Gold rush, or gold fever. Most probably all of you heard about it. If you are one of a few people, who has no clue what it is about, do yourself a favor, put aside your tablet with TikTok finance advisors and check it here.
Gold rush
I am not expert in history, finance, nor psychology. But let’s have a look into what the gold rush was. We can define it as a large movement of prospectors into the area of gold discovery. It is always driven by greedy crowds and by vision of easy money (get rich fast). Even though it was proven to be very unprofitable for vast majority of diggers and only a few were able to make life changing fortune.
Of course businesses related to the gold were generating crazy profits. They mostly supported the rush by spreading successful stories and advertising it as easy and available for anyone. As said at start, it triggered migrations which created new settlements, led to some personal tragedies, but also to economical booms of these regions.
To be fair, this is not connected only to gold. It happened before with other precious metals, diamonds, or anything what had value in the time. And it happens again and again. Interestingly, we can observe how it was happening in cycles. Just to cherry pick some data, let’s have a look at gold rush in the North America (even though it happens everywhere). We can observe waves:
- 1800’s in North Carolina
- 1830’s in Georgia
- 1840’s in California in Sierra Nevada,
- 1860’s in Nova Scotia
- 1890’s in Klondike in Yukon.
Losers
- majority of prospects
Winners
- merchants,
- banks,
- local shops,
- transportation facilities,
- a few prospects
„History doesn’t repeat itself, but it often rhymes.“
- Mark Twain
Crypto rush
Now, let’s fast forward into the present time. And let’s connect some links and check if we got our lesson from the past. In short, NO.
Crypto currency was not a new idea when the Bitcoin was released. Actually many people tried to achieve the same goal, but only Bitcoin came up with solution for double spending issue and we could see first currency with decentralized properties. It took time, but mostly pushed by IT geeks and nerds, it started getting more attention. And with more attention, of course the value went up.
The core of the Bitcoin is mining. Sounds familiar? Mining secures the network and rewards miners with newly created coins (plus fees from transactions, but it is not important now). The reward. The reward was the trigger to get more people involved into the Bitcoin and crypto in general.
With the time it became difficult to mine on personal laptop. First pools were created and joined their power together to increase the chance for the reward from mining. Only one can win.
1st Wave
We can see that as a first wave. Started by people, who came up with revolutionary technology and decentralized payment system, then more people got involved in hunt for funny internet coins (like it or hate it, but it is one of the reasons why the value grows — demand).
Losers
- miners who sold for less then burned energy
Winners
- crypto exchanges,
- third party services buying/selling crypto for customers,
- producers of mining hardware,
- long term investors
2nd Wave
With success of the Bitcoin, some people decided to fork the original source code, adapt some parameters and issue their own coin on its own chain. That got attention of some people and rushed into Litecoin or later in Dogecoin. There was chance with smaller community to get more rewards and hope for next Bitcoin.
Losers
- investors who picked wrong clone
- investors who left their funds on hacked exchanges
Winners
- crypto exchanges
3rd Wave
Ethereum was introduced in 2014. Smart contract platform, the world computer. Probably not many people could imagine into what it will evolve in future. ICOs started crazy token rush in 2017. People were investing in ideas mostly only written on paper (whitepapers) and drove crypto market into new highs. Together with ICOs, Bitcoin forks and masternode coins prices were driven to insane ATHs.
Losers
- majority of long-term investors in: ICOs and forks
Winners
- crypto exchanges,
- influencers promoting ICO scams,
- shady dev teams
4th Wave
With the evolution of the Ethereum ecosystem we were introduced into the world of Decentralized Finances and applications of financial products without any restrictions (well, not completely, but that’s for another article).
Together with liquidity mining and airdrops we saw another token rush for the governance tokens. People were convinced by (well paid) influencers on social media (in similar way as during ICOs), but this time mostly with already deployed project. This was improvement from only written ideas on paper. New narratives and smell of securities around tokens took many people into red numbers.
Losers
- investors of governance tokens
- investors of forks
Winners
- crypto exchanges,
- influencers,
- VCs
NFT Wave
With the success of governance tokens, new search for the “alpha” started. There was push for social tokens, but this narrative was not successful. What got attention were NFTs. Especially when international celebrities started getting involved. Suddenly we saw hunt for NFTs and digital art. It was supported with play-to-earn games idea, which will probably end as most ICOs ended, vaporware, since the hype cold down lately.
Losers
- most of NFT investors,
- social token investors
Winners
- crypto exchanges,
- influencers,
- couple of NFT artists
- shady projects, exit scams
Rebasing Wave
The show is still going on as the narrative changes. We saw algorithmic coins, which followed the fate of masternode coins. Lot of forks, lot of promises and big fails. Vision of passive income with high yield always work as magnet. We see it everywhere, not only in crypto. And it always ends the same.
Losers
- long term investors
Winners
- early investors who sold in profit,
- shady dev teams,
- influencers
Conclusion
There are clear winners of this game, like in the gold rush. Businesses providing paid services connected to the rush. It can be exchange, payment service providers, or paid influencers who shill you some token. They have common interest to make you invest into the ecosystem and to keep you doing so.
Do not expect that crypto space is different than the real world. People can scam, cheat, play. Greed and naivety is usually what leads us to loss. Next time we might be more careful. Keep in mind: your decisions = your responsibility.
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