Picture this: A young tech walks into her manager’s office to work on the manager’s computer, the two have a casual relationship built on a shared love of tech and sci-fi, so it’s easy to have more and more complex conversations on things like the internet and technology. On this particular day, the young tech is excited, her Cryptocurrency portfolio has recently reached $1700.00 based on the various coins/tokens that she has invested in. The tech tells her manager, “you have to check out Cryptocurrency! it’s crazy how valuable this stuff is, once I sell I’ll be able to pay off my student loans!”
The manager looks at her and says “you know I’ve been looking into Bitcoin but I don’t understand…what gives it the value”.
As many of you have probably experienced in the past, the tech takes off on a rant about Blockchain Technology, Scarcity and how Bitcoin will replace fiat. But still, they have yet to explain, in terms the manager can understand, why Bitcoin has value and why a person would take their money and invest it in such a volatile market.
At this point, we need to look at things from the manager’s perspective. Why should they invest in something that the person speaking to them about, cannot explain it in a clear, concise manner?
How does this define our young tech? When something is new and exciting, it’s easy to jump on the bandwagon and even become fanatical in your views of that thing, which in this case is Cryptocurrency as people have developed a kind of tribalism around their particular coin of choice. So the tech comes into their manager’s office, excitingly telling them that they’ve “found” this new thing that is going to make them rich but who fails to be able to tell exactly why.
Let’s use the process of Critical Thinking to get an idea of where the Manager is right now:
Who said It? A tech working for a company that is not in the Blockchain or Cyptocurrency space, it’s possible but probably not likely others know anything about Cryptocurrency or Blockchain.
What did they say? “You have to check out Cryptocurrency! it’s crazy how valuable this stuff is, once I sell I’ll be able to pay off my student loans!”
Where did they say it? In the manager’s office while they are working on the manager’s computer.
When did they say it? During a casual conversation that was basically taking up dead air.
Why did they say it? The tech is excited about Cryptocurrency and wants to tell as many people about it as possible.
How did they say it? With excitement in their voice, using grandiose claims such as paying off student loans.
Now let’s step away from the fact that the manager knows this person and may even consider them a friend. Would it be in the manager’s best interest to take what amounts to financial advice from this person? Would it even sound to the manager like a Ponzi or pyramid scheme?
When Bitconnect was at its height, word of mouth, Facebook, YouTube and Twitter were used to promote what in the end amounted to a Ponzi scheme which cost those holding the bag thousands, if not millions of dollars. But if those who were dupped by Bitconnect had used Critical Thinking instead of FOMO (fear of missing out) they could have saved themselves both emotionally and financially.
Let’s revisit the Manager/Tech Conversation and put it in relation to Bitconnect:
Who said It? A young person (late teens, early twenties)
What did they say? “You can make thousands, even millions in crypto using Bitconnect’s trading bot and lending platform. It’s easy and you can do it from anywhere. Also, this is not financial advice.”
Where did they say it? On YouTube or social media, these places require no validation of claims to post them and do not require that users use their real names/identities to create channels.
When did they say it? At the height of the cryptocurrency craze, Bitcoin was all over the news and the internet and from all appearances, people were getting rich overnight.
Why did they say it? They are trying to get more people involved in the platform/scheme. The more people involved, the more money they can potentially make.
How did they say it? Very excited, making it appear that this is an opportunity the viewer would be a fool to miss out on.
Because crypto (at least in the United States) is relatively unregulated when compared to Wall Street, there are not the same protections that traditional investors have to protect them from fraud and scams so it becomes necessary for investors in cryptocurrency to approach any would-be investment with a critical eye so that scams like Bitconnect do not happen again.