“In a recent ad for cryptocurrency exchange FTX, Tom Brady asks seemingly everyone in his contact list, ‘You in?’ As in, are you going to join him in buying some crypto, and not, presumably, in being a football star married to a supermodel. The pitch is straightforward celebrity-endorsement fare, designed to capitalize on the FOMO that is the standard psychological tacticof those who are already invested in cryptocurrencies and related technologies, and who would like the rest of us to come aboard. Mr. Brady has an equity stake in FTX” writes Christopher Mims, The Wall Street Journal, 2/19/22.
This celebrity pitch is typical of multilevel marketing companies. Our getting ‘in’ will obviously enrich those urging us to do so, by driving up the value of their own holdings. “And then, hey, the same could be true for us!”
“But how does owning or trading crypto, which is after all just data—infinitely reproducible, supposedly nearly free thanks to the internet—make one rich? Or for that matter, owning or trading other digital assets like NFTs (or ‘nonfungible tokens’)?”
“There’s a paradox at the root of the growing crypto ecosystem—a disconnect between the technology and the economics. While individual digital assets—bitcoins, pictures of ‘bored apes,’ giant JPEGs of everything the artist Beeple has ever produced—can be unique, the underlying nature of the internet means that there is, in aggregate, a potentially infinite supply of cryptocurrency, NFTs and all the other exchangeable tokens that make up “crypto” and the broader vision for a decentralized internet known as ‘Web3.’
“Basic economics suggests an unhappy outcome: When the demand for something is limited—there are only so many people on earth, and only so much traditional money to be converted into tokens and cryptocurrencies—and the supply is infinite, the average price of that asset is going to zero.”
“Recent research has found that most NFTs don’t sell. A hardly-comprehensive list of dead and abandoned tokens created for crypto projects includes nearly 2,400 entries. For every new cryptocurrency that retains any value, there are many that become worthless.”
FOMO: fear of missing out.
Source: Financial Planning for Women