Crypto enthusiasts and crypto investors are two different things

Are you in crypto to learn the technology? I don’t know how you would answer, but if you ask me, I would say, “I definitely am”.

Personally, I am naturally curious and addicted to learning. This is true for anything. From the German language to Azerbaijani cuisine. When something interests me, I can become quite obsessed. So when I saw how endlessly complex and interesting the world of cryptocurrency was, it was like a kid in a toy store.

In the past, I learned things without a specific goal in mind, or if I did, I just went with the flow. (Like I learned photo editing in order to become an Instagram influencer, but then I got bored). Nothing is as "about money" as it is with crypto now, as it was in the past. Crypto is not just fun to learn, it's a crazy investment. My goal is to get rich with it just like any other investment. Crypto has unlimited potential to get rich, it's incredible.

Maybe some of you are facing the same dilemma. Should cryptocurrency be regarded as an asset? Or simply as a new branch of technology? Cryptocurrency needs to be treated from a dialectical perspective.

Switching between the two modes

Obviously, you need two brains when dealing with cryptocurrencies. An investor’s brain, and a researcher’s brain. If your brain is framed in a single state, you are likely to fall into the trap of crypto technical analysis and forget to pay attention to market dynamics, which will lead to your positions being liquidated.

When you know too much about a subject, it becomes difficult to make any concrete decisions. There comes a time when you wish you were a little more ignorant. There is a reason why so-called smart people are not impressed by Doge, SHIB, or BAYC. Dealing with the cryptocurrency industry, you have to know how to switch your brain between the tech enthusiast and the investor. You need to turn off one when one is active, or even run both simultaneously but separately.

Great technology does not equal great investment

This is true not only for cryptocurrencies, but also for many things in life. Android vs iOS, Google Plus vs Facebook, Snap vs TikTok. Great technology is not the only thing to invest in. It is just one of many factors. Sometimes, the technology doesn't even need to be groundbreaking, it just needs to be life-changing enough. In cryptocurrencies, you would say that narrative is more important. This is true but not absolute. There are many factors that can make a cryptocurrency project a hot investment. Right timing, attractive story, technology, big VC endorsement, community. For example, it is pure luck that Elon Musk likes your coin.

This paradox often frustrates technology purists, as sometimes good projects may not get the recognition they deserve.

This is where you get emotional. And we all know that when it comes to investing, being emotional is a recipe for disaster.

Treat it like your life

Take a deep breath. The thing about crypto is that sometimes we shouldn’t take it too seriously. Let things flow and rise and fall with the tide. Only when you let go will you feel liberated.

When you get too hung up on how things are going to play out, you lose all the fun of research. It’s important to remember the experimental nature of the cryptocurrency ecosystem, and people are still figuring things out. We need to see new projects, and if you think those memecoins or ponzicoins aren’t worth the valuations, there’s a good chance they will be corrected by the market. Again, this is something you can never predict, and you shouldn’t try to predict.

Being a perfectionist can be a recipe for burnout as you try to find your worth in a nascent industry.

Markets and industries are two different things

The market and the industry don’t see things the same way. Often, prices lag behind technology, or some technologies may be overvalued. Another thing we need to accept is that even the best technology may never be accepted by the mainstream.

You have to think like an entrepreneur, not like a scientist. You see a token and you are fascinated by its technology. How do you decide whether to invest in it? If technology is not everything, then what is?

A while ago, a tweet from SBF (CEO of FTX ) kind of triggered me. There were some facts in his statement that I didn't like. He posted something along the lines of: He thinks cross-chain bridges might be technically cool, but that doesn't necessarily mean they'll be profitable. As someone who's a bit emotional about the crypto infrastructure space, I don't like hearing that. But he's right. That's where you need to put down your technical analyst side and become more of a hard-boiled businessman.

Evaluating a project requires you to look beyond the technical perspective. There are many factors to consider, as each one can make or break a project.

Put yourself in your users’ shoes

When evaluating users, you can’t just consider a certain type of user. I believe many people make this mistake. That’s why some people can’t understand why Luna, until a while ago, was still in a bullish uptrend despite the general market downturn, and why Binance Smart Chain is now outperforming even BTC and ETH, despite maxis’ frustrations about its non-decentralization or shitcoinery.

Some questions about users

Why do users love it? It is almost a universal consensus that low fees are the first choice. Fast transactions are the second. For some hardcore blockchain enthusiasts, this may be difficult to witness, but for most users, decentralization does not matter, at least to a certain extent. As long as it is decentralized enough, people will still use it.

What are the users like? You have to consider users from different backgrounds. Culture, economy, preferences, what are their goals, etc. For example, imagine you are a person living in Turkey right now. How would you invest in cryptocurrencies?

How low is the gas fee? This is another common mistake people make when evaluating users. Again, we need to take into account the context. Where you live, there may be no difference between a $5 and $1 transaction fee, but I can bet that in many parts of the world, even the difference between $1 and $0.30 is quite large.

How easy is it to get started? What is the user experience like? The reason why I still don’t believe in Layer 2 Ethereum or Cosmos ecosystems is that using them is far from simple. Many cryptocurrency projects don’t seem to adopt the same design principles as traditional technology in designing applications. This principle is to always assume that users are stupid and lazy.

Selecting good underlying assets

In a bull market where everything is rising, a project’s business model doesn’t seem to matter. But when facing a bear market like the one we are facing now, the project’s business model and its sustainability become very important.

There are some questions we need to think about:

• What problem is this project going to solve? How big is this problem and how important is it?

• How does the project make money?

• How much revenue does the project generate? Is it profitable?

• What are the token economics of the project?

• Does the project share profits among participants?

• Is the business model sustainable?

• How professional is the team?

• What is the financial situation like? Do they have enough funds to sustain themselves in a bear market?

• What is their market share? Who are their competitors?

• How well does the product fit the market? What scale can it achieve?

• What story does the project tell? Is it attractive enough?

To answer some of these questions, it is not enough to just have knowledge from blockchain books. Just like when evaluating users, you need to have empathy and put yourself in other people's shoes. To understand users, market psychology, communities, cryptocurrency culture, trends, you need to understand humans themselves - human nature. These factors are very important in determining how profitable a project is, but at the same time, they are difficult to quantify. For people who like math and are good at analyzing based on facts, these humanistic thoughts seem a bit nonsensical.

Abandoning a data-driven approach

I’m not saying to ignore statistics or on-chain data completely, but to take it easy. Billions of TVL can disappear overnight, large BTC exchange outflows don’t always mean whales are buying, and even good data needs to be analyzed in an accurate way. The highest outflows of BTC from exchanges tend to occur at the top. That’s when confidence is high and people are moving BTC to their wallets.

Cryptocurrency data, are lagging indicators. The best they can do is tell you what is happening right now. Even then, the data can be interpreted in many ways. They rarely predict the future. They might give you an insight into a trend, but can often be easily proven wrong. The volatile nature of the cryptocurrency industry is why. Things are too volatile for people to gather insightful data, and there are too many voices in the space that muddy the waters.

Likewise, transaction volume or user growth may not take into account the number of bots in the statistics and the number of Sybil attacks.

Now that you understand the two ways your brain works, it's important to know how to switch between the two. Sometimes I think it would be better for me if I was just in it for the money, at least there would be no bias that would prevent me from making some meaningless decisions. You must have a great passion for technology, at least a spirit of exploration. This can quickly get you into the field of crypto. But often you also have to consider that investing is never an exact science, and sometimes you need to quickly switch from a technology enthusiast to an investor's perspective.

In short, we need to get a little dumber, use our emotional intelligence more than our IQ, enjoy this unique journey, and embrace crypto.