Down the Rabbit Hole: The 5 Stages of Crypto Involvement

When you first enter the crypto space, you're lost and overwhelmed by the complexity of it all. Even if you have a background in day trading with stocks or commodities, you will still find novelty in the frantic volatility, the dynamics of an unregulated market that is open 24/7. In the first few months, you're guaranteed to feel completely lost, question everything you thought you knew about cryptos, start reading a lot about the coins in your portfolio, and start to revaluate your investments.

But to make it all slightly less confusing and bring out the funny side of the journey, a classification of five phases has been made - from being a newbie to actually being able to participate in a discussion about how blocks are generated and why a certain scaling solution is better than the other.

Phase 1: The Good Friend or Co-Worker

Everyone and their mom knows a guy who just wouldn't stop talking about Bitcoin, the internet of value, decentralization of money and the separation of money and state. However, you're intrigued about their success and feel the itch - you want to make sure that you're not missing out on something that may just be the next financial revolution, and you hope that one day you will be able to buy a new house/lambo with the small amount of money (which you will later refer to as "fiat") that you're willing to invest.

Why's that person talking about Ripple or EOS all the time? How is it different from the Bitcoin you've always heard about? Well, it doesn't really matter - you take a small percentage of your hard-earned salary and decide to invest it in a cryptocurrency. So should you buy Bitcoin? Well, one unit is way too expensive, and it seems to be on a downtrend. Some people claim it's an obsolete technology anyway, and it's going to get replaced by one of those ultra-fast third generation coins like TRX. Wait, isn't TRX close to the all-time high? And isn't XRP a token that will get used by banks, the institutions that you can actually trust? These certainly seem like sound investments that you can afford and can potentially bring high returns, so you send over $200 of your cash to Binance and invest on your mates ‘financial advice’.

What you get in return is a digital asset whose value is gradually declining, and you're starting to feel anxious. The original plan was to acquire the coins, and then forget all about it for a few years. Now you begin to check CryptoCompare every day hoping to see an uptick (which you now cordially call "Moon"), and you constantly ask your friend or co-worker for advice. As you're about to find out, they have no clue about what they're doing and simply got lucky in the middle of the massive bull run of November and December 2017. They have no idea how to handle bear markets, so you decide that you should move on and seek advice somewhere else.

Phase 2: John McAfee

Well, this is the part where you begin to seek advice from successful people who appear on the cover of magazines, have regular television appearances on shows like CNBC's Fast Money, and always talk like they know exactly what's going on.

But the epitome of this phase is the presence, influence, and charisma of John McAfee. Everyone in the crypto community is holding to his claim that he would eat his own manhood if bitcoin didn’t hit $1 million by 2020.

Mr. McAfee is also responsible for the success of many crypto projects like Verge, and it's well-known that whatever coin he promotes its bound to get a massive pump. Since you're in this game for the money and your first investment proved to be an utter disappointment (you've most likely panic sold and lost half of your fiat during the dip), this plan sounds just perfect: you follow John McAfee and allow him to lead you to the very best crypto investments. It's also likely that you will be tempted to join some ultra-secret and exclusive Telegram groups.

This phase can last for a while, especially if you get lucky and actually make some money. Your original plan was to HODL, but your first choice was poor and you bought at the all-time high. It's about time you finally make a profit! But the scheme isn't meant to last and sooner or later you will feel disappointment: you discover that John McAfee is basically a salesman who will promote anything for the right price. Also, the sleepless nights and time spent watching graphs go up and down is unhealthy for you. There has to be a better way, and you soon discover a new layer of the crypto world.

Crypto Before and After

Phase 3: Roger Ver, Justin Sun, or Justin Sunerok

This is the moment when you finally begin to believe in a project and allow your inner feelings of tribalism to take over. You've already lost money day trading coins with no future, you've become disillusioned with people's advice, and actually feel like believing in the ideology of crypto. It takes some time to get to this point, but when you finally settle for something, you begin to get that warm feeling of belonging to a community.

It's really easy to get into Bitcoin Cash, Tronix, or Verge. They are rather popular, you see them in market cap charts, and they are backed by some of the most active Twitter and Reddit communities. You have the coin which claims to follow Satoshi's original vision (and pursues on-chain scaling despite the creator's decision to limit physical block size to 1MB), the underlying virtual asset of an envisioned new decentralized internet, and a privacy coin which shows some promise for mainstream adoption.

Are they the best in their respective fields? Well, some may argue that BTC, ETH and Monero are far superior. But this imperfect trio has the most convincing crowds on CryptoTwitter. Communities do matter when you're dealing with cases for adoption, right? If the original Bitcoin is so great, then why aren't people more vocal when it comes to promoting it? Why do the @Bitcoin account, the r/BTC subreddit, and the Bitcoin.com website all promote Bitcoin Cash? You rarely see any spokespeople for Bitcoin on television.

Same with TRX: it's backed by one of the most charismatic and successful Chinese businessmen who is very vocal and always announces partnerships. How can anyone go wrong with this degree of accountability and transparency? It's also rumoured that the coin will partner with the world's largest online marketplace AliBaba, so you have all the incentives to believe in the rise of this project.

As for XVG, it uses Onion encryption and has already been accepted as a currency for the biggest porn website in the world! The privacy isn't always-on, which means that regulators will be milder and won't call it money for criminals on the deep web, and it's expected that more companies will embrace this wonderful technology for their use cases. You can't go wrong with this choice, right?

Well, unless you discover the meaning or definition of decentralization and suddenly realize that assets with strong centralizing figures and planned pumps are basically like a speculative PayPal on the blockchain, you will remain stuck in this phase. You need a liberal mindset to want to step out and search for something different... or you just have to read the news: Bitcoin Cash is highly concentrated in terms of ownership and has created most of its supply out of thin air after the hard fork (when BTC holders received an equal amount of BCH), TRX has some of its own issues with transparency and living up to the expectations of its plagiarized whitepaper, and XVG has been hacked many times via exploits of its complicated mining algorithms.

Phase 4: Vitalik Buterin, Charlie Lee, Riccardo Spagni, Jameson Lopp, and Andreas Antonopoulos

This is where you will start to follow the founders of legitimate cryptocurrencies and true visionaries and experts who have stood the test of time. They see the value of Bitcoin for its unprecedented degree of decentralization and look beyond price fluctuations and daily volumes in order to present their arguments. All of them are savvy in cryptographic terms and have backgrounds in computer science, they've all published extensive and influential works in the field which either educate or innovate, and they always get invited to the biggest events.

If you've made bad investments and the market is following a bearish trend, these are the people you will inevitably start following. They have all seen multiple bear markets and help you focus on the tech not the price.

You finally understand what the decentralization is all about, might buy some Ethereum, Litecoin and Monero in hopes for more moderate returns. You finally understand that security matters more than transaction times and fees, immutability is what ultimately generates the long-term sustainability of a crypto project, and Lightning is a smart way of scaling which doesn't compromise the degree of decentralization.

This is perhaps the most enjoyable phase of all, as you finally become ready to join a team and provide your expertise for the purpose of lending your skillset for a greater good. This is voluntarism at its finest, and the stake is mainstream adoption. It's a real story about how I've joined the Litecoin Foundation as a writer and thousands of people have found a job in the world of crypto.

Phase 5: Nick Szabo, Hall Finney, and Old Bitcointalk.org Threads

I'll start this off by saying that it's easy to get into Nick Szabo's work, but it's hard to understand most of what he's saying. He's the modern definition of a Renaissance man, he is the polymath responsible for creating BitGold (the forefather of Bitcoin) and the concept of smart contracts. Very few people can meet his degree of intelligence or challenge him in debate, and some claim he might just be Satoshi Nakamoto.

Unless you have a good understanding of mathematics, cryptography, and computer science, a lot of his writings will seem inaccessible. Nevertheless, spending time on his blog - Unenumerated - is an academic experience in itself. You will find that Mr. Szabo doesn't write just to meet a monthly quota, he actually comes up with thoughtful pieces whenever he has something fascinating to say. He writes like a scholar, with complete references and well-developed points, and manages to cover unexpected fields with apparent ease.

If my limited understanding of his work is correct, then the fundamental idea that he promotes in regards to cryptocurrencies is trustless governance. He sees algorithms like mechanical time pieces that are much more efficient than humans in accomplishing their tasks. Mr. Szabo's dream is to make use of neutral, objective, and uncompromising lines of code for the purpose of solving issues that get stained and flawed by human error.

He resents cryptocurrency projects that are centralized and become subject to unplanned dictatorial changes and instead favours trust in a well-written and commonly-agreed code. It's one of the reasons why he appreciates Bitcoin as an invention, and he often writes visionary research articles about extending the use and scalability of the king of cryptos: he even proposed using radio waves to send transactions beyond national borders where the internet is censored.

If you've become so advanced and reached this phase, you will certainly look into the posts that Satoshi Nakamoto and Hal Finney have made on the Bitcointalk.org forum. This feels a lot like reading a history book, though the early days of Bitcoin are not so far behind us. Hal Finney’s positivity is contagious, it may inspire you to become a developer and devote your career to developing innovations in the crypto space.

Regardless of the phase you find yourself in and your intentions, it's good to have you on board and never forget that you're contributing to the greatest paradigm shift in money the world has seen!