Headlines concerning wild price fluctuations of cryptocurrencies keep coming up. One reason for the fluctuations seems to be a lack of Crypto-knowledge. Therefore, we want to show our path of gaining information!
Let’s start with the advantages of cryptos. As we mentioned in the last post we believe that Crypto could have a disruptive impact on society. Next to pure digital currencies, blockchain technology offers different use cases and opportunities.
- more secure digital elections,
- data storage in the healthcare sector,
- digital IDs.
In other words: some blockchains allow building applications that haven’t been possible before. NFTs, DApps, and DAOs are on the plan now. This also makes it very interesting for builders! Of course, there are also disadvantages. High energy consumption is a matter of discussion! But this just seems to be a disadvantage if you don’t have crypto knowledge.
Crypto-knowledge: a field full of rabbit holes
Well, that complexity is the crux of the whole topic! Cryptos and blockchains are very diverse technologies. Prof. Philipp Sandner claims that you have to spend 500 hours of research to investigate cryptos and blockchain. The whole topic is not a single rabbit hole! It is more of a field covered with rabbit holes that are all very deep.
Technology is evolving
Let’s stick to the energy consumption example for an explanation! Crypto-mining and validating transactions are indeed processes using a lot of energy. The current mechanism of many blockchains is called proof of work (POW). The mechanism needs a lot of computing power to run different cryptographic calculations. But technologies are evolving. A new mechanism called Proof of Stake (POS) removes the need to do all these calculations and therefore the excess energy usage.
Bitcoin vs. Ethereum in a nutshell
Let’s also compare Bitcoin and Ether to give you a feeling of how nuanced the crypto space is! Disclaimer, we simplify here. Basically, Bitcoin is digital gold. Every coin has a value. Its technology limits the number of coins to 21 Million. As long as other people believe in its value, it will continue to be valuable.
Ethereum offers more than just a cryptocurrency. It is a world computer and the backbone of a decentralized internet, which enables people to build apps and products. Ether is like digital oil! It is the fuel of the whole ecosystem. NFTs, DApps etc. run on Ethereum.
Having a basic understanding of the whole terrain
Now it’s time for some real-life effects of lack of understanding. Extreme price fluctuations triggered by a few opinion leaders show that there seems to be a lack of crypto-knowledge. One original idea of crypto is that it enables people to be more self-responsible for their financial fate. These uninformed speculations lead to the opposite. For example, Elon Musk has sent various cryptocurrencies soaring but also plummeting. His followers do not trust in their own knowledge. They are following their gut feelings and emotions. Those feelings seem to be triggered easily by Elon’s comments. In one of these cases, he was joking about Dogecoin in a comedy show and suddenly the price of Dogecoin crashed.
A first appeal from us at this point: Inform yourself! That’s never a bad idea. There are several examples of people who lost money or missed the opportunity to sell their crypto with true profit.
So for all who want to make quick money a basic understanding is not the worst idea. However, basic knowledge is much more important for people who believe in technology and decentralization. Being a builder means being hands-on. A 500 hours time investment in research is not a dictionary example for the term. Nevertheless, we want to engage with the technology and help to shape it.
Building a foundation
For us, the flood of information and the complexity were initially overwhelming. As you know from our Company-Knowledge-Base article, we use an information processing system. But concerning this topic, it’s hard to find perfect sources. As the popularity of the topic increased, so did the guides and books about Cryptos. Whereas Bitcoins are limited to 21 Million, guides and books don’t seem to be! 😀
Besides too much choice, these books also have another problem. There is a lot of time between the gathering of information, the writing, and the publishing. Thus the highest actuality is no longer offered. With such a fast-moving topic this is not conducive!
It’s also hard to find super-objective resources. Keep in mind who is talking and what are potential intentions behind their arguments. Well… that’s a general lesson for life! With this in mind, you can find the appropriate rabbit hole on the field. Here are some channels we trust:
Quick information and market research
For basic crypto-knowledge, the previously mentioned sources are well-suited. But if you want to be part of the development, you have to go deeper into the rabbit holes. You need specific information. Forums have been a good source for that. Here are some learnings we made engaging in these communities:
- You can get in direct contact with experts and exchange information about the latest trends.
- One can ask more granular questions and thus draw more specific learnings.
- In forums of providers, it is also not unlikely to get in touch with team members and maybe arrange personal meetings.
Of course, there is no free lunch here either. While interacting in different communities, we discovered several pitfalls.
- As we preached, you have to have basic knowledge. Even when you label yourself as a person “new to the topic”, members of the forums presume basic terms and information. You can’t start from zero. Some communities even have their own memes and wording. This subculture can quickly become overwhelming.
- On Reddit, you can quickly be labeled as a marketing researcher and banned from the Subreddit. So ask substantive questions and try to uncover needs in conversations/threads. Don’t go through your market research questionnaire. That is general advice for Reddit.
- You must always be careful that you do not fall for people who want to convince you of their products. However, this seems to be even more prominent in the crypto scene. Personal messages have partly flipped from initial advice into sales inquiries. If you are unprepared, people may try to sell you their applications or even new currencies. Use the multiple source approach from journalism here. Never believe one source and double-check what you read.
To sum it up
The crypto-space is very diverse. It offers various opportunities for disruptions! Being part of that is desirable for builders and also for people who want to make money. In both cases, it is important to have at least basic crypto-knowledge. But if you want to understand the technology and its possibilities, you have to dive deeper. This research can be very time-consuming. One approach can be forums and direct interaction. But without the basics, you will quickly be overwhelmed or even tricked.
Technology has the potential to change society. When it does, it’s good to be part of it, or at least understand it.