By: Mohamed Allam, Messari Protocol Research Analyst
Compiled by: 0xjs@Golden Finance
A few weeks ago, I wrote an article titled "Stick to Your Investing Thesis or You'll Lose Money" and gosh, it feels like no one has an investing thesis - and on top of that, everyone is losing money. If this is your first crypto cycle, welcome to the casino. If you try to bet against the house, you'll lose. Ahem, $TRUMP, $LIBRA, $JAILSTOOL, and $CAR. These are just mainstream memes, but if you're really in the trenches, you'll know that's just the first layer of the onion.
Let me say it again: if you treat cryptocurrency like a casino, it treats you like a gambler.
In a casino, one in five players will win money on the jackpot machine. That means the vast majority of people are losers — and even the “winners” don’t really win money if you count how much they lost before they hit the jackpot. Let’s say you bet a bunch of meme coins, lose over and over again, and finally hit the jackpot. What happens? You think you’re special. You think you’ve cracked the code. But in reality, your win was just an exception, and if you keep playing, the casino will take the money away.
Casinos lure you in with free buffets and dreams of financial freedom. Memecoin tempts you with airdrops, 10,000x dreams, wife swap rewards, and shiny Rolexes.
Casinos make the rules and let you play until they decide to spit you out. Twitter influencers send memes to the moon and then banish you to the cold palace.
Casinos sell you the fantasy of a “one big win” when your luck is down. Memecoin has the same effect, only with a smaller chance of success.
Maths - Why You Might Lose
Now, I’m a math guy, so let’s talk about the law of large numbers in plain English.
The law states that as you play more trials, your results will get closer and closer to the expected average. In gambling, the expected average is the amount of money you lose. Casinos and gambling games are built around this principle. The more you play, the more your personal results will tend toward the house edge.
Think of it this way: If you flip a coin 10 times, you might get 7 heads and 3 tails — anomalies happen in small samples. But if you flip the coin 1,000 times, the results will be closer to 50/50. The same logic applies to betting on meme coins. You might get lucky once or twice, but after enough trades, the expected results return to reality. And the reality is that Twitter influencers are getting richer and richer, while you are losing a lot of money.
So, how do winners win?
1. Get in early – But let’s face it, even the smartest people can’t leave on time, and getting in early is nearly impossible.
2. Becoming an insider trader - vile and bad.
3. Becoming a KOL to cause trouble - also mean and bad.
So, in short, it’s a game of luck unless you meet the above criteria, which you probably don’t, myself included.
That being said, the stigma of cryptocurrency needs to change. Memecoin will almost certainly not make you rich. If you really care about this space, then learn about it and develop a thesis — a real thesis.
Making 10,000x in a few hours is not a rational idea. Making 2-4x in 2-5 years is a rational idea. If you understand this, you can make money (NFA of course). Don't let the meme cycle eat you up.
Will Memecoin disappear? No.
Is peak crime here? Yes. And it probably always will be.
But if you want to succeed in this grey world of cryptocurrency, you need to be prepared and understand what you are investing in.
