Technology can exist for a while before a mass consumer use is found for it.
Each week we’ll be discussing potential triggers for the mass adoption of blockchain technology.
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?
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