What is a zero-sum game and why should you care about it with crypto?

Welcome to the cryptohunt jam where we spend one minute a day to explain crypto. In plain english.

Today: What are zero-sum games and why should you care?

In the context of financial systems, zero-sum games describe a market where someone’s gain is someone else’s loss.

Let’s take a look at a slot machine in the casino. When you win, your wins are only possible because numerous other people have lost at that machine in the past.

Crypto is the same: When hedge funds invested a few million dollars in Terra Luna, and exited with hundreds of millions before the collapse, that money came from the other people who put their money in after them, which pushed Luna’s price up. A plus for hedge funds, a minus for everyone else: Makes zero in sum.

But why should you care? Because when things look too good to be true, they probably are. Always do your own research on things you are interested in investing in. Ask yourself: If everything is a zero-sum game, who stands to benefit from me putting money here? And if you don’t like the answer, walk away.

Come visit us at www.cryptohunt.it if you are interested in learning more. We have dozens of small, easy to understand lessons to empower you to make your own decisions. No crypto knowledge required!

Disclaimer: This podcast references our opinion and is for information purposes only. It is not intended to be investment advice. Do your own research and seek a duly licensed professional for investment advice.