Until recently, there was no decision or lack of decision in my life that I regretted afterwards. With the rise of Bitcoin, this changed slightly. I nowadays occasionally catch myself thinking that I missed a big opportunity by not purchasing a few Bitcoins early on, when one BTC only cost a few bucks. I am probably not the only one with that sentiment.
I was actually quite close. In 2011 I mentioned Bitcoin in a blogpost for the first time. So at that point I was aware of the crypto currency. However, it took a few more years until I actually made a purchase – for the sole purpose of a text I was about to write about the purchasing procedure. So I only bought 0,1 BTC, which I paid about 50 Euro for. At that point, one BTC was already valued at around 500 Euro / 600 USD. Today, after an unprecedented increase particularly over the past weeks, the Bitcoin price hovers around 4000 USD.
Of course there is little to be gained from having regrets about the past, especially when the issue is about a missed opportunity, as opposed to a really bad decision. Also I am not a very materialistic person, and “being rich” has never been a life goal of mine. Nevertheless, reading articles about people who made an early call to purchase some coins for essentially nothing and nowadays are pretty well off, is fascinating and offers some, in my eyes valuable, lessons.
Hindsight bias, risk aversion and the importance of curiosity
It’s always tempting to fall for the so called hindsight bias, assuming that one could have seen the future rise of Bitcoin’s value already back in 2009 when the first transaction was made by its mysterious inventor(s) known under the pseudonym Satoshi Nakamoto. But in reality no one could have predicted this.
However, I would have wished that my own approach to a new technological phenomenon such as Bitcoin had been a different one, such as: “I don’t think this will in any way become a thing of significance, but it won’t hurt me right now to buy some Bitcoins for little money, and it will be an educative process as well”. Instead I had the emergence of the crypto currency on my radar, but lacked both curiosity and energy to get involved. Additionally, I was probably also subject to loss aversion, which relates to the phenomenon that people are more negatively affected by losing something than they are positively affected by gaining something, which might lead to short-term actions (or inaction). Shelling out “real” money for some virtual currency would have felt like a “loss” at that point. So the lesson for my future self: Be even more curious and be aware of the effect of loss aversion.
The rich get richer? Not when it came to Bitcoin
It’s increasingly harder for people who don’t have a lof wealth to build wealth – that’s what’s often singled out as the big flaw of today’s state of capitalism. But when it came to the early period of Bitcoin, different rules applied: Theoretically every woman and every man had the same opportunity to build unexpected wealth. Unlike in most other forms of investing, the obstacle was not primarily lack of funds. One didn’t need more than 100 Euro/USD, which means that at least in developed countries most people were not excluded by default. The obstacles instead were absence of knowledge, absence of curiosity, absence of the will to experiment and absence of patience (you didn’t gain a lot if you bought Bitcoins at 5 Euro/BTC and sold at 10 Euro/BTC).
Maybe I am exaggerating, but at least during its early days, Bitcoin was an extremely egalitarian technology. Lots of highly intelligent, educated, powerful and wealthy people did not invest in it because they either did not know about it or because they thought it was bullshit. On the other hand, while I am not aware of a reliable statistic about the demographic and social status of the early Bitcoin buyers, it’s highly likely that you had a fair share of people among them who were excluded from traditional means of investing (at least from those which promised substantial returns).
There is a widespread tendency to blame others or external events for one’s perceived failures or lack of opportunities. For large parts of the population of developed countries, Bitcoin offers a beautiful antithesis: If one didn’t jump on it early, there is only one who carries responsibility for this: oneself.
Please note that I deliberately don’t make any statement about Bitcoin today or how it will evolve. Anything can happen. My point is that everyone who, like me, feels that they missed out on something need to be aware of why they did miss out, and how they can improve the likelihood of not missing out a “similar” phenomenon in the future. With “similar” I mean another Black Swan – an extremely rare and unpredictable event which offers great opportunities to those few who spot it and who take a small, calculated gamble.
If you like what you read, you can support meshedsociety.com on Patreon!