"Consensus" means "value"? | Q&A

1. After experiencing the roller coaster of the last bull market, I ended up with a handful of hot coins, and now all that's left is the dregs. This time it's about new listings, airdrops, inscriptions, and runes, and I'm extremely anxious. No matter how hard I try, I can't seem to outperform the market.

I think this statement applies to the vast majority of investors. Moreover, this pattern has been proven countless times, and I even believe it is very close to the truth.

In my experience, it applies not only to the crypto market but also to the traditional stock market.

In the traditional stock market (especially the U.S. stock market), Buffett's famous betting case and data from previous years show that over 80% of investors (including the vast majority of Wall Street fund managers) underperform the Dow Jones Index (the market).

I believe this is even more true in the crypto market.

Investors who have experienced at least two (three or more is better) bull markets might want to take a closer look:

Let's take Bitcoin and Ethereum separately to see what returns they have brought us; then let's look at the returns from the coins bought on a whim during the hot trends. On average, which has provided higher returns: Bitcoin and Ethereum, or those miscellaneous altcoins?

I believe for the vast majority of retail investors, it is highly likely that Bitcoin and Ethereum have provided higher returns.

I do not deny that during these bull markets, we might have bought some obscure altcoins that far exceeded the returns of Bitcoin and Ethereum. I have had such examples, but I prefer to view such "achievements" as luck rather than a reflection of my ability.

Moreover, the vast majority of those who can make money in such luck are the brave ones who dare to be the first to take risks and can stick it out until the end, rather than the general public who follow the trends later.

Those brave individuals who dare to take risks and can persist until the end are often denied by the environment and misunderstood by those around them.

How many people can truly understand the torment one must endure to hold onto their beliefs in such an environment?

So even if one encounters such luck, the process is very painful, and I do not believe it belongs to the general public.

2. The Consensus of Retail Investors is Also a Consensus

This expression originally comes from X Xiaolai.

Often, this statement is easily understood as: as long as there is a consensus among the masses about something, regardless of what that consensus is, it is valuable and meaningful.

Thus, in the crypto ecosystem, many people thoughtlessly believe that any coin, as long as it has "consensus," will have "value."

I hold a reserved attitude towards this understanding. Because many times, this kind of consensus can be more colloquially described as the herd effect. And the herd effect in the investment market is mostly not only without value but also harmful.

It is precisely because of the herd effect that when the market is continuously active, everyone becomes more convinced that prices will continue to rise, pushing the market to even more irrational heights; while when the market is continuously cooling, everyone becomes more convinced that prices will continue to fall, pushing the market to even deeper, unfathomable lows.

All of these are the effects of this kind of "consensus."

But this consensus often reflects the market's irrationality, which, in my view, rational investors should strive to avoid. In many cases, we should even operate in the opposite direction of this "consensus."

Another common viewpoint is:

Many people view the consensus formed around Bitcoin today as a result of the "consensus" of retail investors, as if without this "consensus," Bitcoin would not have its current value.

I cannot say this viewpoint is incorrect, but I believe the more fundamental reason is that there has always been a small group of elites in human society tirelessly pursuing the most precious, pure, and simple values in human thought: equality, privacy, and freedom.

This arduous quest ultimately transformed by a small number of geniuses into a masterpiece created through technological means.

And this value system forms the priceless core of Bitcoin's value.

The consensus is merely the process of continuously adding value around this core value.

Without this core value, consensus cannot function at all and cannot be sustained—this is also why the so-called "value" of most altcoins is at best fleeting and cannot be maintained long-term. Because they lack a priceless core value like Bitcoin, even if there is consensus, it cannot solidly coalesce and accumulate.