1 APRIL 2022


Minimum financial literacy, up-only and do-your-own-research

One of the really encouraging aspects of the rise of cryptocurrency into popular culture is its role as a forcing function that promotes financial literary. In order for one to participate in the space, let alone to win, it is necessary to have a basic level of financial literacy.

I suppose this aspect of education would be similar to other forms of financial investments, but nobody excitedly talks about buying into traditional low cost index funds as much as when the next <insert-animal-here> coin is being dropped.

Does this hype necessarily lead to negative consequences only? I hope not.

In my own journey, coming from a background that is deeply lacking in finance and economics, the desire to learn more about crypto has forced me to learn and educate myself on these fundamental dynamics of money — the sequence in this is important. Motivation first, tools and techniques second.

‘Up only’

This is a prolific saying within crypto communities and it has to do with the historical price performance to-date. Looking at the Bitcoin chart specifically, it is not difficult to see how this comes about:


But the saying is much more a satirical statement than a reflection of what the reality was actually like. From the macro perspective, sure, the price has generally been increasing over time but this makes it a little too easy to disregard the stomach-lurching dips.

The Bitcoin (BTC) network was launched in 2009 by Satoshi Nakamato, the successor to previous iterations of Chaumian eCash, Hashcash, b-money and BitGold that were developed in the 90s to early 2000s.

Where we are today has been a long time in the making, and it was not always ‘up only’. It is easy to look back with hindsight at the price performance of Bitcoin to date and come to the conclusion that it would have been a no-brainer to ‘HODL’, but what would you have done when an asset you hold appreciates 10x, 100x or even 1000x? These are near unfathomable, potentially life-changing rates of return. Imagine experiencing the price escalation from $50 to $500, to $5000, to $50,000.

If I were in that position, I would almost certainly have sold early to capture the upside. Bitcoin, in those early years, was also an unvetted technology, nobody had any reasonable way to know whether the technology would withstand the tests of time — look at the chart figures leading up to 2017. There were those hardcore minority players who held high conviction and stuck through all the stomach-lurching dips and years of inactive, sideways price action, sure, but there was still never a guarantee that it was ever going to make it.

Having said that, a large part of why crypto now exists in everyday coffeeshop conversations is not so much the novelty of the underlying technology but rather the ‘price go up’ visibility and excitement. On top of this, an ‘open door’ participation policy also exists. Anyone with sufficient conviction and resources can choose to opt-in and participate in the Bitcoin network by acquiring an amount of BTC — ever since the earliest days this was true.

Anyone with a sufficiently powerful graphics card could choose to trade electricity costs for BTC, or trade-in cash for coin via (dodgy) exchange markets. It is almost possible to think of BTC as a technology ‘company’ that anyone could opt in and own a part of, except there is no centralised ‘company’ or management team or employees. It operates on the blockchain through the internet in a completely trust-minimised fashion.

As a consequence of open door participation and the ‘up only’ mentality, there have emerged players who identify themselves as Bitcoin maximalists, who preach the philosophies of BTC (sound money, sovereign ownership of wealth, low time preference and much more) to their audiences.

‘Fix the money, fix the world.’

And the louder they preach, the more likely they will reach new audiences and bring more participants to join into the network of which they themselves already have skin in the game in.

Do Your Own Research

Cryptocurrencies, non-fungible tokens (NFTs), decentralised finance (DeFi) and decentralised autonomous organisations (DAOs)— all of the above are domains that are early-stage and under development.

As part of venturing into uncharted territory comes alongside the necessary exposure to a greater surface area of risk.

‘Do your own research’ (DYOR) is another colloquial term that has come about from the crypto communities. The philosophy of DYOR is to push responsibility of any activities taken within these spaces down towards the individual, which is not really an unexpected surprise from a culture that was born from beliefs in sovereign wealth ownership and decentralised states.

Not everyone should, or have to be, personally involved in picking their own investment options or have self-custody of their assets, but DYOR is also a pointer towards how early and underdeveloped the emerging systems still are. There are no, or perhaps still nascent versions of, intermediary mediums that provide exposure to upside at lower risk (e.g cryptocurrency index funds).

An interesting perspective of risk exposure within underdeveloped arenas is a concept that Nassim Taleb talks about in his book, ‘Antifragility’. For an entity to be considered as ‘antifragile’, it has to be something that improves or becomes stronger as a result of exposure to unexpected, negative events or stressors.

When millions of cryptocurrency get stolen off a centralised exchange or a player mistakenly loses access to the unique seed phrase that grants access to a substantial vault of cryptocurrency assets, these supposedly ‘negative’ events are bad for the individual but good for the cryptocurrency ecosystem as a whole. Bad news tends to spread like wildfire.

Another analogy: let us imagine entrepreneurs as the explorers who venture out to the boundaries of what humanity collectively knows as of today, where they then initiate further expeditions out into the unknown. When young entrepreneurs harness the courage and tenacity to start new businesses and attempt to lift them off the ground, they are making concerted efforts to explore into parts unknown to the rest of us.

If they succeed in their expeditions and bring back the fruits of their journeys back to humanity (in the form of new technology, fresh insights etc), they are deservingly rewarded big time for their willingness to try and the results that they deliver. If the entrepreneur jumps into the fire, but fails, the ecosystem (e.g other entrepreneurs) as a whole learns to stop venturing into that particular neck of the woods at that particular point of time, therefore improving upon its previous state at the cost of that singular individual.

The idea that individual, isolated losses have the potential to bring benefits to the overall system, together with the phenomena of bad news spreading like wildfire, can bring a different perspective on the experience of venturing into unexplored technological domains.

Another thing that I do like about DYOR is the focus on individual agency combined with the aspect of ‘learning by doing’, which come together to form a very potent pathway for accelerated and effective learning.


On my own journey, I’m still learning and trying to make sense of things as I go along. For this week:

Wealth is the fundamental thing. Wealth is stuff we want: food, clothes, houses, cars, gadgets, travel to interesting places, and so on. You can have wealth without having money. If you had a magic machine that could on command make you a car or cook you dinner or do your laundry, or do anything else you wanted, you wouldn’t need money. Whereas if you were in the middle of Antarctica, where there is nothing to buy, it wouldn’t matter how much money you had.

Wealth is what you want, not money. But if wealth is the important thing, why does everyone talk about making money? It is a kind of shorthand: money is a way of moving wealth, and in practice they are usually interchangeable. But they are not the same thing, and unless you plan to get rich by counterfeiting, talking about making money can make it harder to understand how to make money.

Paul Graham

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