Investing and gamification
The youth and investing
The taboo of talking about your finances is fading away. Although people were still cautious about sharing things like their salary in the past, we increasingly see an open discussion about money. Likewise, investing is also gaining ground as an exciting topic for discussion.
The investment world seemed to be closed off for most people, reserved for wealthy men in black suits. Not a place to grow wealth for ordinary people. Most banks already offer the option for managed investing. But this, in most cases, has a high entry fee.
A lot has changed in the past ten years. First, the banks have started to focus more on “the common man” by significantly lowering entry fees. Second, managed investing became more and more accessible to everyone.
In recent years, more and more apps have also been developed aimed at simplifying managed investing. Do you have some change and a smartphone? Then you can start managed investing within five minutes. Moreover, the appearance and use of the apps have become more and more attractive through gamification. No wonder that young people are increasingly finding their way to investing.
With the arrival of these young people, the responsibility you have as a platform has also become more significant. Investing still involves risks.
Criticism of investment apps
Recently, the Dutch newspaper FD published a critical piece about the investment app Robinhood. The app lets anyone invest themselves. The app is easy to use, and you can get started within seconds.
As prices plummeted at the start of the coronavirus outbreak, many aspiring investors grabbed their chance and started investing. This resulted in 3 million new users for Robinhood.
As a Robinhood user, you do all the investing yourself. You choose what and how much you want to buy. It’s an easy-to-use app, so shares are purchased or sold in no time. “At first, it looked like a game for your smartphone,” says one user of the app.
And therein, according to the FD, lies the danger. Investing is not something you should quickly do while sitting on the toilet. If you want to do it right and build capital with it, you need tons of knowledge, experience, and, if possible, a supercomputer.
The new style of investing
Investing with the BOTS app works with such a supercomputer. BOTS is an open platform on which expert developers offer their trading bots. These bots invest for the user. They make their choices based on artificial intelligence, machine learning, and algorithms. So, bots are automated trading strategies.
For a long time, algorithmic investing has only been available to the wealthiest 3% of the world. Precisely the 3% that already made huge profits over time. The BOTS app was developed to make this type of investing available to everyone.
The BOTS app also applies elements of gamification. “We do this mainly to make the user experience even easier and more fun. In addition, at BOTS you do not do the investing yourself; we invest algorithmically for you.” According to the founders of BOTS.
In practice, this means that everyone, young and old, can start investing without the need for tons of experience. The trading bots already have that experience for you. The user can choose the risk level and the amount of the investment. Because a bot will never act if it is not necessary, the user will not be confronted with unnecessary transaction costs.
“This is the new way of investing. We take into account the wishes of the user, the risks associated with investing, the return, and a supercomputer. With this, you as a platform, take the responsibility that comes with a young userbase.”
Crypto’s such as bitcoin (BTC) bring extra responsibility
In recent years, a new investment class was born. This investment class can be seen as an answer to the unfair and opaque traditional financial system. In traditional finance, banks and companies process transactions and offer other financial services; crypto makes banks and financial companies unnecessary.
A decentralized network maintains a blockchain with all the transactions that have ever been done with a specific cryptocurrency. Some crypto projects offer just the possibility to send and receive transactions like bitcoin (BTC), while others provide more complex financial applications such as taking out a loan, betting on sports, or games with an in-game economy.
One risk that investing in crypto brings is volatility. As there are no central parties that can intervene when the market overheats, the price of a cryptocurrency is the true reflection of the current supply and demand on the market. This can sometimes cause extreme price volatility when there is intense fear (like during the corona pandemic) or extreme greed (when bitcoin broke its all-time high in December 2020).
Emotion plays an important role in crypto, maybe even more so than in the traditional financial world. Therefore, having no emotions at all would be an advantage. The trading bots in the BOTS app are precisely that kind of trader; they have no emotions. Often the trading bots minimized losses during a price crash by doing precisely nothing, something that can be hard to do for a humanbeing when they see the price crash by +40%.
There is no such thing as risk-free trading. It is possible to lose (part of) your stake