to be illegal, and suddenly, double-digit percentage gains can be instantly wiped away. Such violent volatility certainly discourages a lot of people. Consequently, I think many people are not yet comfortable investing in crypto because they don’t know enough about why the market behaves the way it does.
Conversely, the opposite holds true as well. A single event, story, or even rumor can drive fantastically large gains over a very short period. In this author’s opinion, this aspect ultimately entices more people to enter crypto, than the risks which dissuade them to stay away.
What’s The Future of Cryptocurrency?
If one steps back and views this relatively recent phenomenon over the long term, the picture becomes a bit clearer. It’s apparent the overall trend has been upward. Not only just upward as well, like the dot-com boom before it, but it has also shown exponential growth in total market cap. That’s the hallmark of new technology with great potential and even greater speculative value. Things like this do lend to people feeling comfortable investing in crypto.
Taking these facts into consideration, I think it makes sense for nearly all investors to at least have some exposure to cryptocurrency in their portfolios. However, “some exposure” is an intentionally vague term though. Clearly crypto carries a large amount of inherent risk. Thus, each investor has to decide for themselves what percentage of their portfolio can bear the damage if this risky investment goes bad.
Ultimately, I fall on the side that the risk is worth it, and overall crypto will continue not only to find footholds but will thrive in today’s electronic world. The road to success for cryptocurrency will be filled with setbacks. A lot of them!
In fact, I write this as the market suffers one of the largest pullbacks in memory. Unsurprisingly though, I still believe the technology is too groundbreaking to simply die off. There is too much upside potential to be ignored by anyone. As long as they temper expectations of overnight riches and above all else, practice effective risk management, people will continue to become more comfortable investing in crypto.
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