Through the new Texas site, Compass Mining expands access...
FYI, I’m going to be joining a Substack Live stream on Oct 17th, 5pm EST / Oct 18th, 7am AEST, hosted by my friend and fellow substack author .
You’ll be able to view the stream here (I’ll also tweet it out when we’re live).
Welcome to another Nugget of Wisdom! A free post I send out once a week. These are designed to be short and sweet, a quick read to (hopefully) impart some sort of wisdom, or at the very least to get you thinking about something interesting.
OVERTAKE is a peer-to-peer marketplace on Sui that lets players trade game items, accounts, and currencies with ease. Designed for the multi-billion dollar Web2 game asset market, it uses a multi-signature smart contract escrow to ensure secure, low-fee transactions with instant settlement.
Built for gamers, creators, and entrepreneurs, designed to redefine digital economies and game asset trading.
Sell gaming assets from non-web3 games (such as Path-of-Exile) and earn in crypto.
I made this tweet yesterday and it got a lot of mixed responses from people. I made it because I think about this trader often, and I think there is a lot to learn from their mindset.
Basically, I believe there are five main reasons a person might buy a digital asset: to trade, to invest, to gamble, to collect, or for utility purposes. Setting aside the utility purchases (like stablecoins, or membership card NFTs), let’s take a look at the others.
Most people don’t really take the time to have a clear understanding of why they’re buying something before they buy it, and it’s often some confused hodgepodge of all of these above reasons.
It’s helpful to define each reason:
If you’re a trader, you’re buying the asset with the explicit intention of selling it for more money, usually in the short to medium term future. You may or may not believe in the long term prospects of it, but you are making an educated bet that it go up in price in the relatively near future.
If you’re an investor, you’re buying the asset with the expectation that it will go up in price over a longer time period — usually years. You may be intending to sell at some point, or you may simply be looking to build your wealth by buying and holding the asset. You probably have no idea if it’ll go up or down in the short term.
If you’re a gambler, you’re buying the asset with the pure hope that it’ll go up in price. You have no real reason to expect it to go up, other than you really want it to go up. Your decision is not based on solid research and you’re not taking a methodical approach to your purchase. You’re not making an educated bet; you’re gambling. Maybe you’re buying out of FOMO, or because another trade went poorly and you want to “make it back”. You might fool yourself into thinking you’re a trader or investor, but you’re actually just a gambler.
If you’re a collector, you’re buying the asset purely because you like it and want to own it. The price is largely irrelevant, especially since you have no explicit intention of ever selling it. Perhaps one day in the distant future you might part ways with the item, but it’s not a front of mind consideration. By definition you have an emotional attachment to the thing you’re buying.
Going back to the tweet I made, the person I was referring to was very clearly a trader. They didn’t believe in NFTs much. That didn’t matter — they were able to make stupid amounts of money by flipping them.
If you want to be a great trader, you’re probably best off focusing on being a great trader. If you also want to be a collector, then you probably shouldn’t be trying to collect the same things you’re trying to trade; at least not at the same time. Make your bag trading, then come back and collect later on.
If you want to be a great investor, you’re probably best off focusing on being a great investor. Basically that means: buy and hold. The trap that gets so many people is that they want to be a great investor but they also want to be a great trader. Inevitably they end up approaching their investments with a trader’s mindset, or approaching their trades with an investor’s mindset. Both are usually terrible ideas.
Moral of the story? Figure out what you want to do, and do that, and try not to confuse it with something else.
Much, much, much easier said than done.
Good luck.
Thanks for reading! In case you missed it, check out Monday’s post below 👇
Letter 83: Market Crash Analysis
A few days ago we experienced the largest single-day liquidation crash in crypto history, and the largest daily drop in BTC price in history. By far.
