Today I want to write briefly about the 3 lessons I’ve learnt about the concept of “value” from trading crypto. Now, there are many definitions of this term “value”.
The last time I counted, there were at least 78 definitions in academia. For the purpose of discussion, let’s define the term “value” as “benefit” in this post.
Lesson #1: Value cannot be destroyed. It can only be created and/or transferred.
Have you ever heard of people freely saying that someone is “stealing their idea” and “OMG what a leech?” This gives the impression that value can be destroyed.
Actually, value cannot be destroyed. It can merely be taken away or modified. The original creator can always create and generate more value to others (but given the presence of a leech, a smart creator would do better to be wiser in future to protect his or her idea or creation).
Let’s accept this premise for the time being. If value cannot be destroyed but transferred or created, what does it mean when a market crashes? Yes–you’re right, it means that some parties profit immensely from it, and value is transferred from party A to party B.
This explains why for instance, before investing in anything, it is essential to do due diligence. Because if the market crashes and you did not do due diligence prior, then it might be tempting to blame someone else for “destroying your life”.
Some people might argue for the presence of ‘deadweight loss’, which is a welfare loss due to inefficiency. This is true in economic terms. However, when it comes to discussing ‘deadweight loss’, we are really talking about “what is” as compared to “what could have been” in a 100% rational context.
Human beings are not rational. In fact, they are first emotional, then they use logic to justify whatever they do. So is the concept of deadweight loss still relevant? 🙂
Since value 99.99% of the time can only be created or transferred, this gives rise to the concept of trade with the larger community. Which brings us to the next point…
Lesson #2: Trade can only happen when someone values something more than you do.
- Why is coin X rising? It’s because more people believe in a higher value of coin X than the current market value.
- Why is coin X falling? It’s because more people believe in a lower value of coin X than the current market value.
So the conclusion is that trade can only happen when someone values something more than you do.
How about a trade with yourself?
When you fail, do you beat yourself up or do you rejoice because now you have exclusive information about yourself towards a better future? Do you journal, reflect, and analyse how to assimilate information so that you can move towards a better you, now with customized information?
Which brings us again to the last point…
Lesson #3: If the value of information to you is zero, you are undervaluing a lot of things in life.
I used to regard the value of information as zero, because I tend to have a lot of information easily from a lot of sources. This is pretty common in my line of work because I hear information everywhere. Which explains why I have to act dumb often.
Then I realised recently that I’m not monetizing on my storeroom of knowledge and information at all 🙂 And upon checking, I realised it’s because I value information cheaply, or at zero.
So I’ve decided to stop doing that haha because it warps my internal reality quite a bit. I regret so many things in life because I valued information of myself and my immediate reality at zero. I always thought–“If only if I had known XYZ then, why am I so stupid”, or “If only if I had been a bit more hardworking in research then, I would have ____”.
I stopped feeling like that already after I realised there is value to information, and it is this value I want to price/ prize and communicate to serve the masses more.
It’s like how this gentleman eloquently phrases it via the idea of an “inner menu”—
“We’re always taking the best choices on our menus
I have found myself looking back at choices I made that I now see as being non-optimal. I have a tendency to beat myself up for making what seemed like a bad decision. It is very hard to put ourselves into the shoes of another — or even into the shoes of our past self — and understand why we made the choices we did. What we can know is that everyone is continually making the best choices they have on their inner menus.
As you read the following, it’s sometimes going to look like I’m beating myself up. I’m mostly trying to be aware of what could have been, and attempting to learn from it. I hope that I can learn, and I hope you can learn as well.”
Value of information to yourself, towards a better future self, is definitely not zero.
If the value of information feels like “zero” to you, it is because you either don’t value information correctly because you cannot see it, or don’t see your future as bright.
Conclusion: Where Do We Go From Here?
Know that the value of information is not zero. Know that the value of time and energy is not zero.
Know that the value of things to anyone is subjective. Listen carefully to how people value things, and how you can play a part in contributing towards this value. For when you do that, trade can happen, and it’ll be easy to do a business =)