Finance is a curious discipline.

Halfway between economics, politics and psychology, it is increasingly becoming the subject of hope, especially with regards to new technologies.
And increasingly targeted by influencers of various kinds. 

The Dogecoin Case

Dogecoin is a decentralized peer-to-peer cryptocurrency (like bitcoin), created in 2013 and inspired by a very popular dog meme on the web.

But it is only at the beginning of 2021 that Dogecoin has an unexpected fortune, reaching its all-time high of $0,08 on February 8. At that time, its estimated ROI was 10290.91% from launch to today (March 18), according to MarketCap.

And all this thanks to the lucky tweets of Elon Musk, who has now also established himself as a financial influencer. The value of bitcoins also often follows Musk's tweets, but the Signal case is the most emblematic: immediately after the invitation of the Tesla CEO to download Signal, the shares of Signal Advance skyrocketed.

Too bad it was a biomedical company that had nothing to do with messaging.

How we got from the silent contrarian investing of Wall Street genius Warren Buffett to this unusual publicity and spectacularization of finance? 

A Brief History of Financial Influencers

A historical overview is a must: while finance has always been the prerogative of a few experts, often coming to this discipline after an economics course of study, today courses, tutorials and influencers' opinions are available to everyone. 

In the 80s, the average Italian family invested through their own financial advisor, but above all, only those with very large assets invested.

Today, however, the online trading tool opens its doors to everyone. 

Since the first lockdown, online trading has undergone a considerable boom, especially among the very young. Many people locked at home have started to inform themselves, to follow quick courses - in the best of cases - or just the indices and the performance of stocks.

Someone started to chew on previously unthinkable mathematical formulas, learning about binary options and the laws of probability. 

“The pandemic has popularized active trading - Kevin Gu explains, product manager at Wealthsimple Trade, a well-known U.S. online trading platform – for a few reasons: people have more time on their hands since they’re at home, they’re thinking about their finances more seriously, and they’re excited about the opportunity to get into the market.” 

Ultimately, investing has an adrenaline rush: the secret hope of those who buy is to be pioneers, to one day see their pockets explode with the fruits of their stock purchases. 

The Thrill of Investing in New Technologies

New technologies are now a hot sector to invest in: smartphones, blockchain, Internet of Things, self-driving vehicles, digital genome...

If until about twenty years ago the computer majors were the only ones to emerge victorious, for example Apple (NASDAQ:AAPL) or Microsoft (NASDAQ:MSFT), today we have successful assets that are much less tied to economic productivity but still interesting for investors. Some new technologies that could make sense to invest in hide fascinating and mysterious stories: this is the case for example of bitcoins. 

Bitcoin (with a capital “B”) technology and its related cryptocurrency bitcoin (lowercase “B”) may seem like a golden goose to some inexperienced investors who follow certain influencers.

But it is imperative to apply caution and understand a technology, before starting an investment. 

Two Things to Know About Bitcoin Technology

BTC was a technological revolution. It paved the way for many other developments in blockchain technology, some of which were much more institutional and less opaque than Satoshi Nakamoto's creation.

However, it is important to know two technological aspects that are very often overlooked:

1. Bitcoins have a finite number. One day in the near future, the last block "miner" will be rewarded with the smallest possible unit of bitcoin. This will stop BTC production at just under 21 million. New possibilities could arise: for example, bitcoin could become a commodity (or "safe haven"), like gold.
2. Bitcoin mining, or the computations required to create new Bitcoins, has an environmental impact considerable. Images of these data centers lost in Siberian wastelands and fueled by coal are now widespread. Servers, as we know, heat up. But mining is by its nature a procedure that requires high computing power, and this aspect makes current mining a creature in conflict with new environmental sensitivities.

Having made these purely technical considerations, one can begin one's economic-financial analysis with awareness.

Choosing the right “influencers” to invest in new technologies

Unfortunately, often the lack of knowledge of some basic technological indicators causes novice investors to embark on the BTC journey - and others too - trusting that the growth will continue forever. 

It is more important than ever to understand the real future of digital assets, or whether it is possible to predict it. A digital strategic consulting, or a rigorous individual study, are essential in this sense, at least to avoid incurring the Betamax risk.

Betamax was the first videocassette – an incredible product with huge potential – marketed in 1975 by the Japanese company Sony.

If there had been online trading and some compliant influencers back then, who wouldn't have invested in Betamax? 

Too bad that a year later the VHS arrived.  

And the rest is history.