The importance of “DYOR” has never felt more relevant.
- Explain Simply
When someone is first introduced to crypto, one of the first pieces of advice they will hear is: “do your own research.” This is especially important in the crypto space, mainly because the amount of shilling on YouTube, Twitter, and TikTok. With thousands of different cryptos out there it is easy to be pulled in many different directions. More than just a catchphrase, it truly is important to do your own research.
However, before you can compare protocols, chains, and Layer 2 solutions, for example, you must understand just what you are looking at. It is important to understand the difference between the basic elements that constitute a protocol, chain, or solution. For example, if you are comparing smart contract chains, do you understand the difference between proof-of-stake and proof-of-work?
That question in particular is a good place to start. If you cannot adequately explain the difference, you can be a prime person to fall victim to a potential dumpster fire of a project, built on nothing but hype. Once you’ve grasped that, you could then ask yourself a question that probes further: what is the difference between delegated proof-of-stake, bonded proof-of-stake, and the other less common consensus mechanisms?
This is right tact in order to ensure you are taking adequate steps to protect the precious money you’ve used to invest. With the unraveling of Terra/UST, ‘old-heads’ in the space like Udi Wertheimer have begun to ponder the importance of research. Before him, though, it was Warren Buffet who famously said: “never invest in a business you cannot understand.” Udi agrees, and this would’ve saved some folks with Terra due to the risk-heavy reality in algo-stables.
have been reflecting and thinking about what it means that people didn’t understand what they invest in
and if it’s our responsibility to educate them
maxis obviously having a field day, but did they help? calling everything a scam didn’t do much, factually no one listened /2
— udiverse (@udiWertheimer) May 13, 2022
Famous Physicist Richard Feynman once said: “if you can’t explain something in simple terms, you don’t understand it.” So, hold yourself that to that standard. It is better to hone in on just a couple cryptocurrencies you truly believe in as opposed to trying to catch every wave, and casually just buy into anything that has some buzz. If someone asks you about crypto, the technicals of the chain or protocol, then you may need to re-think your investment if you can’t explain it in simple terms.
The stage of educating yourself in crypto can take quite some time, but the prudent course of action is to put education before investment. That may just save you or a friend from the “rug-pull” and “rekt stage.”
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