This article is not meant to attack Bitcoin or cryptocurrencies in general. I believe that readers of this blogpost are intelligent and are able to consume more nuanced information (so many people read the super lengthy ADMF article, I can’t believe it).
Cryptocurrency is a large and complex topic. One could write a PhD thesis on crypto to analyse many components from multiple angles (technological, economic, social, etc).
However, this article is solely about how I am looking at hype on cryptocurrencies in general. Answer is looking within.
And it is definitely not financial advice.
Hype on cryptocurrency
You might expect me to go and ridicule or bash investment influencers in this section. But let us begin by talking about the nervous system.
In my free time, I sometimes like to read about how the nervous system works. It is a complex system that no body truly understands. In the 20th and 21st century, there are more and more science breakthroughs that start to surface. All of the sudden, zero cost behavioural tools that arise from deeper understanding of nervous system, becomes available to be shared and implemented. Tools often involving increasing willpower, managing stress, getting better sleep, etc are effective and usually free of cost.
In the nervous system, there is an organ referred to as the brain. It is the most important organ in the nervous system and the most complex one as well. Without the brain, a human being wouldn’t be alive quite frankly.
And to understand a phenomena surrounding hype that is largely behavioural and governed by our brains, it is really important for us to get some understanding of how the brain actually works.
A glimpse about the brain
Here’s what most people know about the brain:
There’s the left and right brain allowing people to be analytical and creative respectively.
It is used to think and control your body
We can start from here and go a step further. We can mention that the primary goal of our brain is to ensure survival. This is done in 5 simple steps:
Needs: It is responsible to inform us on what our body needs for example food, shelter, procreation, etc
Think: It is responsible to inform us on how we can achieve that
Execute: It is responsible to generate the energy for us to accomplish things we need
Identify problem: It is responsible to alert us if danger arises
Adapt: It is responsible to calibrate our actions in the moment in response to various stimuli
That’s pretty much it as far as we understand it scientifically. Needs, think, execution, problem, adaption.
Okay, that’s a simple explanation of how our brain can accomplish its goal. Now let’s talk about features of the brain that support the capabilities that I have just highlighted.
IMPORTANT: The brain is built from bottom up
There is the most bottom part that is also the most primitive. It is readily available the moment we are born and it is known as the animal brain or reptilian brain. This is by far the oldest brain structure that we possess. Animals have this too and it controls super basic functionalities such as:
Breathe
Sleep
Hunger
Eat
Sense temperature
Sense pain
Urinate & defecate
You get the idea
Sitting on top of reptilian brain is the limbic system
Now this is where things get exciting, literally because it forms the basis that allows mammals (not just humans) to form relations, emotional connections and be in groups as social creatures. It is part of the brain that allows you to feel emotions for example:
Judge if something is scary
Judge if something is needed for survival
Judge if something is an opportunity without rationalising it
You get the idea
It essentially perceives stimulus from outer world not by reasoning and logic, but by emotions. Now when you combine reptilian brain and the limbic system, we get what is usually referred to as “emotional brain”. Here are some example behaviours that are governed by your emotional brain:
Playing your phone at night even though you know that it will worsen your quality of sleep
Eating processed food and drinking sugary beverages because it tastes good but you know it has detrimental effects on your health
And other guilty pleasures you can think of that you probably should not be doing
Finally, the newest brain structure that is added into the party
prefrontal cortex also known as the rational brain. It occupies about 30% of our skull and it is mainly responsible for us to reason. Reasoning is powerful because it is key to understand the world around us in a factual and structured manner. It allows people to:
innovate,
break from bad habits (inhibition),
polish existing skills,
plan with a sense of time, etc.
read Recompound’s blogpost instead of scrolling Instagram mindlessly ;)
Unfortunately, making full use of prefrontal cortex is onerous and everybody knows this. Who actually really prefers to do a calculus homework in high school over to eating a delicious chocolate ice cream? And even if we tell ourselves not to eat the ice cream, we still do.
Why is this the case?
Flow of information
Now comes the most important part of this mini science sub-essay which hopefully has not bored you that much.
When there is a sensory input:
An influencer telling you to borong bitcoin
Your friends just made a crypto exchange account to buy ethereum for the first time
You see that price of bitcoin is sky high at coinmarketcap and expect to rip even further
You see Michael Saylor with his laser eyes and telling people to mortgage their homes to buy bitcoin
and many more
All this information is a perception that is then cooked in the Thalamus.
Afterwards, it gets sent to 2 directions: down and up. Down to the limbic system (amygdala) and up to the frontal lobes as they reach our consciousness and a more polished, analytical interpretation. Neuroscientist Joseph LeDoux calls this the “low road” and “high road” respectively.
What’s been found is that pathway to the emotional brain is milliseconds faster than pathway to your rational brain. All what I am saying is that before you even interpret the information rationally, your brain has already dealt with the information emotionally by inducing stress hormones and make you feel in a certain way.
A classic example of behaviour that is induced by stress hormones in response to the emotional brain is fear.
In the case of cryptocurrency to be more complete:
Fear of missing out or fear of losing money (depending on what cycle we’re at).
You can imagine when being flooded by repeated information like a broken radio about Bitcoin halving, Ethereum becoming full Proof of Stake, SEC approving Bitcoin ETFs, El Savador acknowledging Bitcoin as legal tender, Elon Musk mentioning Doge is going to the moon, Federal Reserve money printer go brr and you need to escape the fiat system and Bitcoin is your Noah’s Ark (savior). All those are going to your emotional brain that creates stress inside you if you don’t participate in the hype or if you don’t sell your Bitcoin immediately to prevent you from further losses.
You’d feel like a sucker and perhaps you have heard from Bitcoin maximalists saying: “Have fun staying poor” if you don’t go all in on Bitcoin.
If this feels like you now, do you know why? Because I have been there and done that back in 2018 🙂
The more intelligent amongst people would learn about theories like Plan B’s Stock to Flow ratio or Chris Burniske’s cryptoasset valuation MV = PQ or Ethereum forming the basis of decentralised finance (DeFi) and decentralised applications using Web3 which would accrue value from their various use cases as championed by famous eth influencers like David Hoffman.
Seeing these smart visionaries explain cool stuff that you don’t probably understand fully (I certainly don’t understand them fully) might make you be even more Fearful. Fearful of what? Missing out of course (during bullish times) and fearful of losing capital permanently (during bearish times).
And if you are still with me this far, my argument in this article is this: it is dangerous (very risky) to only trust your emotions or instincts when buying anything of excessive or sizeable amounts.
I hope that this article has brought clarity
The hype or gloom that constantly surrounds cryptocurrencies is a market phenomenon that is powered by a strong psychological force that stems from a biological underpinning. It comes from the way the human brain is wired.
We process information emotionally first, and analytically second.
That’s why narratives can feel overwhelming, contagious, or even irresistible at times. It’s also why markets can swing to extremes — not because the fundamentals change overnight, but because our biology reacts faster than our logic.
But what really is Bitcoin?
Many who buy and sell Bitcoin understand it as a digital store of value and believes that the value comes from the 21,000,000 hard supply cap that needs to be mined by miners.
Others understand it as a number that gets displayed in their digital wallet (software they download from the internet) OR digital number that gets displayed in the most famous crypto exchange.
But fundamentally what is it? What does it mean to own a Bitcoin? Well, click on the button below to read an explanation that gets down to the core of what Bitcoin really is. It is ready whenever you are :)