Could Ignorance be the source of value for Bitcoin? — a draft I never published.
TLDR; The more I understand cryptocurrencies and finance, the more I distrust the value of Bitcoin and the more I believe its value is backed by the steady flow of ignorance driven by light analysis and lack of understanding.
I was introduced to cryptocurrencies by a team of local blockchain developers who were working on their own coin back in 2017. Back then, their coin seemed to me like just another idea for another cryptocurrency, same business ideas with slight changes here and there I thought.
I invested around $350 real money back then, and by March 2018, I had around $2000 in crypto, in different exchanges, and diversified most of it, and didn’t buy Bitcoin, instead, I bought a lot of different coins mostly based on the potential but highly distrusting the idea that they could all succeed long term. 2 of them did increase and I was able to recover my initial investment and some earnings, but far from the $2000 I once had. I moved this money into real stock as soon as I found a way to sell it for real USD again.
Nowadays, I have again researched all the old coins + some of the new ones, and I started to notice some patterns:
1- There are even more coins nowadays, proposing countless use cases and countless micro-improvements on the same underlying technology, each one claiming to be the same “next widely adopted and more convenient than the rest, payment method or smart contract tech”.
Is it normal to see a market cap of 2 trillion USD competing for the same segment, that today is still dominated by few digital payment methods?
Back in 2018, I could not buy BTC with any of my cards, I had to buy it from people who would send me ETH to my ETH wallet, via bank transfer, and it was hard to find. I was convinced by a friend who now had several thousand dollars because he bought ETH when it was $18..
In 2021, I was able to SWIFT fiat from the exchange to my bank account, but most people are still asking in FB groups where to buy BTC, and others are trying to sell it in person. I know a few friends who made great earnings again, mostly with ICOs, and some others who closed positions when BTC was down and LOST their money. I know people who lost $4000 and people who made up to $150K. They all struggled to get fiat for their coins.
The hedge funds were late in 2021 and when they arrived, BTC price soared after a couple of news in the media. Tesla poured $1B, they had to buy BTC starting at the market price and going up till whatever price someone decided a BTC would be. Some people who created orders thinking it would cost $30K, Tesla bought it, some said $35K, so Tesla bought that one as well.
When people saw the price going up like that, people went in and poured even more money in, making the price go even higher than what the max purchase price was for Tesla. After all, why would Tesla buy if it is not going up higher than their max purchase price, right? They would not buy if they would think it would go down right after that, right?
Tesla knows the price will never go lower than what they paid for unless they sell. And there will never exist more than X amount of those coins, so that cannot be changed. They control all that price segment, and as more BTCs are burned, the more control they gain. For Tesla, and the first Institutional Investors, it is now a game of Holding until the price goes up, and then they can safely sell. No one buys their original price until the price falls backs down, everyone is guaranteed to buy on top of it unless they sell below it.
Where is all this money coming from if Institutional Investors are arriving late to the party?
If I spend a couple of nights creating an ETH contract + Website with a whitepaper, and then register and ICO, and tell people: Pssst, I have info about this new ICO, you can buy $100, and you are locked 3 months, after that, you may sell, but if you sell, 10% is given to the other holders. And then you also start buying those coins with your own seed money, every time more expensive than the other, bidding against your partner, then the price of the coin will inevitably go up in the blockchain and it is legit and looks legit, but the great majority of people will never go check the number or size of those transactions, they only see the price and they bite.
E.g. CRC Coin. A coin that is advertised as the most important blockchain movement in Costa Rica and with a price that fluctuates and only exchanged in Uniswap.
People would go and ask in FB where they can get it, and they invest $20, and $30..around 8 of those transactions in a year made the price show always the last transaction price. One guy was selling 1500 in $150, but the price in the contract said it was $6 per coin. It seemed like a super deal, but once you get them, you are lucky if you can sell them to someone about to become your ex-friend. Pretty much a PONZI.
Is it possible that the Institutional Financial Institutions and investors were actually late in their own game?
It is not the same to have 1M citizens buying $100 each as a risky investment and literally HOPING or BELIEVING it will go up and more mainstream as a payment method or a better alternative to store value than gold. Do you think all the people investing in BTC have done research with due diligence? Normally, people go to a financial institution to avoid the hassle of having to research real-world business and real-world IPOs.
The majority of individuals holding Bitcoin are agnostic to the underlying technology and lack financial education. They also are not willing to spend too much time reading and they see BTC as an easy way to make easy money.
Did Wallstreet not make its homework?
They pretend it is good storage of value, like gold, and put 1–5% on it, because they trust there will be “demand”. Do you think they didn’t have access to highly skilled technical advisors and that they don't know it is worthless unless they decide it is not?
Every single cryptocurrency price analysis says exactly the same data since the launching of that coin:
“If the bulls bla bla the price could go as high as Y, or retrace to the previous support point.. bla bla.. “
“Any coin price surged or soared after X celebrity or X company mentioned it.. “
If Tesla bought the majority of BTCs until it doubled its price, from $20k to $40k, they knew 2 things:
A- If people sold to profit, they would still have the same basis they had when they started buying ($20k), from there, they just needed to hold and wait until it went up to their previous lower purchase point + their volume, and then they could sell their coins in parts.
B- Elon knew all he had to do was tweet about that and everyone would follow, not companies, people driven by sentiment. They knew it will support the price level unless they sell because they are one of the largest whales and largest influencers.
Do you notice how it is a popularity game more than a real technological race?
Why has no one important or relevant, said anything about this?
What would happen is someone important that sees the problem, goes public stating that he knows the Smart and Rich are consciously about to deploy another arm to take the money from the ignorant and poor majority, and that they are putting in billions of USD, that are actually small even tiny amounts of their total net worths, just because they can really trust there are enough ignorant people willing to put money into worthless stuff just because they see everyone else doing the same?
People would hate him and deny they ignore what a BTC is, and claim he doesn't or that I don’t.
