How to balance speculation and value investing in cryptocurrency investments?

For a long time, I have always expressed the following viewpoint:

Among all investment ecosystems, the crypto ecosystem is the most friendly to retail investors.

The so-called "most friendly" refers to a comparison between the crypto ecosystem and other investment ecosystems (such as the stock market, foreign exchange, precious metals, etc.).

In what specific ways is it friendly?

The most intuitive observation is: in the crypto ecosystem, the capital threshold is the lowest, making it easier to earn money "quickly," and "getting rich" seems almost within reach.

I believe many readers also agree with this viewpoint.

However, I have gradually discovered that although many people agree with this viewpoint, their understanding of it is actually quite different.

Taking the understanding of "the lowest capital threshold, earning money more 'quickly,' and 'getting rich' seemingly within reach" as an example, one core perception is:

The crypto ecosystem provides a "casino" that does not exist in real life, offers chips that do not exist in real life, and presents gameplay that does not exist in real life. Importantly, this "casino" is open to everyone in the world without any threshold.

Going to Macau is quite troublesome, and going to Las Vegas is even more so.

Currency exchange, transportation, language, accommodation…

There are obstacles everywhere, thresholds everywhere. Apart from high rollers who can afford to spend lavishly, how can retail investors withstand such hassle?

As a result, a portion (possibly a large portion) of retail investors enters the crypto ecosystem with this "dream."

Since they treat the crypto ecosystem as a "casino," these players are not looking for projects that can truly change their lives, disrupt models, or create miracles. Instead, they are looking for "non-existent chips" and "non-existent gameplay" in real life to achieve overnight wealth.

If one enters the crypto ecosystem with such thoughts and mindset and has not changed their thinking until now, the final outcome will inevitably be asking around "What coin did Trump release today?", "What coin did Milei release tomorrow?", "What coin did CZ release the day after tomorrow?", ultimately summarizing it as "What coin did XXX release?"

Because this approach has the lowest cost and is the most "shortcut," it requires no learning, no improvement, and no understanding. The only thing that may require high attention is a phone call at midnight informing that XXX has launched a coin, and another call at 4 AM notifying that someone has leveraged to go long/short on a coin…

In my view, this approach is essentially no different from hoping for overnight wealth in a "casino."

Let’s return to common sense and think about it: throughout history, apart from a few exceptional individuals, how many people have achieved overnight wealth in a casino?

What I firmly believe is another viewpoint:

The reason the crypto ecosystem is the most friendly to retail investors is not that it provides a casino that does not exist in real life, but rather:

• It creates a brand new ecosystem, a new fair platform.

• On this platform, traditional VCs do not have a crushing advantage over retail investors. Retail investors can compete on the same stage as VCs, participating in promising projects at the seed or Series A rounds, and even achieving better returns than VCs.

• Retail investors can also get involved in projects that VCs have not yet recognized, obtaining returns that VCs cannot even imagine.

• Retail investors can participate in a project they believe in with a very low threshold. Even if they only have one dollar, they can buy a fraction or even a percentage of a project token on Uniswap, without needing to buy at least 100 shares of a company on traditional platforms.

However, all these advantages for retail investors ultimately need to be reflected through the value of the projects they invest in. In other words, in the crypto ecosystem, whether it is VCs or retail investors, the value or returns from investments must ultimately be reflected in the value of the projects.

How should the value of a project be judged?

I believe there is only one standard for judgment: whether it can create value for users, provide the functions that users need, and ultimately obtain returns from users, achieving sustainable cash flow.

This point does not differentiate between traditional investments and crypto investments; the essence should be the same in any ecosystem.

I think this is common sense and also a matter of principle.

As for the judgment and analysis of project value, traditional stock investment and venture capital have already provided a wealth of cases, experiences, and lessons.

Although there are significant differences between Buffett's value investing and venture capital, there is no essential difference between the two: both seek to find enterprises and companies that can create value and achieve sustainable returns; the only difference lies in the stage of project involvement.

Since we need to judge the value and returns of projects, the wealth of experience and literature accumulated in traditional investments and venture capital in this regard is worth learning from, especially for investors in the crypto ecosystem—because the speculative atmosphere in the crypto ecosystem far exceeds that of any other investment field, and there is almost no systematic experience and summary discussing project value and potential returns.

Some traditional tech bloggers I often listen to express disdain and contempt when talking about the crypto ecosystem, viewing it as a bunch of gamblers and low-level retail investors who do not even understand basic common sense—I believe their prejudice lies in being misled by the superficial speculative atmosphere, thus underestimating the long-term value of the crypto ecosystem.

In the crypto ecosystem, while we can see active players and hardworking entrepreneurs, the short-term speculative atmosphere is too heavy, severely affecting the long-term development of the ecosystem—I think one problem with the ecosystem now is that it has forgotten common sense and principles.

Therefore, stepping out of the speculative atmosphere of the crypto ecosystem and learning from existing experiences and lessons in traditional fields may help us better understand this ecosystem, do the "right things" better, and learn to "do things right" sooner.