The Effects Of Rampant Misinformation In The Crypto Ecosystem
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Anthony Sassano, Product Marketing Manager at Set Protocol, Co-Founder of EthHub, and Founder of The Daily Gwei, tweeted a thread about how a cloud of noise and misinformation surrounds the crypto topic. He said,
"Information asymmetry in the crypto ecosystem is your superpower if you know how to take advantage of it. What do I mean by this? Well, because there's so much noise and misinformation, people are often misled for months or even years about different projects."
Issues That Misinformation Breeds
Sassano states that due to this information's asymmetric distribution, most new fundamental developments in crypto fail to be "priced in." It is hard to believe that even prevalent assets such as EIP-1559 and Ethereum PoS are not priced in yet.
People tend to get stuck in echo chambers and not be aware of fundamental developments that different projects undergo. This is why token prices for specific projects stay flats for a long time (months or years) until the market notices it someday.
Another issue is that people may be aware of a fundamental development but tend to think it is inconsequential due to not understanding its full potential. Sassano believes this applies perfectly to Ethereum's monetary policy.
How Can You Make The Best Of This Misinformation?
As per Sassano, people can take advantage of information asymmetry. He states that people should get out of the echo chambers; be open to everything within reason; Invest time to research everything and learn as much as possible; and finally, place bets when others are not even aware of something.
These tips might not always work, as the crypto space has plenty of complex projects with a massive following, allowing those projects to pump up in volume. But eventually, it's the investor's job to sift through the garbage to find diamonds, states Sassano.
The Sassano Method Of Weighing Information
The way Sassano approaches it is by looking at who is interested in the project. If some of the smartest people he knows are interested in it and don't have an ulterior motive, then it's a good indicator if something is legitimate. This approach has informed almost all of his long-term investment decisions.
Sassano further adds,
"You also have to not get spooked out of your investments based on FUD or perceived "bearish" developments. Example: Optimism delayed so people turn bearish on ETH. Reality: There are plenty of other L2 solutions live/going live and ETH is bullish for many other reasons."
Another critical rule that Sassano emphasizes is not listening to negative people as they're pure noise most of the time or trying to mislead an interested investor. Finding the right people with good information can be tricky as it takes time, but he believes that the best time to start looking is today.
Sassano ended his thread saying,
"Investing is a game and the only way you get better at it is to practice - don't get depressed if you make the wrong decision - learn from it and level up."