Editor's note: Cryptocurrency isn't about dollars... it's about value.

When people consider buying crypto assets like bitcoin, they tend to focus on price. They compare this breakthrough technology to familiar investments, because that makes it easier to understand.

But our resident crypto expert Eric Wade says if you're building a crypto position based on traditional market analysis, you're missing the point. Crypto isn't a "traditional" asset class – it's turning our financial ecosystem on its head.

Today's Masters Series is adapted from a recent Crypto Master Class video and the March 26, 2021 DailyWealth. In it, Eric addresses some misconceptions about cryptos... details a way to value your crypto portfolio without relying on dollars... and reveals what some of the "smartest people in finance" are missing about this disruptive technology...

Your Brain's 'Autopilot' Could Cost You a Fortune

By Eric Wade, editor, Crypto Capital

When you pull up a chart for bitcoin, you probably just check the price and move on...

Most people look at (and think about) bitcoin in terms of dollars. That's for the same reason you'd price any asset in dollars – it makes it easy to track. People want to see when bitcoin is in a rally or a sell-off, and tracking it in dollars is an easy way to keep score.

But don't forget... bitcoin itself – and the bitcoin network – doesn't have anything to do with dollars.

Thinking about price and nothing else can lead to misconceptions when it comes to bitcoin and other cryptocurrencies. And it can hold you back as a crypto investor.

Let me show you what I mean...

The bitcoin network doesn't move dollars. It moves bitcoin – and only bitcoin.

Now, there may be a human being at the end of either bitcoin transaction who does care about dollars, and does care about the price. And as investors, we're part of that – we join in on that dollar talk.

But then you hear something like the recent statement from Citibank... when in early March, it said in a research note that bitcoin could "become the currency of choice for international trade."

OK. Thank you, Citibank... for catching up to where we've been for years.

Of course bitcoin can work in international trade. If you put bitcoin on one end of the network and send it around the world to someone else at the other end of the network, then they can convert that bitcoin to anything they want – or keep it. Bitcoin isn't directly linked to dollars.

Instead, when we talk about cryptocurrency prices, what we're really talking about is the value that the market is putting on it...

We're dealing with the market and its perception, its risk tolerance, and its expectations of profit. It's about all the people who participate in the market and what they believe will happen.

So, if I say bitcoin is going to reach a million dollars in our lifetime, that means I have the expectation that when bitcoin is $50,000, it's undervalued on a lifetime basis... but that it might be overvalued in a short-term basis. It's all about value.

All of this might sound obvious. But I want to help folks break away from limited thinking and misconceptions...

I've heard people talk about transferring dollars over the bitcoin network. That isn't how it works. You could build a network on top of bitcoin where someone holds dollars on one end, and someone else then feels confident that he could withdraw dollars from somebody else.

You could do that. But it's important to know that the transactions on the bitcoin network are independent of the dollars... other than the "brackets" at either end of any transaction, which is the human who's saying, "I'm going to buy bitcoin with my dollars."

You can't just walk up to the bitcoin network, hand it some dollars, and have those dollars move across the network and show up at the other end, the way you would with a bank wire. It's just different.

Even more important, this understanding matters to your investments, too...

We're all looking to build our net worth. But when you're building your position in cryptocurrencies or related technologies, does it change things if you take dollars out of the equation? Do you still look at your cryptos in the same way?

Try putting the dollars and the price appreciation of the token out of your mind once in a while, and ask yourself, "Do I want to own this disruptive technology that has unique new monetization principles? Do I want to own it irrespective of the dollar change in value?"

Because that dollar change is just a human on the other side who's willing to buy it for that price. And technology doesn't always answer to price.

So, try holding your portfolio to this standard...

Look at it the same way you would an ounce, 40 ounces, or 400 ounces of gold. We know that dollars are going to fluctuate on that. But a bar of gold doesn't ask how much it's worth when you pick it up and hold it in your hands, does it?

Then neither does bitcoin.

Ask yourself if you've put your brain on autopilot and are simply checking prices... even though you know bitcoin is different from other assets.

After all, most people stick with what they know... whether it's trying a new brand of soda... or investing in an entirely new asset class.

Think about it. How often do you change the route you take to work? How often do you try a new dish at a restaurant?

In short, our brains are wired to tell us it's easier to keep things the same and avoid any potential pain that might come from changing things.

This is exactly what happened in the early 1990s.

The Internet was just starting to go mainstream. But many smart folks were convinced it was just a fad.

For example, famous economist Paul Krugman said:

It will become clear that the Internet's impact on the economy has been no greater than the fax machine's.

And here's a quote from U.S. astronomer Clifford Stoll in 1995:

Visionaries see a future of telecommuting workers, interactive libraries and multimedia classrooms. They speak of electronic town meetings and virtual communities. Commerce and business will shift from offices and malls to networks and modems. And the freedom of digital networks will make government more democratic. Baloney.

Even the co-inventor of Ethernet, Robert Metcalfe, didn't believe in the Internet...

I predict the Internet will soon go spectacularly supernova and in 1996 catastrophically collapse.

These "experts" fell for the default bias. Plenty of investors fell for this bias, too. And they missed out on big gains as the Nasdaq – which is home to many tech stocks – grew 400% from 1995 to 2000.

We're seeing the same thing happen with cryptocurrencies and the revolutionary technology that fuels them... the blockchain.

Many of the smartest people in finance just don't get it.

For example, in May, JPMorgan Chase (JPM) CEO Jamie Dimon again warned people to "stay away" from cryptocurrencies.

And at a Berkshire Hathaway (BRK-B) shareholder meeting in May, investor Charlie Munger told the audience...

I hate the bitcoin success. And I don't welcome a currency that's so useful to kidnappers and extortionists... nor do I like just shuffling out a few extra billions and billions and billions of dollars to somebody who just invented a new financial product out of thin air.

But bitcoin is just a cryptographically secure medium of exchanging value. It's not "fraud," or "not a real currency." It can be moved around far more easily than traditional currencies, and it can't be "closed." It's not an overleveraged credit derivative fund. It's a highly secure distributed blockchain running on a global network of computers. And as I explained yesterday, it's the most important disruptive technology since the Internet.

That's why some of the experts are starting to overcome their default bias... like hedge-fund billionaire Paul Tudor Jones, who once called it a "speculation." He recently announced that he's backing a $72 million crypto fund.

Meanwhile, during an investment advisory call in May 2020, Goldman Sachs representatives told their clients that cryptocurrency was not an asset class. The main points of the slide were that bitcoin provides no cash flow and is not an effective hedge against inflation.

But almost exactly one year later, Goldman Sachs changed its tune.

Mathew McDermott, head of global assets at Goldman Sachs, released research confirming that "bitcoin is now considered an investable asset," and that "it's not often that we get to witness the emergence of a new asset class."

And while billionaire financier Stanley Druckenmiller once said, "I don't want to own bitcoin"... he now says it's "better than gold."

Today, these investors can see the opportunity. Cryptocurrencies are already revolutionizing the financial industry. With decentralized finance ("DeFi"), crypto investors can become their own financial institutions. Between lending and borrowing, market making, trading, and insurance, DeFi is recreating our financial ecosystem from scratch in a new, individualized, and decentralized manner.

So don't let your default bias cause you to miss out on the next great disruptive technology. If you're willing to go against your default bias, you could make a fortune.

Good investing,

Eric Wade

Editor's note: Crypto is disrupting the financial system... and Eric says bitcoin was only the first step in the "DeFi" revolution. Now, a major change has arrived in the crypto world – and it could lead to big income yields for those who know what to look for.

That's why on Wednesday, July 21, at 8 p.m. Eastern time, Eric is hosting a special event to explain why all the "experts" are dead wrong about cryptocurrencies... and how one opportunity could be far bigger than anything he has shared in the past. It's completely free to attend – all you have to do is let him know you're coming. Click here to get started.