I bought my first cryptoasset—Ethereum—in early 2017. I’d like to say I did all kinds of research and weighed the pros and cons to make a well-informed decision, but I didn’t. People I respect in the gambling community had been talking about it a lot, so I just bought some. I honestly could have just as easily waited months, but I had time one day and got in.
Check out the evolution of Ethereum’s price over the past 14 months:
Jan. 1: $8.24
Feb. 1: $10.62
March 1: $16.80
April 1: $50.85
May 1: $76.92
June 1: $225.80
Today (Feb. 21): $874.00
If you bought $10,000 worth of ETH on Jan. 1 of last year, it would have been worth $274,000 by June 1 and $1.06M today. I don’t think even the most bullish investors saw that type of return on the horizon, and so the difference in ROI you would have seen from a decision to buy ETH on Jan. 1 as opposed to waiting a few months was mostly a matter of luck. Well, at least that’s the case for me. Put another way: If you had told me on March 1 that I could either invest $10K into ETH or not be allowed to do it for a month and just be handed $10K, I obviously would have taken the free money (which would have turned out to be less than ETH gains during that time).
That isn’t to say that I or anyone else who got into crypto “early” got completely lucky. (I put early in quotes because I wasn’t truly early, or I probably wouldn’t be writing this in bed sitting next to a week-old bowl of soup and empty bags of Jack Link’s and Lay’s Sour Cream & Onion chips.) Just that there’s lots of luck involved in every aspect of life, and certainly in complex markets.
It would be foolish to minimize the role of variance in the buying/selling/trading of cryptoassets in the same way it’s foolish to minimize the role of variance in sports outcomes. We can make educated guesses, but failing to recognize the inherent uncertainty and randomness in any facet of investing leads to overconfidence — a trait I believe is the single most detrimental component to sharp decision-making.
In fact, I believe the best paths to making money often involve admitting uncertainty and exploiting others’ overconfidence. Playing DFS can teach you how to embrace randomness and exploit others’ black-and-white, overconfident views of the world, which is one way in which DFS players (and sports bettors) are already equipped with a trait that can lead to success trading cryptocurrencies.
Here are some others.