The short term speculator vs the long term strategic investor
I was monitoring a thread on Bitcointalk of one of my long term strategic investments (Enigma) and I found this gem:
There are two primary mentalities in this space. The speculator mentality comes from people who in some cases just entered into the blockchain and crypto space. These individuals typically are only thinking about making quick gains and do not care about the outcome of any project. In some cases these individuals just want to make money and while nothing is wrong with making money off crypto there is at least in my opinion a bigger picture. The dialog between these two investors led me to think about what exactly my value is and now it is a lot more clear.
As a strategic medium to long term investors who is "all in" on crypto it is about the overall vision of what crypto technology can do to improve my life and the lives of others. This could be due to improvements made to information security, or better defense of human rights, or elevating people out of financial ruin, all of these outcomes are part of what makes it worth it. I realize that certain projects are not going to produce results over night because they are very ambitious. In addition, having been in the blockchain space since 2013 and involved with "political cryptography" since 2000-2001, it is due to my unique background that I can appreciate the utility these technologies can provide.
Long term holders in a project who have strategic intentions are likely to think in years. For instance a strategic intention could be to acquire a significant stake in the decentralized computational resources area. This would make projects like Enigma, iExec, Tauchain, and anything else which comes after it, an attractive proposition. This is also distinct because during the late 90s Dot Com bubble most peope involved in that did not see the big picture. If they saw where things could go then they would have bought Google stock at IPO, they would have bought Redhat stock at IPO, they would have bought up useful domain names, etc. Here we are again where it is a gold rush scenario and there are so many potential long term investments which can only gain in value over time which get passed over for the technical analysis of day trading for daily profit.
Daily profit is passive income. Passive income is necessary to live and pay bills for people who are truly "all in" on crypto. At the same time the long term component is about projects, about gathering resources, and about what you can build with those resources. For instance, if you do have enough computation resources then you can rent it out and get passive income of much greater size than from trading bots alone. At the same time funding the development of Golem, iExec, Enigma, all help to solve long term research problems in information security which produce true progress. So the difference here is that short term speculation is profit by any means while long term strategic investing is profit from progress.
In the current environment most will end up doing a little bit of both. So the point is not to diminish short term speculating or day trading. The point is that if the only thing a person does is day trade and they do not contribute a line of code, or a good idea, or help build a community, or invest in any "moon shot" projects, which solve big problems like scalability, privacy, AI, information security, etc, then they are not building upon the foundations which can lead to the next crypto-revolution.
So the conclusion is that part of the value I offer as an investor is to fund a vision. The vision is something I've laid out in previous posts involving a decentralized exocortex, AI, etc. This greater vision is based around using technology to improve human decision making, and to promote increased security, freedom, and happiness. Security could be seen as having smart contracts which don't fail and or which recover when they do. Security can mean privacy, as in having the least amount of human access necessary to the data being analyzed. Freedom can mean not having to have your actions restricted if you are not harming yourself and or others. Freedom can also mean not having to drudge at a day job which you hate and being able to set your own hours, be your own boss, get more of your own time to enjoy your life with those you choose to associate with. And above all, happiness is critical because that is the whole point of utilitarianism and after you have security and freedom, it's about having fun.
These are examples of why these technologies should be invented, and what they can do for the world. In my own case I did not arrive at my vision and ideas based on thinking about what it could do for the world. I arrived at these conclusions from a selfish perspective of thinking about what blockchain, cryptography, AI, could do for me personally. It is often that people for entirely selfish reasons will invest in and fund technologies which can uplift many others. It is for this reason that it is important just as a self reminder, to think about what these technologies can do for you, how they can further your interests, and if it can help you as an individual there likely are a million other individuals similar to you who would benefit from the same fundamental breakthrough.
None of this post represents investment advice. The purpose of this post was to explore my own inner reasons for why I find long term potential utility from these technologies. The utility question is something which can only be answered individually, and as different individuals have different needs, level of expertise, etc, they will find more or less utility from different kinds of solutions. If you are one of the people who can see the long term potential of the research going on in crypto, as well as the very likely issues individuals will be facing such as technological unemployment, climate change, or just poor decision making (immorality), then you can see how some of these advances can gently solve many of the problems which people today seem to use the political tools or tools of force to solve. Any time a solution is offered to a global problem by technical means, there is likely to be resistance at first. The technical solutions which are global, decentralized, yet effective at solving certain problems, will eventually become increasingly adopted.
A decentralized solution is still a solution. It does not matter who invented it or who in the world came up with the original idea. It does not matter (at least to me) if people get rich from it, as people get rich from very bad ideas all the time. What does matter is do these new tools we create to solve the old problem work better than the old tools we were using previously? If you intend to use the blockchain the effectiveness becomes an important measure more than mere "profit taking" or "market cap", and by effectiveness I mean does the app, smart contract, concept, provide enough utility to be worth the risk?