It has been over 2 months since my last post. That doesn’t mean that things are slow. In fact, they are coming faster than ever before. But IRT crypto, it’s been a long , cold HODL winter, and I am so grateful to be seeing the springtime again.
I wrote this as the crypto slump was starting, in June. This was the first real challenge of my crypto journey, where I chose to HODL. During that time, it was hard to be enthusiastic about crypto and I felt a mix of defensiveness and defiance about sharing my enthusiasm with my friends, some of whom may have been influenced by it to buy. Now the market is back up to where it was and more, and all that is gone. As much as I hate to admit it, nobody is made of steel and it takes a steady faith to put money where your mouth is.
I still feel this way. I do also have healthy concerns that an onslaught of regulatory missteps will derail crypto. But taken as a whole, it is something that has always been a threat and has never worked. Not even China’s best efforts can stop Bitcoin. That’s the point of a decentralized, trustless currency. It will succeed because it is better technology: better for more people, a redistribution of power to the everyman, and away from controlling institutions, governments, and private interests.
So, after a long hiatus, I’m posting this as a lesson. Stick to your beliefs. Trust yourself. What seems true in the sunshine is still true in the fog. Literally, that mirrors my own physical journey from the sunny shores of Mexico, where I fell in love with Crypto, and the foggy shores of Pacifica, where I came to move through the last remaining tethers of an old life. Only to find the flowering of a whole new one. But that’s a story for another time…
Notes from the start of the crash:
I’ve been soaking up information, specifically on Cryptocurrency and Blockchain, at a pace I haven’t hit since Undergrad. I have spent the last month immersed in podcasts, videos, papers, articles, and reaching out to my friends who know a lot about Crypto. Needless to say, there is a lot more complexity and diversity and specialization than there was in 2017. I am not going to try to trade crypto, and am not your financial advisor, but I believe anyone can learn these things if they are passionate about it, as I am.
Having said that, this is my personal blog, so I shall tell you what I am doing, and thinking. Learning about cryptocurrency is a new addition to the minestrone soup that makes up my daily schedule, that I have so diligently and patiently put together over the last six months. I’ll tell you about that later.
I’ve been ‘attending’ the virtual conference ‘Consensus’ by Coinbase. It has been a bit like trying to drink my way out of the middle of the ocean. There are lots of things that I liked learning about, here are a very few random selections;
What about the price crash?
As far as crypto goes, you know the entire market value has dropped 50% in the last few weeks. It has changed the feel of the entire community and certainly the non-community about it.
- These are the major impact factors for the crash:
- Elon musk tweet
- Whale attacks from Bitcoin and Etherium, dump out (young coins)
- China news cycle
- FUD for retail investors
- Leverage liquidations
Bitcoin has had 7 drops over 50% in its average 200% YOY growth since it began. And China has banned or threatened to ban Bitcoin half a dozen times since its creation.
I personally am not worried, though I am glad I didn’t put more in before it crashed. Full disclosure, I’ve been buying this whole week, not a lot, but whatever I can spare. Every bit will add to the gains when it hits its next explosive cycle. And even longer term.
I’ll be clear. I believe crypto (that is an increasingly broad word, I’m coming to realize) is going to grow, faster in relative value (to other currencies and a store of wealth) and faster in absolute value (as a means of purchasing goods and services) than any other type of money, currency, bond, equity, precious metal, new tech startup, real estate, commodity, or any other asset class I can think of. In the next decade we will look back and this will seem like the early days.
The question isn’t ‘how many dollars is that crypto worth’ but ‘how many (insert a number of very sound chains, coins, or tokens etc) is that thing worth?’
I agree with many that Bitcoin will become the gold of Crypto, the undisputed king of value storage. The entire crypto market can be described (and has by Michael Saylor) as layers upon layers of decentralization, all protecting Bitcoin from being controlled by any central interest.
I believe Etherium will be the backbone from which Decentralized Finance will spread as it replaces classic financial systems. We are already at layer 2 application marketplaces popping up everywhere.
I think there will be a tension between centralized (government and private enterprise-sponsored) finance and decentralized (tech-driven, mission driven, empowering and accessible to everyone) finance, and we are seeing battles play out across the price fluctuations. It is a volatile factor, and adds to the general volatility of the price of crypto. But that’s what we are here for, is it not?
The Community:
I have been attending the ‘Consensus’ conference put on by CoinDesk, a fairly sophisticated crypto news network that makes part of the largest Crypto holding group iiiin the US The US crypto community is a mishmash of seemingly disparate groups.
- Among the community you will find:
- Media nerds
- Sci Fi fans
- Tech Bros
- Financial mavericks
- Wall st renegades
- Conspiracy fans
- Futurists
- Hackers
- Smart immigrants from countries with large inflationary history
- Alt Right
- Outlaws
- Libertarians
Like the technology, this group is smart, decentralized, and forms a trustless network. Often the value of a new project is, as in all new ventures and startup companies, entirely dependent on the integrity of the community that builds around it. Crypto has passion from its adherents, and offers a lot to get passionate about. The potential is quite staggering.
I see a grand, epic and global story in the intense activity that surrounds cryptocurrency now. And it looks a lot like an early stage, distributed, decentralized, trustless community that is disrupting the largest industry in history: cash.
Cryptocurrency seems to me to be like the internet of finance. DEX and DeFi run on chains, and the number of chains are multiplying, each with an ecosystem built on top of it. The ecosystem itself is what drives value of the central ‘Coin’ or ‘proof of work/proof of stake’ blocks. Cross-chain protocols are currently being built, such as Cosmos, or staking
The sharks and the whales.
The media environment right now is a self-perpetuating cycle, either virtuous (hype) or destructive (market downturns and crashes). What is happnening right now is a sequence of factors, all happening in a way that compound the downturn enough that a critical mass of investors has changed into a mode that is designed to shake out the individuals and entities that are not as aware or calculated as they are. The big entities are buying the dip, and some are even help the downturn to get the cheapest price, regardless of wrecking overleveraged little fish.
And the ‘Environmental’ criticism of Crypto, and Bitcoin specifically? Well, the same people working on Bitcoin are working to use technology to achieve what policy and politics has failed to do: save the world from special interests. It is a potent criticism, but without getting in to a whole sub-discussion, I will say do your research, don’t listen to ‘influencers’
What am I doing here?
I am most interested in the promise of decentralization and trustless networks. It seems that there are some potential large power struggles happening in Cryptocurrency, that are changing, and may eventually come to align with other, geopolitical power struggles in the real world. Decentralized vs. Centralized power centers. Eastern vs. Western regional regulatory environments, that shape specialization. Finance vs. Engineers.
Therefore, the thing to remember is that these are the same people that inhabit the current world. At some point disruption becomes the new normal, and an equilibrium of sorts arises. I have seen cycles of this in the 20 years I have been in the bay area, working in tech for many of them. However, I will end with some spice:
Good or Evil?
I do think the value of cryptocurrencies will continue to grow, over the years-long timeframes. I don’t think anyone actually thinks otherwise, or at least the numbers are already in the minority. So I am buying and holding a planned amount of creditable projects as a part of my total portfolio, based on my mid term and long term goals. I have some serious questions about how things will shake out, and it will be fascinating to watch history unfold.
But I believe there is a beautiful story that we are watching unfold, now, in the present, faster almost than we can keep up with. And it will be part of all of the things that shape our future. Like all technology, it has the potential for incredible salvation, and also can be used for dark and destructive purposes. Its up to us, which one prevails. The best part is, my interest in the space spans several major areas of personal effort at the moment, and brings them closer together. So I am deeeeep down the rabbit hole. Feels like grad school. SO.
Take a deep breath. Relax and practice patience Observe as the world changes in front of our eyes.
Addendum (June 2021)
I have been drinking the ocean at ‘Consensus‘ convention this week, put on by CoinDesk, the media company owned by the largest Crypto Invsetment Group Greyscale. I am not associated with any of these companies, nor do I own any coins I am talking about. But there were some fascinating nuggets to save and chew later. I look forward to it. Here are a few:
Space Crypto. Send Crypto via Satelite
Gemini Crypto Credit Card (waitlisted)
Hack Insurance for Crypto assets on loan
Quadratic Voting being tested in Colorado state budget allocation