(Disclaimer: All opinions expressed in this article belong to the author only)
In 2021, according to a MagnifyMoney survey, 60% of young investors (under 40) turned to social media for investment advice. YouTube now looks like the new CNBC, Reddit’s WallStreetBets, Bloomberg.
This is natural. After all, if you read about Dogecoin making millionaires overnight, it’s hard to see the appeal of index funds.
I clearly remember the Finance 101 lecture (the last lecture of the semester), where Professor’s golden advice was to invest in the S & P 500.
He explained how saving a small portion of your income can help you retire as a millionaire by the age of 65. So I have been working for many years.
At the age of 20, in an era of pandemics and so-called “mass layoffs,” 9 to 5 jobs aren’t very attractive.
We call it lack of foresight or simple old naivety, but even the slightest hint of shortcuts feels worth investigating.
Cryptocurrencies and NFTs seem to offer this shortcut. In the way they are portrayed throughout social media, there is a fountain of wealth called blockchain, which you would think is giving away free money.
In addition to that, the fountain very Easy to access. Cryptographic accounts can be opened within a few hours and there are plenty of opportunities to invest your money with it.
Go to the moon
Last year, the best performing stocks on the S & P 500 increased in value by almost 200%.
In the same time frame, five of the top 10 cryptocurrencies (by market capitalization) outperformed it. The highest winner, Binance Coin, recorded an increase of over 1,200%.
Interestingly, such benefits are normalized across the crypto and NFT communities.In fact, for NFT projects Do not Shortly after launch, you’ll notice that its value doubles and some community members call it a scam.
The entire NFT Discord Group has community members who have taken the first step towards personal finance. Many of them are rarely high school students, but spend hours trading and guessing about the value of tokenized .jpegs.
Their idea of ”investment” is shaped by the existence of extreme volatility. That is, either increase your funds immediately or incur a loss and try again.
Despite the emergence of utilities in NFT spaces, from games to virtual real estate, trading charts show that resellers make up a significant portion of the value traded.
With new projects starting every day, there is plenty of room for speculation and active involvement.There is more to do do In this area, as opposed to investing in an index fund and forgetting it for 30 years.
The power of the community
A common way to look at stocks is to look at the underlying company’s fundamentals (source of earnings, historical earnings, and key controls).
For crypto and NFT projects, this is not always possible and not always required. For many, the idea of ”doing your own research” comes down to joining the Discord group and asking “Is this project a rug puller?”
In many cases, the founder is anonymous and can pass a .pdf document filled with buzzwords as a roadmap. The only aspect that can be reliably monitored is the strength of the community.
When 100 people tweet about: Boring Ape Yacht ClubIt will buy an additional 100 (FOMO) simply because it can be missed.
This is even more pronounced with meme coins, which literally promise zero utility. You agree with the hope that the community will come together and make the coin viral. In many cases it does not happen.
Still, there are still many people who are willing to guess. why?
In my opinion, realizing profits from NFT projects or cryptocurrencies can often be far more satisfying than traditional investments.
Holders play an active role in driving the success of these projects. They lead Twitter’s “raid” and play a marketing and community management role that keeps spammers away. These actions can have a direct impact on price fluctuations.
For new (and impatient) investors, the idea of control is very promising. Beyond the dream of making quick money, the crypto community provides you with voice and a sense of belonging.
Loss normalization
These same communities also act as support groups when time is tight. It’s hard to lose money on a scam, but talking about it with the other 12 people can help make it better.
Losing money is neither spectacular nor a reason to make a safer investment decision. Rather, it’s part of the game. In forums, users often share screenshots and make jokes about the losses they have made.
This phenomenon can actually be traced back to WallStreetBetssubreddit’s option trader. Often there are posts that introduce a portfolio that has crashed and burned. Some of these have over 100,000 votes in favor.
Votes in favor cannot replace the lost thousands of dollars, but perhaps they help relieve pain in their own weird ways.
Not surprisingly, loss sharing has become a popular pastime among the crypto community. There is some catharsis in scrolling portfolio screenshots, all of which ends in a sudden drop.
Anyone who has been in space for long enough has experienced fraud and rug pulling, and after experiencing it, it helps to know that it is not just you.
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Featured Image Credits: Grandparents | iStock Editorial | Getty Images
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