Technology can exist for a while before a mass consumer use is found for it.
Do you remember when you purchased your first home computer— and if so what do you use it for?
Geeks and accountants drove the early sales, but in 1993— BOOM! This happened…
It was called Mosaic — the first web browser. And you know what happened next. The world tilted on its axis. Did You See It Coming?
The killer app, and the catalyst, for the mass adoption and use of home computers, was the Mosaic web browser.
We’ll look back in history for clues that could set up, like the Mosaic browser for home computing, the “Killer Apps” for blockchains, the Apps that will bring awareness of blockchains to the public.
Each week we’ll be discussing potential triggers for the mass adoption of blockchain technology.
What if the catalyst for the mass adoption and rollout of blockchains has not happened yet?
By far the question we get asked the most is, “What coin or token is going to be the next Bitcoin?”
To answer this question, it’s an advantage to keep it simple and start with this — “What problem does this coin or token solve?”
And it’s much easier if you know how your money has been manipulated and devalued in the past. And ask, “Is Bitcoin a store of value and a democratic vehicle to protect your wealth from government shenanigans, or is Bitcoin a currency?”
Most people new to cryptocurrencies quickly get lost in the minutiae. They start by looking at the fine print and details, and get confused and frustrated by the terminology.
But what if there was a much more effective way?
By asking why Bitcoin was released in 2009 and why, in 2018, the perfect storm is developing that could be the catalyst for the mass adoption of blockchain technology, the task of filtering out which coins and tokens have a real shot at becoming another Bitcoin is just that little bit easier.
Why, in late 2017, did governments around the world scramble to stop the outflow of money into cryptocurrencies?
We discuss the (sometimes underhand) tactics the authorities used to slow down the movement of fiat currency into cryptocurrencies.
And ask, “Is Bitcoin still the kingmaker?”
We look at how Bitcoin prices have performed in the past and why understanding Bitcoin’s price movement is an effective way to track the entire cryptocurrency space.
Cryptocurrency Supply and Demand 101: How to use the supply and demand dynamics of Bitcoin to figure out what is going on in the cryptocurrency market.
As Bitcoin prices hit new lows, we ask, “Why is the Bitcoin hash rate at all time highs?”
We discuss how to use the direct market feedback left behind by the big money behind Bitcoin, and we ask, “Why does it matter?”
Why, whenever you buy a property, invest in cryptocurrencies, stocks, bonds, or even when taking a bet on a sporting event, you expose yourself to built-in biases and behaviour patterns.
These biases are well known and regularly manipulated by those in the know.
We ask, “Is being part of the crowd a good idea when it comes to investing, including cryptocurrencies, and how to know you’re part of the crowd.
We discuss how prices move, the signatures professional (whales) leave behind, and how an understanding of this can help you break free from the puppet masters.
Prices move through cycles of supply and demand as if they’re controlled by a hidden hand. And cryptocurrencies are no different.
This Gordon Gekko quote from Wall Street: Money Never Sleeps— “Bulls Make Money, Bears Make Money, Pigs? They Get Slaughtered”,
perfectly describes how the system works. The public buys at highs and sells at lows. Like clockwork.
We ask, “Why does the investing public do the wrong thing at the wrong time?
And we look back in time to see what can happen when everyone agrees the only way is up and the good times will last forever.
It’s another busy morning, and the usual scramble to get to work. So far you’ve avoided taking a look. At your desk, you take a deep breath and click the link. It’s up again, this time a lot.
You sit there wondering why you didn’t do it. Why didn’t you buy it? You knew it was going up. Images flash before your eyes— the holiday, the car, six months pay. All you had to do was send the cash to the exchange and click the link.
“Next time it goes down, I’ll buy,” you say to yourself as you settle in for the day. “Next time.”
Twenty-four hours later you’re hovering over the link. Click.
It’s up again. And it hurts.
FOMO has you.
What do the most successful blackjack players, poker players, financial market and cryptocurrency participants, from hedge funds to successful home-based traders have in common?
The training provided by exchanges and brokers is good quality, and the trading platforms are impressive. Flashing lights, constantly changing prices, indicators, and news. Wow! How can you lose? Yet most do.
Why do the people who know what they are doing live the life you want, and what do they know that you don’t?
Mr. H. Sapien Esq. is a pattern recogniser. We see patterns everywhere. In our caveman days, we’d be aware of moments of sudden and unexpected quiet, tall grass shifting with the wind, and subtle changes of shade.
A change of light, a snap of a twig, and our pattern recognition software would trigger our fight or flight mechanism. Our sensitivity to pattern changes of light and vibration helped us survive.
The problem in the modern world is knowing when our inbuilt pattern recognition software is being manipulated.
The reason understanding an edge is so important is because when you go through guaranteed periods of losses,(and you will), you know, because of your understanding of the expectancy of your edge, what is normal compared to what is not normal behaviour.
And understanding the expectancy of your edge is your antidote to the built-in biases and emotions that act against you in any form of speculation.
The first step to generating consistent returns is using a strategy with a positive expectancy. But this is not enough unless you understand how expectancy actually works.
And the clue to the complete understanding of expectancy is in the simple formula. And it’s the term — “Average.”
Expectancy is the mean average of your returns. Nothing more, nothing less.
Imagine walking into your bosses office with a great idea. You’ve figured out a game plan. It’s simple, it’s ingenious, and it’s yours.
In your mind you see the recognition, you see co-workers clapping as you walk proudly on to the stage. Arms raised above your head, and the crowd goes wild…
You’re wrenched out of your dream.
He looks up and points at the chair, “I’m busy, you’ve got 2 minutes.”
Giddy with excitement you sit down and deliver the pitch.
Your boss listens, then a pause.
Stone-faced and eyeball to eyeball, “Give me three good reasons.” His voice is monotone.
And this is where you start to unravel.
If you’re going to strap yourself into a flying bullet that has the potential to destroy your savings (and more), you’re going to have to trust the knowledge you’re using when you put your capital at risk.
Trust comes from being able to ask the right questions, trust comes from figuring out a plan and acting on it, and trust comes from understanding yourself and how you react to wins and losses.
Success in speculation and investing is being able to ask the right questions — and trusting the answers.
The majority don’t have a plan, and they react to market moves using their emotions.
Is anyone trapped, and do they have to get out? If the answer is yes, they’ll have to get out fast. This translates into a fast move in the opposite direction — the move you are positioned in.
You can measure the level of emotion in a market using the 4th dimension. It’s like having the wind at your back.
Edges are everywhere. Some are long-term and last years, and others are short-term and last days. Some last only for a few seconds.
It’s useful to be competent at math and computer programming if you want to uncover short-term edges, but the best edges, the ones that tend to last for years, are often found using no coding or math skills.
The 5% club use tools that give them feedback on the state of the market, and they use these tools to ask the most critical question of all. What is the risk?
Occam’s Razor is a problem-solving solution that suggests as long as the explanations fit the evidence, the answer with the fewest guesses is most likely to be true.
If, when you’re using Occam’s Razor the guess seems to raise more questions than answers, you’re moving away from simplicity and towards a more complicated solution.
Maybe it’s a by-product of our education system, but we generally find it difficult to trust simple solutions to our problems.
What if simple solutions could be used to answer difficult questions. How useful would this be?
Instead of being lost at sea with the 95%, the 5% study the environment of their quarry. They study the ebb and flow of the current and the temperature of the water.
They ask what time of the day their prey is most likely to be hungry and what their prey is most likely to eat. And they ask if this changes due to the season of the year.
Instead of casting out into the unknown, the 5% club take positions at the edges.
Start with the premise that markets move in cycles between downtrends and uptrends. And then, rather than using technical analysis the way it’s taught to the 95%, use it as a proxy for the intentions of the masses.
Instead of using a complex automated trading system, it’s possible to build a schematic framework to analyse any liquid market using four states and a handful of behavioural patterns left behind on a chart.
The greater fool theory describes how the 95% majority use charts. When the 95% take a position, they are relying on a bigger fool than them buying at a higher price.
As Warren Buffett said, you can buy anytime, but if you don’t understand the value of what you’ve purchased, then you are putting yourself at risk.
The 5%, the consistently profitable, search for value and use the charts to trigger their entry.
The majority of traders, the 95%, fail because when they’re under pressure after a string of losses, they either panic and give up or go in search of another system. They do this until they’ve wiped out most of their trading account. Eventually, they’re replaced by a new batch of traders with a new stash of capital looking to change their lives.
And around it goes, with the 5% keeping the 95%’s capital.
Consistency, over both the long and short term, comes from understanding the interplay between supply and demand, and not from the settings used by an indicator.
Fahrenheit 451 describes a world where the public have stopped reading. They watch wall-sized television sets and are dumbed down by constant news and trivia. 1984 is a future controlled by an all-powerful state that uses fear as a weapon of control. A Brave New World is about a future where the public is controlled by technology. A world where everything you do is recorded. From your first breath to your last.
The 5% club use tools, like the trilemma, to figure out long term trends. They use price action within the price cycle to confirm their analysis.
The 5% club think differently and don't follow the crowd. They monitor social trends and analyse the new demand for technologies most likely to benefit from the latest trend.
The 5% club monitor the Price Cycle and use the Hype Cycle to help build their big picture objectives. They don’t wait for media attention, and are most often positioned, months or even years, before the market they’ve invested in gets mainstream media coverage.
The 5% don’t get lost in the technical complexities. They attempt to find the bottlenecks and restrictions of new technology so they can quickly eliminate them. Their first order is to find the most effective questions that reveal the likelihood of a new idea winning the game.
It is very easy to fall into the tech speak rabbit hole when describing blockchains. It’s because they are not simple. Blockchains are complex, but the 5% manage to get around this by using metaphors.
You can’t compare the balance sheet of a bank with a biotech company because the internal structure of their operations is entirely different.
And so it is with blockchains. Behind all the tech speak, all the complicated white papers and technobabble, big money investment needs to know the where, how, and why of value creation. Which technology has an advantage over its competitors and how robust is the edge the technology enjoys?
How is a treaty signed in 17th century Germany and random numbers connected? And how can this help you find the blockchains and cryptocurrencies most likely to succeed in the future?
In 1648, a series of peace treaties ended the Thirty Years War in Europe. The treaties of Westphalia are important because they mark the beginning of the modern international system of sovereignty.
What have the Westphalia treaties got to do with blockchains?
In mid-November 2018, Bitcoin and the top-ranked alt-coins are in sideways moves in a bear market.
Google the search term “crypto today,” and you’ll be served up the factoids and opinions on what’s driving the cryptocurrency market. Sometimes the news is useful, but most of the time it’s a reflection of the market price action. A move up, and the news is good, a move down and it’s bad.
Is there another way?
As Bitcoin goes under the hammer, is a major change in the cryptocurrency markets taking place?
When a cryptocurrency market breaks to the downside on huge volume (Bitcoin on 14th of November 2018 is such a day) and closes in the lower third of the day’s range, it can be used as a proxy for a supply and demand imbalance. Yes, you might be thinking that this is obvious, but, for the most consistent investors and speculators, it’s what happens next over the following days or weeks that’s most important.
For cryptocurrencies to replace cash does anything have to change?
Innovator and early majority types might be rolling their eyes, thinking that investing in cryptocurrencies is easy, but if you take the time to ask, next time your socialising with friends, you’ll find that cryptocurrencies, for the majority of people, seems confusing and complicated.
As cryptocurrencies and blockchain technologies travel along the hype curve, between the initial trigger and mass adoption, can things stay the same or does something have to change?
Is Bitcoin dead or just waiting for a catalyst?
When an authority figure, like a senior investment advisor from a leading investment bank, appears on TV and confidently tells you the reason why, in hindsight, a market has gone up or down, it’s not easy to ignore their advice. After all, they are the acknowledged authority, and they are supposed to be experts in their field.
With Bitcoin and the leading alt-coins hard down at the end of 2018, some establishment experts are confidently forecasting the future of Bitcoin, but how accurate is their analysis, and do they always get it right?
Crowd behaviour at highs and lows and what the 5% do instead when trading Cryptocurrencies.
As 2018 draws to a close, cryptocurrencies have been routed. But while the prices have been getting hit hard, one behaviour pattern is constant.
If you study the history of speculative markets, from Tulip mania in the 1630s to Bitcoin in 2017, you’ll find one common denominator. FOMO.
What advertising and market bubbles have in common
What advertising and market bubbles have in common
The public hears about a new technology. It’s everywhere. Every time they watch the news, every time they use Youtube, Twitter, or Facebook, everyone seems to be talking about this thing called Bitcoin — and yet they have a problem. They have no idea what it is.
In 1994, George Loewenstein, a behavioural economist at Carnegie Mellon University ran a series of experiments in an attempt to answer this question: What makes people interested?
Comparison of Industries: Automobile vs Cryptocurrency
It’s ten years since the genesis block of Bitcoin was mined. Ten years after the mass-production of motor vehicles started in the 1890s, the majority of new startup companies were manufacturing steam-powered cars. If you could travel back in time and land in the United States in 1906, you wouldn’t find it so easy to figure out which technology would become dominant.
Indicator settings don’t influence trend direction.
The majority of traders and investors use technical indicators to time their trades, yet few take the time to understand the root cause of trending prices. Fewer still understand the strategies used by the 5%, the most consistent group of traders and speculators, as prices move between the lines.
Are cryptocurrencies immune from the Power Law?
In 1906, an Italian economist, Vilfredo Pareto discovered what is now known as the 80:20 rule, when he noticed that 80% of the land in Italy was owned by 20% of the people. The power law is everywhere. 80% of the revenue from Hollywood is made by 20% of the movies. 80% of global internet traffic goes to 20% of the sites. The power law is at work in the cryptocurrency markets too — the only question is which coins will survive?
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