A few days ago, I came across a post by a newbie in the crypto world: 'Using 5000 as capital to open a 10x contract, earned 20000 in three days, this money is too easy to earn!' The comments were full of cheers asking to be led, but I remembered an old friend Zhang I met last year—he once made 2 million from 1 million using contracts, only to lose it all in liquidation two weeks later, finally sitting at the exchange entrance smoking half a pack of cigarettes saying, 'This thing is not about making quick money; it's about taking lives.'

In today's article, I don't want to simply criticize contracts as 'harmful,' but rather to tear off their 'get-rich filter' and discuss why so many people still choose to trade contracts despite knowing the risks. What role do they play in the crypto ecosystem? Should ordinary people engage?

First, the 'addictiveness' of contracts: using 'low probability high returns' precisely hits human weaknesses.

The essence of contract trading is a gambling game that amplifies profits (or losses) using leverage. However, it is addictive because it precisely grips two of humanity's most primitive weaknesses:

1. 'Gambler's fallacy': always thinking 'the next round can turn it around.'

I have a friend, A Jie, who in 2023 used 30,000 as capital to trade BTC contracts. He opened a 5x leverage position for the first time, and when BTC fell by 5%, he directly liquidated and lost everything. Unwilling to accept this, he borrowed 20,000 and used 10x leverage; when BTC rebounded by 3%, he liquidated again. In the end, he even mortgaged his credit card and only stopped after losing everything.

This mentality of 'wanting to recover losses when losing and wanting to double when winning' is a typical 'gambler's fallacy'—people always think 'after a series of losses, good luck should come,' but ignore that the liquidation mechanism of contracts is 'counterintuitive': the higher the leverage, the closer the liquidation line. You may think 'if I just hold on a bit longer, it will rebound,' but the result may just bring you closer to liquidation.

2. 'Instant feedback': the 'pleasure' driven by dopamine.

Spot trading may require waiting days or even months to see returns, but the volatility of contracts is measured in minutes or even seconds. After opening a long position, if BTC rises by 1%, your account immediately shows a profit; if it falls by 2%, you immediately incur a loss. This 'real-time stimulation' continuously prompts the brain to secrete dopamine, creating the illusion of 'I am in control of the market.'

There is a concept in psychology called 'variable ratio reinforcement': when you are unsure whether the next operation will win, your brain continuously secretes dopamine, driving you to keep trying. This is exactly the principle of casino slot machines, and the 'high leverage + high frequency volatility' of contracts essentially magnifies this mechanism tenfold.

Second, the 'survivor bias' of contracts: the 'get-rich myths' you see may just be survivors showing off.

Open the crypto community, and the screen is filled with stories of '10x contracts for 24 hours' and 'after a short position liquidation of 2 million, switching to a long position to make 3 million.' But behind these 'myths' lie three cruel truths:

1. Most 'get-rich-quick cases' are 'survivor bias.'

According to on-chain data platform CryptoRank, in the first half of 2024, among all contract traders, 92% lost money, 5% broke even, and only 3% made a profit. Those who flaunt profit screenshots in their friend circles are either 'shills' hired by the platform or have earned money with very small positions for attention; those who truly achieve financial freedom through contracts are few and far between.

An old acquaintance of mine in the crypto world, Lao Li, who has been trading contracts for 7 years, summarized it in one sentence: 'For every 100 people flaunting profits, there might be 1,000 who lost and dare not speak.'

2. The cost of 'getting rich quickly' may be 'life.'

In 2023, a certain exchange reported news of 'a user jumping off a building due to liquidation of contracts.' More commonly, many people fall into a vicious cycle of 'losses → borrowing money → further losses → running away' to 'recover their capital.'

I have a college classmate who originally earned 20,000 a month and lived comfortably. In 2024, he used all his savings to trade contracts, but faced the LUNA crash, losing 800,000 in three days. In the end, he had to sell his car to pay off debts and is still making installment payments on his credit card. He said, 'I used to think money was earned, but now I understand that the money from contracts is exchanged with life.'

3. The platform is the 'biggest winner.'

The fees for contract trading, funding rates, and the liquidation fee (the portion extracted by the exchange from the losses of liquidated positions) are all sources of income for the exchange. Industry insiders have revealed that the income from contract trading at leading exchanges accounts for over 60%. The profitability of users essentially means 'robbing money from others'—but is the market always a 'zero-sum game'? No, because with fees and liquidation fees, it is actually a 'negative-sum game': in the long run, the total capital of all participants will continuously decrease, ultimately flowing to the exchanges.

Third, the 'real value' of contracts: they can be a tool, but they are definitely not a 'wealth code.'

After discussing so many risks, does that mean contracts are completely without merit? Of course not. Contracts themselves are neutral; their value depends on the person using them.

1. For institutions/big funds: a tool for hedging risks.

For example, institutions holding a large amount of BTC in spot can hedge against the risk of price declines by opening short positions. Before the Bitcoin halving in 2024, many mining companies locked in profits through contracts to avoid losses from a price crash after the halving.

2. For professional traders: a means to amplify profits.

True contract experts do not rely on 'betting on direction' but on 'arbitrage' and 'hedging.' For example, using price differences between different exchanges for cross-platform arbitrage or using options combinations to reduce risks. However, these operations require a deep understanding of the market, which ordinary retail investors cannot learn.

3. For ordinary people: a 'cognitive tax.'

If you don’t even understand 'how to read a candlestick chart' or 'what gas fees are' but want to make quick money through contracts, you are essentially paying a 'cognitive tax.' There is an old saying in the crypto world: 'Every penny you earn is a realization of your market understanding; every penny you lose is a penalty for insufficient understanding.' The high leverage of contracts only magnifies this gap.

Four, advice for ordinary people: contracts can be played, but don't 'get too immersed.'

If you really want to try contracts, remember these four iron rules:

1. Use money you wouldn't mind losing.

Never use living expenses, mortgage money, or medical funds for contracts. I suggest: at most 5% of 'investable assets' (for example, if you have 100,000 in savings, take at most 5,000); losing it all won't affect your life.

2. Set a 'stop-loss line' and execute it firmly.

Before opening a position, think: 'How much loss will trigger closing the position?' For example, with a 5% position, close out at a 10% loss (total loss of 50% of capital). Many people lose money because of the lucky mentality of 'let's wait a bit, it might rebound.'

Those who can truly make money in the crypto world in the long run are either developers researching technology or investors deeply engaged in a particular sector. Contracts are just a tool in their toolbox, not everything.

Finally, I want to say:

The charm of the crypto world lies in its constant reward for those who upgrade their understanding. Contracts can be a tool, but don't let them become a 'black hole that devours your life.' Instead of being addicted to the thrill of 'hundredfold leverage,' spend time learning blockchain technology and researching project fundamentals—slow is fast, stability leads to victory.

Still the same saying, in a bull market, if you don’t know what to do, click on the old blogger's avatar, follow, bull market spot planning, contract passwords, free sharing.

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