RE: The limits of knowledge - why we don't know enough about blockchain
Looking from a personal investing perspective, I have really hit this understanding bottleneck. I don't want to invest into anything I haven't done enough research on, but that limits it to about 10 systems. If I find enough time to study 100 different systems, with whitepapers and forums, I might find 10 systems that I both understand and find promising. Even so, I get both false negatives and false positives - and it's frustrating. There's always something I miss, like the value of effective hype.
On the other hand, this understanding-bottleneck creates some nice information asymmetry, which often turns into good profits. People who are familiar with DPOS and Graphene will find it easy to understand EOS, and are at an advantage compared to those who are not. Another time it will be the opposite again...
Hi Idealist, it looks like this is kind of a case of meta curation or delegation.
You'd have to go on what someone or something, who you trust, tells you about one of those systems and participate in it.
From a risk perspective, participating in things you don't understand could make you vulnerable but not participating in enough things lowers the chances that you will be invested a successful exponential technology before it goes exponential.
Kind of looks like an opportunity for a kind of hedge fund solution but for cryptographic financial products.
Absolutely. Choosing someone to trust is a good shortcut to assessing opportunities.
At the moment my strategy is not to care about false negatives (being wrong about thinking a project was shit), but trying to avoid false positives (being wrong in thinking a project is a good one). There's so many successful projects out there that I don't have to know them all. I just need a handful to be able to diversify, and then successfully avoid putting money into wrong places.
It is basically a venture capital approach but on a smaller scale. Question is can you as an individual sustain several failures before the winners come up. Which can take several years to realize full potential value. So you suffer the losses inmediately and only enjoy the upside in several years... getting out too soon on the winners to cover losses of the losers can really cost you. So you'd have to fire and forget almost and come back in a few years to see what panned out...