From Focusing on Capturing Value to a Focus on Value Creation
In a world in which immediate profits, bottom lines and price rule investment decisions, we must change our decision-making paradigms to pick the ICOs we should invest in. A world of decentralized innovation requires us to focus on value creation and longer-term value propositions instead of focusing on capturing value immediately. Investors should therefore go back to the fundamentals instead of trying to come up with revolutionary paradigms to pick the right ICOs. We should take a page out of Satoshi Nakamoto’s book to understand how to shift our investment paradigms back to the fundamentals.
Nakamoto understood the kind of value that bitcoin would create, and kept a million coins, regardless of the price. A million coins is quite a small quantity – less than 5% of the total amount that will ever be ‘created.’ This shows that Nakamoto focused on value creation, understanding that capturing a relatively small piece of the value created in the future, would be a more profitable exercise. In contrast, Shark Tank investors for instance, opt for an investment paradigm in which they can capture value immediately, looking at short term profits.
This paradigm would likely cause the demise of any ICO regardless of how much value it can create potentially. Shark Tank-like investment paradigms are not well suited for the decentralized world that Satoshi Nakamoto created. They can also create a mind set in which investors overlook the value creation proposition altogether, making them risk-prone investors. Investors should thus abandon the Shark Tank paradigm in favor of the fundamentals that are clear in Satoshi Nakamoto’s work. Long term value creation, with the possibility of capturing a small fraction of that value in the longer-term, trumps immediate value capture. Focusing on the value creation proposition is paramount when choosing ICOs to invest in and avoiding unnecessary risk.
Photo Credit © Shutterstock