People often ask me how I heard about crypto and got into the space as early as I did. Back in 2009, I was doing ethnographic research on game design and community as part of my Undergraduate Anthropology Thesis.
I ended up exploring the concept of virtual currencies from games like World of Warcraft and virtual worlds like Second Life. In these worlds, people were creating exchanges to purchase in-game assets—an early precursor to the explosion of cryptocurrencies over the past few years.
In fact, a lot of early crypto adopters were hacker and gamer types who were working in a peer-to-peer fashion, helping each other learn and explore the concepts.
The more I learned about crypto, the more intrigued I became about blockchain technology. My interest eventually led me to help found Chronicled and begin looking past cryptocurrencies for new uses of blockchain.
Even though my journey in the “industry”—I put this in quotes because frankly, the ethos of decentralization suggests that crypto/blockchain should not be an “industry” but rather ecosystem—started nearly a decade ago, the space is still full of opportunities for people to get involved and begin learning and building. If you choose to do so, there are a few common crypto mistakes that I see people making when they start out in the industry.
For newcomers to crypto, here are the pitfalls you’ll want to sidestep:
1. A tendency to split the industry into factions.
There’s definitely a divide in the crypto space between the bitcoin maximalists and the people who are trying to use blockchain for a host of other concepts.
The tendency to split things into separate groups isn’t unique to the crypto world, but it can be detrimental to a growing industry.
People become attached to different schools of thought, causing them to diverge from their former beliefs—as we’ve seen with bitcoin cash, bitcoin gold, Ethereum Plastic, and other offshoots. Everything becomes politicized, to the point where compromise isn’t possible.
Some have strong feelings about crypto and blockchain technology, but it’s a mistake to become too dogmatic. A blockchain network is not a two-sided marketplace. It contains a multitude of stakeholders with complex incentive schemes. Isolation and rigid adherence to dogma isn’t the best way to go about building new networks and technologies.
The entire industry has to leave the door open to new possibilities and collaborate with people who may not believe exactly what they do.
2. Getting sucked into the communities.
I’ll be quite honest, my Twitter feed is made up mostly of crypto accounts. It’s great because I get to see so many perspectives within the community and interact with people around the world. But it is something of a bubble. To see beyond it, you have to step outside of the sphere of influence.
It’s easy to forget there’s an entire world outside of the crypto community when you’re deeply ingrained in it. Think, most of our parents are only vaguely aware of blockchain, and plenty of people go about their daily lives without thinking about it at all. The technology necessary to make cryptocurrencies viable for daily life is still sorely lacking around much of the globe.
The crypto community can’t stay within the bubble forever. At some point, the two worlds will need to start interacting. Societies are slowly getting there, but many still have a ways to go.
3. Being super focused on daily pricing and individual tokens.
It’s unrealistic to think every single network and every single service will have its own unique currency or token. It’s like every person having their own language. It just doesn’t work.
Initially, every crypto ecosystem thought they needed their own token and tried to raise money through ICOs. The bear market has definitely helped dispel some of that thinking, but people are still making mistakes when it comes to tokens.
For instance, the security token offerings that are becoming popular are often just used as a means to get outside the regulatory burdens of the ICOs.
Some companies take this approach thinking it’s easy money, or that they can raise a lot of cash through this model. But they underestimate the costs associated with the process. You have legal costs, marketing costs, investor relations—taken altogether, the security token offering can easily be a $2 million investment on your part.
4. Looking for the easiest route possible.
It’s unfortunate, but many people still view crypto as a space where they can skip the difficult work associated with success in other industries. They think they can day trade their way to crypto billionaire status, or they believe they’ll be able to pull off an ICO for a business they’ll never execute on.
The problem is that it’s incredibly complicated to build networks. There is no easy way to do it, and I think the rise of utility tokens happened because a lot of people believed tokenomics would be sufficient to align a multi-sided marketplace. As people found out the hard way, tokens are not enough.
Investing your hard-earned money in something that sounds too good to be true can have disastrous results.
In crypto, you have to be smart about recognizing your own underlying biases and assumptions. Reset your expectations and have an open mind, because while there are plenty of pitfalls, this industry can still surprise you in a good way.
When I first got involved, I had no ideas I would start a company—one that still exists—or how hard, exciting, and interesting the industry would really be. Yes, there will be ups and downs, but when you really believe in something you’re doing, the challenges don’t feel quite so big.
No one knows exactly where this is all going, but there’s still plenty of time to come along for the ride.