It is a tale of greed and ambition as old as time. But, for some reason, we don’t always learn the lesson. Overconfidence too often blinds us. In fact, hehe most capable and intelligent people are the first to comment on great acts of clumsiness. In the midst of so much desire, unnecessary risks are taken to eat more than we can chew. And, in the process, we expose ourselves to losing what we have and what we don’t have. Definitelyhuman stupidity is infinite.
What we do need is put at risk to gain what we do not need. It’s absurd, but it happens a lot. People put life savings at risk in search of extraordinary returns. In practice, you put your bread at risk to buy a lambo. In the process, he loses the bread, the other’s bread, and the lambo.
At this point, it is quite useful to talk about the theory of stupidity. The fact that stupidity is everywhere. But often we underestimate its enormous power and do not recognize its presence. In fact, highly successful people are particularly prone to stupidity. In general, stupidity is usually a more accurate explanation than evil. And, in most cases, stupidity is a much more harmful and destructive agent than evil. One might come to think that much of what has happened in the crypto space is the product of evil. But what is most certain is that, once again, stupidity is largely responsible for so much destruction of wealth. The bandit wins by harming the other. But at least someone wins something. The stupid one, on the other hand, ruins the party for everyone. He loses, the others lose, and everyone loses.
Many of us go through life thinking we are geniuses. We feel special. We feel, in some way or another, superior beings. In other words, people normally overestimate themselves and underestimate others.
We all, at some level, suffer from know-it-all syndrome. It could be said that the things we don’t know are greater than the things we do know. However, rarely do we recognize it. We think we know a lot. However, in reality, we know very little. In many aspects of our life, we are very ignorant and quite inept. But, deep inside, the idea that we are geniuses remains. In other words, we go through life making a fool of ourselves with our well-inflated egos. Such an attitude naturally causes us to make many mistakes. With our stupidity, we hurt ourselves and others.
How do you explain that Sam Bankman-Fried has lost more than 20 billion dollars in less than a week? We might remember the story of Icarus. So high did the reckless Icarus fly that the sun melted the wax that held the feathers of his wings. It was not for lack of intelligence. Icarus fell into the sea and died from overconfidence.
The confident ignorance of amateur It is one of the most widespread evils in this ecosystem. In the crypto community, many, after watching a couple of documentaries on YouTube, already feel wiser in matters of money than any Nobel Prize winner in Economics. The mystical experience of hearing for the first time the old theories of the beetles of the Prayedlibertarians and conservatives becomes, for some, an epiphany: “I understand money!”.
But I’m afraid propaganda is not financial education. Adopting old sectarian thinking around the concept of money is not enlightenment. I regret to report that the matter is more complicated than that. The reality is vast, complex and contradictory.
Sam Bankman-Fried ran his companies like a run-down family winery. Now it turns out that so much “genius” and “eccentricity” was nothing other than irresponsibility. What reigned in FTX was inexperience, recklessness and chaos.
How do you recover credibility? Cryptoland has earned a reputation as a Wild West controlled and manipulated by right-libertarian zealots, cypherpunk technocrats, and big kids with a Peter Pan complex. There is certainly plenty of creativity and innovation going on. Of course there are many opportunities. But, as there are opportunities, there are also risks.. It required? Best practices are required. And I don’t mean more crypto-libertarian narratives, dogmas and paraphernalia. I mean acting with ethics, checks and balances. Serious, sensible and responsible rules of the game are required.
Many crypto companies are operating as unregistered non-banks. And they use the lack of transparency and the regulatory vacuum to their advantage. Of course, the matter does not arise like that. The story is made up with a beautiful speech of freedom and nobility. All nice and beautiful, but there is also a dark side that we cannot hide. With this scheme, millions are made with relative ease. However, just as you can make a lot of money, you also take a lot of risks. Which implies that, at the moment something goes wrong, the losses can be very large.
Many expenses, debts and commitments are assumed. And all this is built on highly variable income assets. Things get ant-colored when the price of these assets drop dramatically in price.
What is the problem? The problem is overconfidence. It is a false sense of security that breeds inveterate bulls. The wishful optimism of many crypto enthusiasts. During the boom speculative, it was practically heresy to raise the possibility that prices could fall. A bearish stance in this space is interpreted as an unforgivable act of betrayal. So, the risks are minimized. What risks? “The only risk is not having Bitcoin.” “Bitcoin is going to the moon.” That is sure. It’s a matter of waiting and that’s it. Then the price falls. And now?
The ideological bias prevents things from being seen objectively. But that is a phenomenon that affects retailers more amateur who get carried away, with relative ease, by the narratives imposed by social networks. Among the great actors, the matter is different. They do know full well that everything is about money. And the narratives are instrumental. In other words, they are used to create a community. Because having a community of faithful is essential for business. Here what we have is that they have found the goose that laid the golden eggs. And they want to get as many eggs as possible. But from taking out and taking out so much they end up killing the chicken.
What we need to regain credibility is less ideology and more honesty. Facts, not tweets. Standards, controls, supervision, transparency and accountability. Instead of a tweet, what we need is independent audits. Rather than new cryptographic code, what we need is unbiased oversight. Or, put another way, the wild west needs to get civilized. I mean, this town needs a sheriff. Freedom without justice is not freedom.
Disclaimer: The information and/or opinions expressed in this article do not necessarily represent the views or editorial line of Cointelegraph. The information presented here should not be taken as financial advice or investment recommendation. All investment and commercial movement involve risks and it is the responsibility of each person to do their due research before making an investment decision.
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