Crypto Will Not Change HOW You Become Rich

When I write about crypto, I will freely admit you are not going to get any sort of useful information about what to invest in. The thing is that crypto is a fairly new thing for me.

Besides, there are plenty of other much better versed folks around here that can offer valuable information about particular coins or tokens, or about crypto in general.

That is not to say that I am not intending to offer at least something that still has value as you pursue your crypto endeavors. The things that I can offer are insight, perspective, philosophy, thoughts, and opinions—most of it derived from and gleaned from my many years of experience in other financial markets. Especially the stock market.

I know a thing or two about money, and about saving and investing. And while traditional concepts, or even strategies, may not necessarily directly apply to crypto, really what we are talking about here is money.

Because that's what crypto really is at the end of the day. Money. Something of value that we can either store and accumulate and earn more of and ultimately spend it on things we want and need.

And I can talk about those things.

That all out of the way, what I want to offer today is something more of having a common sense approach to everything we do crypto investing related. The thing is, we all hear all of the stories of fast riches and changed lives. And of course, that gives us a sense of elation and excitement when we read about this sort of thing.

We think things like why not me? And we shout to the moon and beyond.

When it comes to crypto, people do get lucky. It happens in just about any financial market there is and has been happening for many years. But the ones who keep the wealth they achieve are the ones who fully understand how they got there, and especially what to do with their newfound riches once they do.

I don't think it is wise to rely on luck at all. What's wise is to know what you are investing in and why, and be able to rationally and reasonably determine just how many miles to the moon there really are in whatever it is you are investing in.

Let's take Shiba Inu as an example, because it is one that I happen to be invested in, and one which has enjoyed massive overzealous, and ridiculous price predictions.

The first term I want to toss out there is circulating supply or future circulating supply. This is very important. I don't know how many conversations I have had with people who say things like, "I mean, if Bitcoin can reach $60k, what would happen if Shiba Inu reached that?"

First and foremost, it can't. And if one is investing in Shiba Inu thinking it can, or that it even remotely has the possibility to reach valuations of other coins just because they did it, you should not be invested in it.

Because each coin's circulating supply is different. Bitcoin, for example, has a future circulating supply of 21 million coins. Shiba Inu will have nearly 6 trillion.

So, when I hear someone predict that Shiba Inu could easily see 1 penny or could shoot straight out of the Milky Way into the next nearest galaxy and reach $1.20 like Elon Musk predicted it would go back in October of this year, I know this is simple crazy talk.

I think Elon Musk was just being Elon Musk when he said it. Surely he is wise enough to know full well that $1.20 is impossible. But on we go, setting that aside for whatever it is worth.

The point is that there are many people who are invested in Shiba Inu who are all in on their thinking that Shiba Inu can hit a penny, and even soar into the dollar arena. I think these people are either really bad at math, or just investing on dreams and wishful thinking.

Of course they are going to find themselves terribly disappointed.

I will say that Shiba Inu hitting one penny is more likely. But it is still a big stretch to get there.

First of all, in order for Shiba Inu to even reach 1 penny, the burn rate would have to be nearly 99% and the market cap would reach $5 trillion. That statement aside, if one does not understand how Shiba Inu arrives at this market cap and does not understand the basic idea behind burning coins...

Again, one should not be investing in it.

Go to that next nearest galaxy outside the Milky Way and get to that $1 prediction, and the market cap of Shiba Inu would need to be nearly $600 trillion. Not only would this be the most valuable cryptocurrency in the entire world, it would surpass global economies in terms of mere dollars as a whole.

The big takeaway here is to evaluate each coin you are investing in on its own merits. Figure out mathematically what is really possible, and don't simply look at what other coins have done in terms of dollar amounts and think that the dollar amounts are applied or attributed in the same way.

They are not.

Just like when I evaluate a stock, I have to be realistic in terms of how it gets to whatever price target my objective is. I need to evaluate everything about how it gets there, and I need to be true to myself what the real prospects are for my investment.

Expecting that a Dogecoin can reach $1 is more reasonable than expecting Shiba Inu will, based on the math. At the same time it would just as unreasonable to expect that a Dogecoin could see the $50k that a Bitcoin is going for right now.

If you are able to properly research any coin you are interested in, it can provide valuable information and tools that will help you to make the wisest decisions about the investment.

Blind faith has rarely made anyone money. But it can make other people lots of money, and this is also something you should consider.

The greatest wealth redistribution is actually perpetrated by fools. I know it sounds harsh, but it is also true. Most wealth is created by knowing something someone else does not. Fools willingly hand over their money to the ones who know and often times help to create their wealth.

As I said before. I can't tell you what to invest in. I can't even necessarily tell you exactly what to look for. What I can tell you is to simply arm yourself with as much information as you possibly can so that when you do dive in and hand over your hard earned money hoping to walk away with a windfall, you do so knowing things that others don't.

The bottom line for me is that I don't need to necessarily understand crypto 100%. If I know how to invest, and I understand the basic concepts of money, and how things get value, and what future potential value is likely to be, that's really all I need to know.

Because again, regardless of what we are calling it today, crypto is nothing more than a different kind of money. The way we deal with money may change. But money is money, and the way it works will always be the same fundamentally. At the same time, the principles of investing and wealth accumulation will also be the same fundamentally.

Creating wealth will also be the same fundamentally. Knowledge and understanding are not removed from the equation of wealth creation simply because we call it something else or conduct our transactions differently.

Wealth creation was the same when we traded rocks. It was the same when we traded cows and pigs. It was the same when we traded gold. It was the same when we traded fiat. And it will be the same as we trade crypto.

Lead image courtesy of Pixabay, user Tumisu. Man Rich Treasure - Free photo on Pixabay