Sunk costs and skin in the game

While sitting in a bar with colleagues collecting thoughts, a show came up that I had tried watching and found useless, and they said it was because I didn't give it enough of a chance - I had only forced myself through half of the first season and at that point, hadn't found anything that was of interest. Their view was that it would take a dive into the second season to start to get it.

Yeah - there are other shows out there - Thanks.

I joked with them though that perhaps the only reason that they find it interesting now is because they are invested, they have a sunk cost in the show and therefore, a fallacious position that it is better than it is.

When it comes to investing, skin in the game is similar to this position as it is something that can color the opinion about an investment and hide away the reality. However, what it generally does is make the investor more aware and more willing to investigate different aspects of the investment.

For example, when I first came onto the blockchain, my plan was to solely create in the hope to make a little money to ease the financial challenges I faced in my life at the time. However, I didn't really make that much and what I did was so insignificant to the challenges, it wasn't really worth taking out. But, what it did allow me was for the first time in my life. the opportunity to play in a market situation, to take some of the tokens I had earned and see if I could use them to earn more.

While I was playing with pretty small amounts, I was relatively successful (lucky) with my trading and was able to make enough small mistakes early to learn so as to make some gains later. The gains I made eventually went back into the platform where I felt much more like an investor, as I had taken earning and sunk them in, making it a cost. Not time or effort - actual dollars. At this point, I started paying more attention to the platform and reading, learning and most importantly, connecting with people who I could learn more from. I was interested - I was hooked.

This is better than any show there is on Netflix, any book, any entertainment at all. It is better than sex.

Scrub that last one.

It is better than sex.

But, you need something to do when you aren't having sex.

It was around the start of November 2017 that I made my first ever purchase of tokens with fiat, I took money that I had scrounged together (as things were still very, very hard at that time) and put about 200€ of my "real" earnings into tokens. At that point, I became a real investor and not only was I interested, my entire mindset changed into a different position - there was a personal paradigm shift.

By this point and after 10 months, I was already getting some traction with my content, but my interest in the workings of the platform started to take precedence. Rather than being an enduser, I began looking at myself as an investor who should know what they are investing into, understand the fundamentals, the layers and of course, the risks associated with my investment. My very meagre investment.

The thing that many don't seem to realize is how little it takes to start building an investor mindset on Hive. I think that many look at the large accounts of "investors" and think that since I can't put in those kinds of values, it isn't worth it. However (in my opinion) all it really takes is to be enough of an investment that makes a person, not want to lose it, enough that it would hurt a little. For me, that 200€ at the time was enough, for someone else it might be 20€, another 200,000€. It doesn't really matter.

Why would you sink costs into a platform that has high risks?

Because of the potential to build the mindset - really build the mindset, not just think you have it. Investing oneself into developing knowledge, processes and habits that aid investment on Hive doesn't limit the applicability to Hive, it can be applied anywhere in the world. Most of us aren't good at dealing with risk and loss, most of us do not intuitively understand compounding value, most of us are too impatient to get significant returns, most of us in this world are not investors in our life infrastructure - we are consumers on the disposable enduser layer.

I can only use myself (and the many people I have interacted with on and off chain) as an example, but putting some skin in the game of whatever we find important enough to spend our time on, gives us the best opportunity of success because it increases our interest and willingness to learn. As they say, don't buy stuff, buy experience, and putting a little capital in buys experience as an investor. And in my experience, it is those who do this that end up developing themselves as they recognize that in order to best "play the game", they need to be better. It is an investment into self-improvement.

This doesn't mean one has to keep investing more in, it doesn't mean that all the financial dreams will come true, it doesn't mean losses won't be incurred. What it does mean though is that there is an active process intentionally applied, it gives a person agency in their own path. Once this learning starts happening, the similarities to other aspects of our lives become quite obvious as the patterns are the same and what this does, is increase agency in the walking world in areas that seemed "out of the bounds of influence" earlier.

Some people will spend their time forcing themselves through entertainment activities until they enjoy it, like learning to smoke. The first cigarette doesn't taste good, but people will continue until they are addicted. The same discomfort goes for all activities, so why not at least try to sink the cost of time, effort and money into something that improves one's own life in ways that matter to the person?

For me, financial stability has nearly always been a pipe dream - but it is no longer so, as now I have the sense that it is within reach - on and off the platform. I think I would be far further from this position if back in 2017, I had given into my fears and not put that 200€ in. At the end of the day, it is an insignificant amount over time, but it was a sharp pain in the moment.

A little pain and potential for loss goes a long way, which is why having some skin in the game matters. While perhaps it shouldn't there is a difference between the value sunk in through effort and time, and cash. Perhaps it is because we have more of a sense of control over the effort and time, but money is always external and at least made to feel elusive.

What are your thoughts on having skin in the game?

Taraz [ Gen1: Hive ]