8 Things that you must know when you want to invest in a Coin. (from Bitcoin Expert)

I've been working on the coin side for a long time. As liquidity has recently been released to the market, I am writing this article again because I am worried about investing in coins like last time. I know you're busy, but if you're thinking about buying coins, I'd appreciate it if you could read them before then.

1. You have to distinguish between Bitcoin and other coins.

Coin is largely divided into two categories. Coins with a subject and coins without a subject. Bitcoin has no subject. In other words, it is not operated by any company. Except for Bitcoin, most coins have subjects. There is a company that issued the coin, a team, and a project to do something. It's important to understand this first.

2. It's not an investment. It's a donation.

One thing to note here is that buying coins with a subject is completely different from buying shares of the company. Many people don't know, but coins are not legally investments, but donations. The reason why this is a problem is that even if you buy a specific coin, you cannot legally demand any information about the company that issued the coin. To help you understand, let's take a mobile game as an example. Just because we buy game items or game cash does not mean we become shareholders of the company. Game items are only digital currency used in the game. Therefore, the item or cache owner cannot request information inside the company. You are not given the authority to provide any corporate information and financial information, such as how much the company's shareholders are paid, how much they are paid, whether there is embezzlement, etc.

3. The opacity hidden in the philosophy of decentralization.

This is where the opacity hidden in the philosophy of decentralization appears. Interestingly, the society we live in is a decentralized society. An example is the separation of powers divided into legislation, justice, and administration and the separation of companies and accounting firms to make the disclosure transparent. Unless it is a dictatorship, the administration (government) cannot print money or wield its authority at will, ignoring the legislature (National Assembly) and the judiciary (court). The same goes for companies. Companies must be audited by external accounting firms. Whether there is anything accounting fraud or illegal. In addition, the composition of shareholders should be transparently disclosed. When a major shareholder sells his or her shares in the stock market, it is also required to be disclosed. This transparency in finance is a device to protect minority shareholders and individuals who are bound to have relatively little information, and there have been numerous discussions and cooperations historically to create this device.

However, Coin follows a model of past opaque financial services where these values have disappeared. Coin companies do not transparently show who owns and how many coins they issued. The bigger problem is that they don't disclose how much they paid and owned the coin. Stocks show how much capital they put in and how much they took shares accordingly. It also discloses how many new shares were issued according to the corporate value of when it receives investment from external funds. Coin is not obligated to disclose such disclosure. The CEO and members of the company that made the coin each have how much coin each person has and how much they paid for it (usually they have it for free). There is no obligation to disclose. Funds investing in coins are similar. They are not obliged to disclose how much coins they bought at a relatively low price (usually funds buy coins at a discounted amount + bonus volume). The same goes for not only funds but also the advisor. Many coin companies usually provide free coins to advisors for the reliability and help of their coins, but they do not disclose how much they were provided free of charge to individuals.

And these opaque coins are generally changed when they are listed on the exchange. Some people ask why the coin price I bought is traded at an infinitely lower price than the listed price. There are many reasons, but most of them are very cheap or free of charge. Someone who received it for free has no loss price. It's a free gift, so it's a benefit to how much it was sold. Of course, I want to sell it at the highest price as possible, so I sell it at the timing of the sale.

4. Coin company's dilemma.

If you understand this structure and look at the company that issued coins, you can see that they are bound to fall into a huge dilemma. The mobile game mentioned earlier still has substance. There is a game service created and it actually gained huge popularity. Game items are sold because they have gained popularity. The problem is that most coin companies sell game items first even before the game is released. It's also sold a lot. The price of game items sold is bound to change solely with expectations. The higher the expectation, the higher the price. Therefore, paradoxically, it is a risk for the company that issued the coin to launch the service mentioned in the white paper. This is because if the service is released and the response is poor, the price of the coin sold will inevitably plunge. That's why coin companies are structurally focused on raising expectations rather than launching services. Examples include signing MOUs with trusted companies or listing on popular exchanges.

However, the expectations that have occurred cannot last forever. There are limitations to exchanges that can be listed, and there are limitations to MOUs. If coin prices fall, coin buyers will inevitably be angry at the company. To this end, market making is to choose as a desperate measure. In other words, it is also called liquidity supply. If coin prices fall or become less popular with people, coin transactions will fall, which will lead to a drop in prices. Therefore, someone outside (or the coin company itself) intentionally buys and sells coins on the exchange. This is the liquidity supply. But this can also trigger the act of raising prices. If this is intentionally done, it is called market price manipulation. (It is said that it invigorates the market because it has a strong sense of control.) If listed coin prices fall, coin companies will be criticized and nervous. It is difficult to guarantee when the service will be released and whether it will gain popularity even if it is released. So, this choice is made as a short-term prescription. Expectations can be temporarily raised through increased trading volume and rising prices, but this leads to a constant vicious cycle.

5. Blockchain is not special.

Then let's go back to the blockchain that generated these coins. Blockchain looks complicated, but if you think about it simply, it is a new model of storage. In general, data is stored on the server of the company where the data occurred. If you shop or search on Amazon, you can think that the record is saved on the Amazon server. Blockchain is that the servers of those individual companies can be forged, so rather than trusting them, individuals should copy and distribute data equally. Because it is copied and distributed, even if one person changes the data, forgery can be easily found when compared to the rest of the people's data. Of course, there is no reason for individuals to do this for free, so participating in this will give you coins as a reward. This is called mining. The problem is that the process of copying and distributing the same data, and guessing who hasn't tampered with, slows down structurally, increases costs, and decreases efficiency. However, it can work effectively if it is a society that does not trust each other. But you can ask if society is feeling distrustful enough to buy coins.

Have you ever shopped on Amazon or AliExpress? Both individual transaction data and money charged to pay are stored on Amazon and AliExpress servers. The same is true of the reserves generated after purchasing the product. Are you sleepless at night worrying that these companies will manipulate my transaction data and the money and reserves I have charged? There are other examples. Have you ever remitted money through an Internet banking app? How do you trust them? Aren't you worried that I'll manipulate the money I sent you? Of course, there may be people who are worried, but there will not be many. This is because the above companies do business under administrative and legal responsibilities and regulations under the three separate social systems of legislation, justice, and administration mentioned earlier. Society has created a punishment system to prevent them from engaging in illegal activities. If you account for fraud or manipulate data, you will be legally punished. It is also always subject to financial and accounting audits from external institutions. Market manipulation based on the aforementioned liquidity supply is also completely illegal. If you manipulate stock prices in that way, you will be sentenced to prison immediately.

The majority of coin projects started with the need to get out of this system. They say they can't trust Amazon or AliExpress, and they can't trust Internet banking, banks, and the government. And there is one more thing, the concept of data sovereignty. They say companies should be rewarded for making money using data generated by individuals. Of course, this argument is a very good idea to make people think about the new value of data sovereignty. But this is why we can see and use Amazon, Google, YouTube, and Instagram for free. Companies provide free services to customers and develop advertising products through individual data to cover the operating costs of the service. If you succeed in this, you will make a big profit, but if you fail, the company will go bankrupt due to the accumulation of deficits. Fortunately, there is no economic damage to individuals in this process. Even if Amazon goes bankrupt, users don't suffer serious financial losses.

However, many coin projects talk about data sovereignty structurally, but at the same time, they sell coins first that can cause economic damage to individuals. If you deeply believe in the value of data sovereignty, you can just create a company, plan, develop and launch services, and if you succeed in making a lot of operating profit, distribute the money and distribute it to individuals who use the service, saying, "It's a reward based on your data."

6. Bitcoin is unstable gold.

Then, what about Bitcoin? Fortunately, Bitcoin has nothing to do. It's just that transaction details are distributed and stored on numerous computers and bitcoin is given as a reward to those who participated in them. When it first appeared, it worked ideally well. Individuals who are small but believe in value in dispersion participated in this. He was willing to provide his computer to contribute to this system and was rewarded with Bitcoin through these mining activities. However, with the rapid speculation, companies specializing in this have emerged. It is a Chinese mining company (mining pool). Tens of thousands of computers (to be precise, computing machines) have begun to monopolize the mining of Bitcoin. The core value of dispersion has been undermined.

This went beyond simply damaging and caused certain companies to account for more than 50% of the computational power that supports Bitcoin. Bitcoin can also operate books if it has more than 50% computational power in its structure. As I said earlier, when preventing forgery of data, it contrasts with records distributed on other computers, but if there are more modulated data (over 50 percent), it is viewed as the correct record. Of course, this manipulation plays a role in making mining companies that have to maintain the value of Bitcoin, as it drastically reduces Bitcoin reliability, possible but not possible. However, it should be noted that it is clear that the value of dispersion has been undermined and that manipulation is absolutely impossible is false.

Then, based on this structure, I will compare it with gold. It is not companies that hold the most gold, but state agencies. Almost all countries around the world have gold in the order of the United States, Germany, and the IMF. That's why gold has been highly trusted for a long time. I don't think it's easy to argue that Chinese mining companies are more reliable than central banks around the world.

In addition, Bitcoin has no choice but to continue to have technical and institutional risks. Bitcoin is the core of trust in who has more than 50% computational power of the computer that operates it. Chinese mining companies now have this hegemony, but sudden switching may occur through technological advances. What quantum computers are said to be the threat of Bitcoin comes from this trend. This is because quantum computers' computational capabilities can in theory overwhelmingly surpass existing computers' computational capabilities of existing computers.

Of course, Bitcoin advocates say it's still a long way off and if it comes out, the security of all existing financial systems will be undermined. It makes sense. But if you disrupt the financial system mentioned earlier with a quantum computer, it's a crime. It can be assumed that Google manipulated Citibank's books through Seekermore, which they are developing. Of course, this will lead to a fall in Citibank's stock price and damage to other corporations, which will naturally result in legal punishment. Not to mention national financial services. However, Bitcoin has no subject. It's hard to find a target for punishment and it's hard to assess how much economic damage it has caused. This is because Bitcoin has no intrinsic value in the first place. Even if Bitcoin is disturbed and the price falls to 10 won, it does not cause damage. It's just that the value has been socially changed to 10 won.

7. I didn't write to say that coin prices are plunging.

However, I think Bitcoin prices can rise as much as possible, and not only at all high points, but also one bitcoin could be billions of dollars. This is because, as mentioned earlier, there is no intrinsic value. Bitcoin has no concept of going bankrupt. There is only a transaction price. Stock-based companies can go bankrupt. If you don't make a profit and accumulate costs, it's liquidated. Countries are similar. But what is the concept of Bitcoin going bankrupt? The concept of collapse is only for the owner. If you buy Bitcoin at a high price by exchanging it with the property you collected from hard work, and the price falls, you can express that you are doomed in your personal life. But that's not how Bitcoin went bankrupt.

The reason why I wrote this article is that there are so many people around me who have been ruined from an individual's point of view. What's sadder is that there were too many people living without understanding the concept of coins themselves when they met and talked. And we don't know the structural opacity of this market. I wished that I wouldn't be able to change the money I earned from working day by day and to be anxious and suffer all the time. Me too, but the more difficult life is, the more I find something to change my life. So this temptation seems to penetrate people who are socially and economically challenged more easily.

In fact, this article was written a long time ago. I wrote to inform at least the people around me of this structure when Bitcoin rises like crazy and meaningless coins rise like crazy. However, there was a crash soon and it was not disclosed. This is because criticizing something inevitably hurts people in the industry.

8. It was written to criticize me for being silent in the past.

And at that time, he was a person who was deeper into this area than anyone else. Perhaps the bigger reason was that they didn't disclose it to protect themselves. Fortunately, paradoxically, I gave up coins and lost a lot of money, but I was responsible for it and owed it. Fortunately, it didn't hurt anyone. To be honest, if you had made a lot of money with coins and if you were still benefiting from them, you would not have released this article because you felt guilty for yourself. In fact, the coin was quiet, so I didn't intend to reveal it. As I said earlier, I thought there was no need to hurt someone by disclosing all the articles that could hurt someone. However, the reason why I decided to disclose this article for the first time in a few years is that the media has started talking about coins again.

Coin stories appeared on the news and people around me talked about coins, which reminded me of the past. My friend called me in a hurry and met me, and I lost all my marriage funds in a strange coin and eventually broke up. I remembered the time when the lady who was cleaning the company asked me to buy these coins on the crumpled paper and asked if it was okay. I felt guilty of being silent and thinking that someone, especially someone vulnerable, could be sacrificed again.

I didn't write this to criticize anyone or not to buy coins. It was written to criticize me for not talking and being silent even though I knew a lot in the past. I just want many people to know what I know. And at least I want you to understand this market to some extent and make decisions. Of course, this article does not contain the truth. There are many shortcomings because it was written from what I experienced and what I knew. And to make it as easy as possible, I deleted the details and simplified them. It's because the people I want you to read this article are the people I met at that time who didn't know much about coins. 

It's not enough, but I tried to write as easily as possible. Still, I believe there is no distortion of the essence. It's written to criticize me for being truly silent in the past. Thank you for reading the long article.

(Refer to: Community Clien)