People who have no clue about how bitcoin works can still invest and make profit from its valuation due to the fact you don't need to do anything besides holding your coins on long run. Theoretical rules don't apply to every cases and if someone stays too tied to them, this person is probably going to lose many opportunities in life. Sometimes you need to risk yourself and start learning from practice.
Dunnin-Krugering is part of a newbie life.
Topic: Circle of Competence (Read 263 times)
I can say that Bitcoin is in my Circle of Competence, I love Bitcoin and I know exactly what I want, but unfortunately this does not apply to many people who have heard of Bitcoin recently, they only think that Bitcoin can make them rich and they don't know anything else about Bitcoin What does it really mean And what is the real benefit of Bitcoin so I think that such people will fail.
Me too, but I also try other investment and trading platform like stock market and I once try forex but it is not my taste I hardly make money on that platform maybe that is not my circle of competence, wherever we are familiar with and we're competent enough to trade that is our circle of competence and for me it is in crypto as well, many people are just like me wh try a lot out of curiosity and we can distinguish the difference of them but as far as I understand I used the same way of trading in all of it.
I have studied Bitcoin for years, but can I say I understand the code? I'm not a programmer so I don't, unless I learn C++, I never will. I understand the fundamentals and digging deeper, initially made me feel it has great potential, but lately I regret that I spent so much time. Bitcoin is code and as code it has mistakes. One of them is that it will never be changed fundamentally. This is not always a wrong approach, but it is not perfect either. Changes will be needed. The new technologies that will dominate the software market are already here. AI is just one of them. What will Bitcoin do is probably stick to this code it has today and never move from it. This is bad for technology, even if it is about money. Not developing and not moving forward and implementing changes means nobody wants to take any risk. It can't go on for another decade like this.
This concept was popularised by Warren Buffet and Charlie Munger. Each person has area of thing "they know", e.g. if you work in computing you will know ´bout programming, networks, systems and the like.
In investment, the rule is "stick to your circle of competence", just do not invest in things you do not understand.
Linked to this is the Dunning-Kruger effect - when you thing you know something and you have understood a problem, but you really have no idea.
Is bitcoin in your circle of competence or are you Dunnin-Krugering around?
In investment, the rule is "stick to your circle of competence", just do not invest in things you do not understand.
Linked to this is the Dunning-Kruger effect - when you thing you know something and you have understood a problem, but you really have no idea.
Is bitcoin in your circle of competence or are you Dunnin-Krugering around?
As an investment advisor I would like to think that most all "investments" of any kind are in my circle of competence, for the most part anyhow. I think this should go for most all other finance people. However unlike Warren Buffet and Charlie Munger, I don't down talk investments/technologies I do not understand as both these old farts do with bitcoin and all other cryptocurrencies.
That's why I stick to crypto and avoid the stock markets
Because I want to stick to what I know and what I understand, plus, here are the current hype and the money...
But that would mean that you know the in-depth theories and applications that bitcoin can be used if bitcoin is in your circle of competence. In my opinion, having a subject in your circle of competence is a very difficult thing to achieve, you know how those people who take masters and doctorate on their chosen major, that one can be considered circle of competence, just because you traded with bitcoin for a long time doesn't mean that you already know everything there is to know about it, maybe if you are one of the bitcoin core developer then I think you can consider bitcoin as part of your circle.
I don't think that is what is meant here, you don't have to have a master's degree or a doctorate to be able to deal with Bitcoin !! If it were as you say, you will only find a few people around the world who are able to work with Bitcoin.
You can be a good car driver without knowing the intricate details of how the car is made. It is enough to have a good idea of the car’s mechanics and mechanism of work, as well as understand the meanings of traffic lights on the road in order to be a good driver. This is what I meant.
Investing in your circle of competence is definitely the way to go when talking about things like stocks. As for bitcoin? While I still think that people should invest in bitcoin only if they really understand it, up to what extent should they understand it? For now as we're quite early, I think people should have high understanding of it. But as time goes and when(and if) Bitcoin becomes the de-facto store-of-value for the masses? I think the minimum that people should know is Bitcoin's basic characteristics(finite, decentralized, self-custody, etc) and how to secure it on a non-custodial wallet, and probably everything else is just extra.
I wonder what level of understanding of Bitcoin to the recent group of large scale
investors have? They see it as a store of wealth/value but do they know the function of
mining and how new Bitcoins are created or how to actually take custody of their
coins for example? im guessing they may only know the very basics.
This concept was popularised by Warren Buffet and Charlie Munger. Each person has area of thing "they know", e.g. if you work in computing you will know ´bout programming, networks, systems and the like.
In investment, the rule is "stick to your circle of competence", just do not invest in things you do not understand.
Linked to this is the Dunning-Kruger effect - when you thing you know something and you have understood a problem, but you really have no idea.
Is bitcoin in your circle of competence or are you Dunnin-Krugering around?
In investment, the rule is "stick to your circle of competence", just do not invest in things you do not understand.
Linked to this is the Dunning-Kruger effect - when you thing you know something and you have understood a problem, but you really have no idea.
Is bitcoin in your circle of competence or are you Dunnin-Krugering around?
I wouldn't say am Dunnin-krugering just because am not a dev doing computing or what have you, I think I know enough to invest a little and not get carried away, does that make me part of the circle of competence? Or am neither both.
With this your explanation, there is no middle ground, it is either you are this or that which I disagree to, one don't have to know btc in depth to be a part of it otherwise we would have far less people in this space.
I can say that Bitcoin is in my Circle of Competence, I love Bitcoin and I know exactly what I want, but unfortunately this does not apply to many people who have heard of Bitcoin recently, they only think that Bitcoin can make them rich and they don't know anything else about Bitcoin What does it really mean And what is the real benefit of Bitcoin so I think that such people will fail.
But that would mean that you know the in-depth theories and applications that bitcoin can be used if bitcoin is in your circle of competence. In my opinion, having a subject in your circle of competence is a very difficult thing to achieve, you know how those people who take masters and doctorate on their chosen major, that one can be considered circle of competence, just because you traded with bitcoin for a long time doesn't mean that you already know everything there is to know about it, maybe if you are one of the bitcoin core developer then I think you can consider bitcoin as part of your circle.
I can say that Bitcoin is in my Circle of Competence, I love Bitcoin and I know exactly what I want, but unfortunately this does not apply to many people who have heard of Bitcoin recently, they only think that Bitcoin can make them rich and they don't know anything else about Bitcoin What does it really mean And what is the real benefit of Bitcoin so I think that such people will fail.
Investing in your circle of competence is definitely the way to go when talking about things like stocks. As for bitcoin? While I still think that people should invest in bitcoin only if they really understand it, up to what extent should they understand it? For now as we're quite early, I think people should have high understanding of it. But as time goes and when(and if) Bitcoin becomes the de-facto store-of-value for the masses? I think the minimum that people should know is Bitcoin's basic characteristics(finite, decentralized, self-custody, etc) and how to secure it on a non-custodial wallet, and probably everything else is just extra.
lol.. I also think we need the "road to Damascus" metaphor in in there too somewhere
sensible investing is about knowing what you are investing in
if you dont have time to learn. then stay away if you dont know the industry
but dont fear learning something new
if your into IT. you do not have to stick with that industry for the rest of your life
be confident to learn new things. just be confident you have learned enough to understand it before investing
some IT nerds know programming. but have no clue about shares, assets, investing. but think just because they know programming it will get them huge riches in bitcoin.
many have lost alot this way.
its not to say nerds should not trade bitcoin. its just to say learn more about it beyond your coding speciality. learn about assets, trading and risk management
if you dont have time to learn. then stay away if you dont know the industry
but dont fear learning something new
if your into IT. you do not have to stick with that industry for the rest of your life
be confident to learn new things. just be confident you have learned enough to understand it before investing
some IT nerds know programming. but have no clue about shares, assets, investing. but think just because they know programming it will get them huge riches in bitcoin.
many have lost alot this way.
its not to say nerds should not trade bitcoin. its just to say learn more about it beyond your coding speciality. learn about assets, trading and risk management
This "circle of competence" is a real thing! For this same reason people like Warren Buffet have never invested in bitcoin or any other cryptocurrency ever. Rather, he stayed back with his old school investment where he succeeded.
Same goes with an Indian billionaire Rakesh Jhunjhunwala who is also known as Indian Warren Buffett. He has recently voiced his statement agaisnt bitcoin and urged Indian government to ban it. So for many people, Bitcoin is out of their circle of Competence.
But there are millions of other people who had adopted bitcoin for a better financial future. For me, it's within my circle of Competence since last few years!
Same goes with an Indian billionaire Rakesh Jhunjhunwala who is also known as Indian Warren Buffett. He has recently voiced his statement agaisnt bitcoin and urged Indian government to ban it. So for many people, Bitcoin is out of their circle of Competence.
But there are millions of other people who had adopted bitcoin for a better financial future. For me, it's within my circle of Competence since last few years!
Good point, these billionaire are more accustomed to the traditional types of investment vehicles so Bitcoin and cryptocurrencies must be otherworldly for them. Same goes with Peter Schiff, the gold advocate who does nothing but hate on Bitcoin but on the other hand is a successful stock broker. If there's so stuck on their thing, its not necessarily a bad thing. They have their thing and we have ours but I wish they would stop screaming bloody hell on crypto just because they don't like it.
I first learned about Bitcoin before I considered about my finances and investing so you would say that crypto is my "circle of competence" as compared to other investments such as stocks/bonds/mutual funds. I dabble on these as well but I'm not as adept to it as compared to my knowledge on crypto.
In investment, the rule is "stick to your circle of competence", just do not invest in things you do not understand.
Quote
Linked to this is the Dunning-Kruger effect - when you thing you know something and you have understood a problem, but you really have no idea.
The Dunning-Kruger effect is when you are stupid,but you don't realize that you are stupid.
Stupid people don't realize that they are stupid,while intelligent people can realize their own level of intelligence.
The people,who fall under the Dunning-Kruger effect cannot realize that they are under the Dunning-Kruger effect,so your question is pointless.
Yes,Bitcoin is in my circle of competence,but I can't say the same thing about the more technical stuff,which surrounds Bitcoin,like mining,blockchain technology,cryptography,etc.
This concept was popularised by Warren Buffet and Charlie Munger. Each person has area of thing "they know", e.g. if you work in computing you will know ´bout programming, networks, systems and the like.
In investment, the rule is "stick to your circle of competence", just do not invest in things you do not understand.
Linked to this is the Dunning-Kruger effect - when you thing you know something and you have understood a problem, but you really have no idea.
Is bitcoin in your circle of competence or are you Dunnin-Krugering around?
In investment, the rule is "stick to your circle of competence", just do not invest in things you do not understand.
Linked to this is the Dunning-Kruger effect - when you thing you know something and you have understood a problem, but you really have no idea.
Is bitcoin in your circle of competence or are you Dunnin-Krugering around?
Well, Buffet and Munger are not gods who have the absolute truth in everything they say. Let's remember what they think about Bitcoin. So, I would relativize what they say. Those who have saved and invested in index funds over the last 50 years have done well, and they didn't need to know much about investing or index funds to do so. On the other hand, we can see fund managers cherry-picking and failing miserably in their decisions, performing worse than index funds. So, although as a general idea I agree that you have to be knowledgeable about what you invest in, I don't consider it an absolute truth either.
Bitcoin is indeed in my circle of competence as long as I remain and operate within my limit in bitcoin that is using bitcoin for transactions and knowing how not to panic sell my bitcoin, but any thing outside the listed above e.g trading, gambling, and mining is way above my competence for now so I always stay away from them.
You know how to transfer bitcoin, how not to sell bitcoin (which is not related to bitcoin itself)... so basically only about how to transfer. So basically you know nothing. Just like saying that you are an IT specialist because you know how to turn on the PC.
Bitcoin is indeed in my circle of competence as long as I remain and operate within my limit in bitcoin that is using bitcoin for transactions and knowing how not to panic sell my bitcoin, but any thing outside the listed above e.g trading, gambling, and mining is way above my competence for now so I always stay away from them.
What you are listing is just scratching the surface of what bitcoin really is, you are just doing what everyone says when the prices go down. It is alright to admit that bitcoin is not in your circle of competence, it is complicated. Better to not pretend that you know it all because when the time comes that someone who genuinely wants to know something about bitcoin and you have no answer, you will only embarrass yourself, I am still learning a lot about bitcoin but I still consider bitcoin not part of my circle. 
This "circle of competence" is a real thing! For this same reason people like Warren Buffet have never invested in bitcoin or any other cryptocurrency ever. Rather, he stayed back with his old school investment where he succeeded.
Same goes with an Indian billionaire Rakesh Jhunjhunwala who is also known as Indian Warren Buffett. He has recently voiced his statement agaisnt bitcoin and urged Indian government to ban it. So for many people, Bitcoin is out of their circle of Competence.
But there are millions of other people who had adopted bitcoin for a better financial future. For me, it's within my circle of Competence since last few years!
Same goes with an Indian billionaire Rakesh Jhunjhunwala who is also known as Indian Warren Buffett. He has recently voiced his statement agaisnt bitcoin and urged Indian government to ban it. So for many people, Bitcoin is out of their circle of Competence.
But there are millions of other people who had adopted bitcoin for a better financial future. For me, it's within my circle of Competence since last few years!
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