Psychological Principles that Apply to Bitcoin

Bitcoin and psychology have a very powerful connection. Remember people saying that bitcoin broke the psychological barrier by crossing $10,000? Well, there's a lot more psychology involved with bitcoin than just that!

Here are the top 3 psychological principles that apply to bitcoin:

Self-Fulfilling Prophecy

Market forces (me and you) decide the value of bitcoin. Since most of us expect it to go up, it does. The Self-fulfilling prophecy is basically a prediction that is reinforced with behavior and beliefs that it will become a reality. People have basically used their will power and belief to cause bitcoin's price to go up. People have been investing/buying/mining bitcoin because they believe it will go up, they expect it will go up. Their expectations have caused bitcoin's price to go up.

This is not the sole reason why bitcoin's price has gone up, but it has contributed to its price increase significantly.

Primacy Effect

Why haven't all the other alt coins reached bitcoin's level or even close? Simply because bitcoin was introduced first, it came first, and has a more established history. In psychology, the primacy effect explains how information (in this case bitcoin) presented first is given more attention than the information that comes afterward (the other alt coins).

This is a gross over-simplification, but it is true to some extent.

Scope & Sequence

This is not really a psychological principle, but it is part of underlying psychological factors. For example, bitcoin was created during the financial crisis. When people were let down by major financial institutions, the lucky few found and invested in bitcoin at that time. So, the scope at that time, was the financial crisis and the answer or proposed solution to that problem was bitcoin.

The sequence is just the series of events that led to bitcoin's success as we perceive it today. Most people might not have not even heard of bitcoin until this year including myself. What are the series of events that led to bitcoin's success? Depending on who you ask, you will get a different answer. However, most things follow a cause-and-effect relationship and I'm sure real life events have triggered bitcoin's success and not some imaginary fairy tale.