Return to common sense in investing

Source: Daoshuo Blockchain

During this period, readers often express their confusion and puzzlement about the articles in the comments at the end of the article.

I think many of these confusions and puzzles come from some misunderstanding and resistance to common sense.

The views I share in these articles are some of my reflections on investment and the crypto ecosystem over the years. And these reflections are mainly based on the common sense and the original things that have been summarized from past mature cases.

What is the common sense and the original things of investment?

It is the free cash flow that enterprises/companies/projects can generate in the future.

I believe that this is applicable to any ecosystem, whether it is a traditional ecosystem or a crypto ecosystem, whether it is venture capital or value investment.

However, for many participants in the crypto ecosystem, our experience over the years is very different from the common sense above: it seems that many "investments" in the crypto ecosystem over the past few years do not seem to need this common sense, do not need to talk about the profitability of the project, and do not need to talk about the free cash flow that the project can generate in the future.

Just by telling stories and meme coins, you can get rich overnight.

In my opinion, this is purely because we happened to encounter its bubble period, and on the other hand, it proves that the market is increasingly going astray and forked without positive incentives.

Duan Yongping said (roughly): Go to a casino in Macau and you can see all of this.

And this kind of bubble and this kind of detour cannot exist for a long time, let alone promote the healthy development of this ecosystem.

He also said another sentence (roughly): Someone bought a lottery and won a prize of 100 million yuan. Can you learn from him? Can you repeat his story?

As investors, there is no problem with playing the lottery for fun, but it will be a big problem to think about and interpret the winning of the lottery as a path to success.

In fact, not only in the crypto ecosystem, but also in other already quite mature fields such as stock investment and venture capital, similar bubbles have already occurred, and similar "getting rich overnight" has also been staged. It’s just that most of our generation and our batch of people have not experienced it.

But there are also some areas that our generation and our batch of people have experienced. For example, in the past 20 years, there are two myths in the world that have never been broken:

One is that China’s housing prices will never fall, and the other is that the US stock market will never fall.

In the past, anyone who dared to expose these two myths would take a huge risk and be scolded to death.

However, the first bubble burst just like that.

There is no bubble that will never die------------This is common sense, but when the market is crazy, we don’t know when the bubble will burst.

But we can’t really think that the bubble will always exist just because it hasn’t burst, or even immerse ourselves in it and ignore common sense and the eternal and unchanging objective laws.

Since we know that there are problems with bubbles and we know that we don’t have the ability to control bubbles, we should honestly return to the original and return to common sense.

There is a sentence in Duan Yongping's Q&A that left a deep impression on me when I first saw it:

The easiest person to deceive in the world is yourself.

This sentence is worth sharing with all readers.

If we don't want to continue to deceive ourselves, we must face the facts, return to common sense, and return to the original.

Some basic facts are:

When I look back at the development and performance of Bitcoin over the years, I can't see more and more that Bitcoin is a "safe haven asset" and even less that Bitcoin is "digital gold".

At least it is not now.

Since it is not now and it has value, what is it? All I can think of is that it is a valuable luxury collectible.

If Bitcoin is a luxury collectible, what will its future value continue to rise on?

It can only rely on the value spillover generated by the prosperity of the crypto ecosystem.

And if the crypto ecosystem is to prosper, what will the final performance be?

That can only be a large number of projects that generate real value, provide real services, can continue to make profits, and generate free cash flow.

Otherwise, what is the prosperity of the crypto ecosystem?

Is it a meme coin?

Or a narrative that can only tell stories and never land?

And when the crypto ecosystem prospers, it needs to share its prosperity and benefits with investors. What should it share specifically?

Is it a governance token that only has governance functions but no actual rights and no use value?

If it is a governance token that only has governance functions, can its real value be compared with stocks? Can it be compared with equity?

If it can't be compared, what are the current prices of these governance tokens if they are not inflated?

If the prices of these tokens want to rise solidly, can they only become assets with real equity value or assets with use value?

I think these are not difficult to understand or deduce, as long as we don't deceive ourselves anymore.

It is also based on common sense and returns to the original of things:

The world we live in is a centralized world. Although it brings efficiency and speed, at the same time, in many occasions, we sacrifice personal freedom and personal interests. Our data and rights are often abused and exploited by centralized forces, and sometimes even our lives are arbitrarily disposed of by centralized forces.

That is why generations of predecessors have fought for decentralization all their lives. These predecessors tried to create a decentralized world with the power of technology to fight against the oppression of centralization, release the human soul, not kneel to authority, and not succumb to power.

It is because of this that we have Bitcoin, Ethereum, and today's encryption ecology. Without the decentralization of these basic platforms, we will not have such a free world in the future.

Now even the decentralization of these basic platforms (L1) is doubted. Isn't this a deviation from common sense and the original?

What's more, we are about to enter a world of fragmentation and independence. If we still believe that human interconnection is unstoppable and that such a neutral world will prosper in the future, then what kind of platform can support such a world? What kind of assets can win the trust of all mankind?

If you still can't figure it out, think about what assets and platforms can our isolated neighbor in the northeast and the empire in the western hemisphere that dominates the world hold and use with confidence?

Returning to common sense, many problems in the crypto ecosystem can be figured out.