One of the first clients for my web company, early 2000s, was a Greek who started a private clinic in Bucharest. It was very early for this type of services and being first paid off for him, he got to sell his network of clinics pretty well, 15 years later. As we worked together for his web identity, we became friends and, one day, he confessed why he started this business here, in Romania.
"You know, I've been a stock broker for 8 years in Greece. Then, one morning, a cab driver started to talk to me about investing. About putting money in the stock market. When I heard him, I knew it's time to get out. Too crowded. And that's how I decided to invest in a small country, in a very narrow niche."
If Everybody Talks About Something, Is This A Bubble Sign?
For years, the wide dissemination of a specific type of information served as a symptom of its imminent crash. The more people know about something, the sooner that something will come to its demise.
It went the same with the "dot com bubble": back then, people will be thrilled about everything that had a ".com" in its name, just as today people are FOMO-ing on every company that changes its name by adding "Blockchain" to it.
But is this a sign of an imminent bubble of the blockchain technology? Is this a sign of a market crash?
To be honest, I used to answer "yes" to those questions. But not anymore. Now I usually answer with "maybe".
Why?
Because the paradigm changed significantly. We're not living in the same context we used to live 30 years ago, when the dot com bubble formed and popped.
What changed?
1. Access To Investment Vehicles
With the proliferation of exchanges, it's becoming easier and easier to move your money in and around digital assets. 30 years ago, investing into a startup was a time consuming and most of the time difficult process, reserved to a few. But now you can buy insane amounts of digital assets in seconds. Most of these assets aren't yet proven by the markets and they are merely promises, but so were those early startups. Probably 10% of the traded tokens today have a use case, a community and an ecosystem (hint: STEEM is one of them).
2. Information Travels Faster Than Ever
Back during the dot com bubble, we were reading about fancy startups on printed magazines, or we were watching news on TV. Both processes - time consuming, again. Now we read about a new token in 3 minutes, probably on our mobile phones, we read the white paper in half an hour and we make the investment in 1 minute. So, in less than an hour - the length of a traditional reportage in the TV golden era - we already informed ourselves, made a decision and acted upon it. This speed doesn't ensure we can't make mistakes, and truth is many of the top 10 coins right now are mistakes, but because things can move so fast, we can correct faster. That means the potential losses are way, way smaller than in the dot com bubble (but most likely inevitable).
3. Assets Are Thinner
Back in the dot com bubble, you would have to fill in a term sheet in order to get a slice of the company shares, a process conducted by a lawyer and validated by a notary. Then you would get a stack of papers stating that you own something in that company. But today, with the tokenization of pretty much everything, assets are way "thinner" than that. Which means you can manage them faster and easier. That lowers the cost of ownership of an asset to almost zero, making it easier to hold. Surprisingly, that makes the lifetime of an asset longer, a situation often translated in crypto lingo by the famous: HODL. From an administrative point of view, it's way easier to hold on to your assets now, so the challenge is mostly psychological.
So, although we do live very enthusiastic times, and exaggerations are popping up every day -or every hour - I do think the old saying about taxi drivers talking about blockchain should not be a reason to get out of the market.
On the contrary: the more taxi drivers get in, the higher the liquidity.
I'm a serial entrepreneur, blogger and ultrarunner. You can find me mainly on my blog at Dragos Roua where I write about productivity, business, relationships and running. Here on Steemit you may stay updated by following me @dragosroua.
https://steemit.com/~witnesses
If you're new to Steemit, you may find these articles relevant (that's also part of my witness activity to support new members of the platform):
I have always been skeptical of buy and hold. Historically, buy and hold has destroyed more wealth than any short term trading or investing strategy and most of such buy and hold losses occur during market crashes.
But in the last few weeks while I have slowly started to get myself acquainted with crypto, hodl seems to be the almost universal strategy. It's easy to see why that is so - with never seen before volatility and growth in crypto prices, it's very difficult to create short term trading strategies while it's much easier to buy and hold in a bull market such as this.
Word of caution is that all of this may come crashing down with only a few tokens and coins surviving that fall. On the other hand, all my skepticism may prove unnecessary and this may just be the beginning of a multi year bull run with institutional money slowly moving to this new asset class.
We will have to wait and see.
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That’s when you start talking about HASHGRAPH???! I dunno
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I doubt it's a real alternative to blockchain from a technical standpoint.
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Cliff High said something very similar..ain’t gonna work
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I hadn't heard that cab drivers were market indicators before... definitely adding this to my predictive arsenal! :P
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Sell in the short term then buy and hold for the long term.
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This is eye-opening @dragosroua! Made me pause and think. Thank you. Voted u as witness.
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Thank you for this interesting article. I guess the biggest problem is that people instead are often driven emotional.
If let‘s say bitcoin decreases dramatically one day, rationally seen this won‘t affect any other cryptocurreny but because people are reading and watching this hysteric, crappy news a lot of people will act in this hysterical way.
I agree with you, the challenge is psychological. But as markt prices depend on supply and demand from a lot of market players, having a low percentage of rational thinking people won’t help them to keep their investment stable.
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So far, no cab driver has mentioned it yet! But, I'll let my wife read about it. This will help us come to decide what to do with our first earnings here. I've always had debates lately about this topic - about how they consider what we have now as bubble. I don't know but it's truly far from the biggest bubble of all time, the tulip mania.
I suppose we just have to be a little attentive to it.
As always, thanks for sharing! It was enlightening!
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True! Your vision dedicate your outcome.
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i like that point "the more taxi drivers get in, the higher the liquidity." let them get in too
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The Idea behind this is the concept of smart money and Dumb money on the market.
The "taxi driver" is the Dumb money, the mass of people that heard that buys stocks/cryptos is easy money and everyone Will be rich.
What happens is that this huge amount of money drives the price up quickly, but these people have no Idea what they are buying, and what make the market movements. And they dont Care about this information, only that someone told him that he is going to get rich quickly. And they buy the asset at a high price.
The smart money know How this Works, and when It sees this, there is a huge profit taking, wich causes a bid drop in price. The Dumb money panics, start to sell more and the market drops even more.
This Will also happen with cryptos eventually.
That doesnt mean that cryptos Will disappear, but It Will be the time to learn wich are the solid project, that Will actually have value in the Future.
Thing is, the crash Will come some day, but when and How big is something kind of Impossible to know for sure, since this is a totally New tech.
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If Your Cab Driver Starts Talking About Bitcoin, It's Time To Sell
Who can afford cabs? Last taxi I was in was thirty or forty years ago in New Jersey. Scared me to death...cost me an arm and a leg....and I swore.."never again."
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i have heard three stories till now that cab drivers are starting to talk about cryptos is it a coincidence or just strange things happening
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reality.... i like it
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we read the white paper in half an hour - well, I am really not that fast :))
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bring the whole uber into the market
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i think i need to take classes from them about market haha
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If it is a bubble when it pops not many people I think will get hurt financially. Like you said a lot of these coins were originally worth nothing so holding long to many early adopters will likely not hurt them financially. If I had to guess we are near some sort of draw down point similar to when bitcoin went from 800 to 200 a couple years back. There needs to be consolidation and lack of liquidity is present because we blasted pretty fast to 800 billion total market cap. Nothing goes up in a straight line, but long term I am a believer in crypto. Thanks.
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I think if we where talking about some hot new stock or some traditional investment, I would say if you cab driver is talking about it then it is time to sell. The think is that cryptocurencies are a totally new animal that does not play by the old rules. @dragosroua
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Is this apply on steemit too?
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resteem this important post
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This post is very important....I love it
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