There are three components of the cryptocurrency world that I want to try and separate out here a bit today.
1 – The obvious scam
2 – The false prophet (the coin that promises the world but is actually useless)
3 – The actual innovation
It’s hard for a newcomer to be able to separate these three things when they’re first learning about crypto, and it’s part of why crypto is so confusing to a lot of people. Is it just a big scam, or is there something actually meaningful here? The reality is that it’s both, but unfortunately for newbies, it’s very hard to know what is legitimate and what isn’t – separating the real from the fake.
We all see people supposedly making a lot of money on crypto, and we want to be a part of it. Most of us know that Doge is not going to change the world. When Dave Portnoy from Barstool talked about the coin Safemoon the other day, he even said “if it is a Ponzi, get in on the ground floor.” This mindset is what most people think of the cryptocurrency space, and they’re not wrong for feeling that way.
Many people can understand that Doge and Safemoon are get-rich-quick schemes, while Bitcoin might be something more, but the hard part lies in the middle. In cryptocurrency, many useless, scammy coins hide behind the claim that they are an innovative technology.
These false promises are what makes cryptocurrency so hard for people to follow. Everyone acts like their coin is some groundbreaking project, but it’s overwhelmingly not true. 80% of the cryptocurrencies in the top 200 are closer to scams than any actual evolution in technology.
Such a small percent of the cryptocurrencies out there represent anything meaningful. And there is a real shortage of good information out there. Seriously.
How can I possibly explain to someone new to crypto that coins #5,6 and 7 on Coin Gecko are useless while #12 might genuinely represent an advancement in financial technology? I can’t.
There is truly no way for me to explain it, and crucially, there is no resource I can point you to to understand for yourself. You simply cannot just jump into crypto and be able to discern truth from BS. It might be easy for people to realize that Doge is just a meme. It’s a lot harder for me to explain why Cardano or Stellar are almost just as bad.
The thing is – there are aspects of cryptocurrency and decentralized tech that will change the future of finance. We will have ‘self-driving banks’ with no ATMs, employees, or buildings. Instead of getting paid every two weeks, we’ll be able to get paid for our work by the second. The democratization of access to financial tools, particularly in countries where populations often don’t have bank accounts (but do have mobile phones!), will be genuinely impactful to billions of people in the coming decade. This is where money is heading, and it’s led by Bitcoin and a tiny percent of other crypto projects.
This difficulty discerning the real from the fake in the crypto world, especially when so much more is fake than real, is why I would mostly recommend not wading into the larger crypto space. Newcomers simply aren’t capable of dealing with the mass amount of false information out there. Just stick with Bitcoin (and maybe some ETH, though I have a few problems with it), start learning more about how it works and why it’s important, and you’ll do just fine. I promise that you didn’t miss the boat.