Samson Mow, an influential member of the Bitcoin community and CEO of Jan3, has raised alarm over psychological traps plaguing newcomers in the cryptocurrency market. According to Mow, widespread confusion caused by “unit bias” can cause inexperienced investors to make choices that do not represent digital currency’s true worth.
The Allure of ‘Affordable’ Altcoins
Mow cautions new investors not to get trapped into thinking lower-priced altcoins are superior investments than Bitcoin, due to their vast supply and unit bias design. He offers as an example: people may believe XRP, priced at $2 compared with Bitcoin’s $85,000 price tag, is a bargain; not realizing there is such a disparate total supply between both coins.
Mow argues that this cognitive bias influences novice investors to prefer owning entire coins of lesser valued cryptocurrencies over fractions of Bitcoin, potentially negatively affecting their investment returns and outcomes.
Market Capitalization Versus Price Perceived Differently with Equal Supply
Mow proposed an interesting thought experiment wherein he recalculated the prices of various cryptocurrencies as though their limited supply were that of 21 million coins like those held by Bitcoin. His adjusted prices show striking disparities: Ethereum would be valued around $9,200 per coin while XRP surged up to $5.800 and Solana hit $3.400 – proof that unit bias distorts perception of value.
Mow highlights the negative implications of unit bias when comparing altcoin investments with Bitcoin investments, showing their relative costs of ownership.
Recent trends suggest diversification away from Bitcoin; yet its dominance in the market has unexpectedly surged to around 60%, showing its significant hold over market capitalization for all cryptocurrencies combined. Contrary to earlier projections, Mow now believes Bitcoin’s dominance will only continue increasing further.
