Investor Cat: What ARE These Investments... REALLY?
Why do we invest in something; some new project; some new crypto venture?
Most of us will likely say something along the lines of "because it sounds promising, and like it would do well!"
Sunbeams and rainbows.
It sounds promising...
But what do we really know about these things we put our money and effort into? Are we just caught up in golden hype, or do we really know what we're committing to?
One of the things about life in the Cryptosphere that often ends up giving me pause to reflect is this idea that things sound good and promising, but I really don't have much idea about the inner workings and WHAT I am really investing in.
The somewhat alarming reality is that most projects are deliberately convoluted and obfuscated to the point where trying to really understand their workings seems almost impossible. There is no "explain this to me like I'm a 5-year old" version.
Just as a simple example, out of the 110-odd dribs and drabs dwelling in my Hive-Engine wallet, there are maybe 12-15 I actually pay attention to on a regular basis.
Aside from minuscule amounts of Bitcoin and Litecoin, even those top 15 strike me as mostly "black box" type ventures with lots of complicated pieces and parts, but no simple "When you add A to B, you will have outcome C" explanations.
More often than not, I find myself looking at a project, feeling cautiously enthusiastic, reading more and ending up at "Invest your money in our project (AND THEN A MIRACLE HAPPENS) and you'll end up earning a 20% APR!"
Trying to unbox the "AND THEN A MIRACLE HAPPENS" turns out to be all but impossible.
Which sort makes me think of one of the oldest cautionary statements in the world, when it comes to money and investing: "A fool and their money are soon parted!"
Are we all fools?
Or is it more a case of project founders really having very little idea of what they are actually doing, so they divert questions by making the path to answers impossibly difficult to find?
If you read my blog on a regular basis, you've probably noticed that my posts are often laced with a substantial dose of skepticism and cynicism, which is primarily the direct consequence of the fact that things seldom turn out as promised.
It's possibly that I place too much emphasis on trying to know irrelevant minutiae, rather than simply trusting that what's "inside the package" matches the description outside.
But I can never get away from the inner dialogue I end up with: "Yes, it's great THAT you want this outcome, but you're not telling me HOW you plan to reach that outcome."
When it turns out that 'how" amounts to little more than "making it up as they go along," I get very nervous!
Maybe that's unfair in some sense, since crypto still is a very new frontier, with few established benchmarks to draw on... but still. It's my hard-earned money you're asking for!
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I don't think there is mean to be an explain it like I'm 5 version, because if you did, everyone would see the vast majority of such schemes and "projects" would be seen as not viable, unsustainable, and for lack of better words, scammy.
Being able to read between the lines is a lost skill for so many people.
It doesn't just apply to crypto projects, it also applies to advertising, finance offers, and other things where there is money involved, or a service changing hands, or a contract that isn't written in plain language.
I tried very hard for my photography business contract to be in the plainest, easy to understand language as possible. I could probably simplify it further - but the best thing is - I have never had any questions from clients asking for clarification on any sections in the three page document.
In one or another yes.
I've had a fair few projects that I invested in(either time/effort or funds) and had them turn into nothing. Either losing momentum, the person behind it disappearing, or some other thing that ends in everything associated with a project losing so much value.