On January 17, 2018, I left my position as co-founder and chief revenue officer of the breakout mobile commerce startup Button to enter the crypto ecosystem full time. On that day, bitcoin closed at a price of $11,089, having reached a high of $20,089 exactly one month earlier. Today, while the price of bitcoin sits at $3,700, I do not for a moment regret moving from traditional technology to frontier technology. Button continues to be an amazing company, making it easier for millions of people globally to discover and buy things on mobile devices. But the pull of bitcoin and cryptocurrency at large was simply too strong; the decision to jump in felt more like a calling than a career decision -- and it still feels that way today.
Deeply ponderous and with no idea what specific role I would play (investor, builder, seller, corporate executive?), I jotted down a number of thoughts in a personal post titled "Day One" after my last day at Button. I had been a bitcoin owner since 2013, but my knowledge of the history, protocols, people and early institutions was topical at best. I was wide-eyed and eager to learn. Here, I share the point-by-point thinking in that original post (in italics) and update each statement after a year of full immersion in the crypto ecosystem.
1) Most people know nothing. A few people know some things — these people know what they don’t know, but they are curious and seek to prove or disprove their hypotheses. No one knows the future — but the best try to model ahead and learn.
Most people know nothing. Those people who do know some things are generally heads down building, investing researching, testing, iterating and learning more. Most of this is happening outside the public squares (Twitter, Reddit, conferences, CNBC, Bloomberg, crypto and mainstream media) and in company and project Slack groups, interest-based private Telegram groups and internal company/project research and development efforts.
Those people most publicly certain about the future are increasingly being proven wrong. And the hubris that is developed by being correct once or twice nearly always leads to being colossally wrong on longer time horizons. Be wary of overly certain people in the cryptocurrency ecosystem. We are in year ten of a multi-hundred year revolution of money and value.
2) Today is a *GREAT* time to jump into blockchain and cryptoasset building, investing and development. Tomorrow is the second best day.
We are 348 days on from this statement, and today is still a *GREAT* time to jump into the crypto ecosystem. There is far less noise today, as most speculators have been washed out, regulatory clarity is increasing and "hopium" has been replaced by large quantities of skepticism. More people are building, investing and developing than in January 2018; and they are doing so out of deep conviction and belief with more accountability and milestone-based measurement.
3) There will be Amazon’s, Google’s and PayPal’s. There will be Webvan’s and Pet.com’s.
The Webvan's and Pet.com's come first. You can track the "Dead Coins" here. The market is down from a peak above $814 billion to $128 billion, a drop of 84%. However, market leaders Bitcoin and Ethereum and new entrant EOS continue to march on, with the newer entrants seeing significant development at the base layer and above and Bitcoin focused on scaling. Building Amazon, Google and PayPal is a multi-decade affair.
4) We are in a massive bubble in the aggregate cryptocurrency market. But there are some tokens that won’t go lower than where they are today. And many projects that are building enduring value. Buy now, buy selectively and buy with knowledge and conviction.
Well, maybe I did get a little bit caught up in the mania. For approximately two months, I was trading shitcoins on Binance with the proceeds from selling my entire Bitcoin Cash position at an average price of $3,500 thanks to Coinbase's crazy roll out of BCH trading. As I found my place in the crypto ecosystem, I realized quickly that it was not investor, trader or price prognosticator.
5) Code and activity matters. Projects that have an ecosystem, that have trading velocity, that have delivered code on time and according to plan — are worth multiples of those that haven’t.
While this will be true in the long run, the cryptocurrency markets have proven to be highly correlated. There simply haven't been enough successful build outs at the protocol level of most blockchains for price to accurately reflect code and activity. Many blockchains that held ICOs in 2017 have failed to or barely launched main nets yet. We are largely in wait and see mode.
6) It is hard work to find the best minds and best information about blockchain and cryptoassets. The best information is in private groups on Telegram, Slack, Signal, etc. It is not in James Altucher’s “secrets.”
The information situation in the crypto ecosystem improved marginally in 2018. Most of the improvement was due to a reduction in noise as charlatans and gold rushers like James Altucher largely exited the market. Mainstream media continued to do a terrible job covering crypto with Bloomberg taking an aggressive anti-Bitcoin and anti-cryptocurrency bias, The Economist declaring cryptocurrencies "useless", NY Times sticking mainly to culture and profile stories and CNBC following its classic tutorial on buying Ripple near all-time highs by continuing to allow personalities who run funds and advise projects to appear on television shilling tokens.
7) Traditional institutions like Visa, Mastercard, Chase, B of A and Citi are talking their books. “Bitcoin will fail” = “Bitcoin scares us to death.” It then turns to “Bitcoin may have some merit and may be money” due to intense client demand.
There was significant institutional activity around cryptocurrency in 2018. While most of the names above didn't participate publicly, many other financial institutions announced that they were funding and building out cryptocurrency infrastructure in 2018. Firms such as Fidelity, NYSE, Goldman Sachs, NASDAQ, TD Ameritrade and DRW plus behemoths like Microsoft, Amazon, Starbucks and IBM built the rails to allow for cryptocurrency trading, payments and more in the future.
8) Gatekeepers and centralized entities will drip, drip, drip control over the coming decades.
They won't give an inch up without a fight. Plenty of government regulation and enforcement action and plenty of FUD from Big Bank executives and economists is just the tip of the iceberg of the tactics we will see. The next will likely be outright cryptocurrency bans in more countries and nation-state attacks against Bitcoin and other blockchains.
9) Inefficient middlemen across countless industries will see their businesses vanish faster than you can say “skimming off the top.”
Give it time. For now, the same middlemen are working hard to build out on-ramps and infrastructure for cryptocurrencies similar to what is utilized for traditional financial rails. Ethereum's #DeFi movement is one of the most organized and comprehensive threats to financial industry middlemen today, with decentralized products being built in trading, lending, derivatives, payments and more.
10) Governments won’t accept a global reserve cryptocurrency or global store of value lightly. The path from here to there will be bumpy, terrifying and exhilarating.
The largest economies in the world (United States and China) have moved in halting steps towards comprehensive cryptocurrency regulation. In China, there is an outright ban on trading cryptocurrencies, yet it is the leading mining country in the world. In the United States, regulation has largely occurred via selective enforcement action with little state or federal legislation being passed and no new tax guidance on cryptocurrency in years. Expect enforcement action to increase in the two largest countries in the world in the coming years -- and look to opportunistic smaller countries to attempt to position themselves as crypto hubs and safe havens.
11) Trading individual coins all day every day is a fools errand. You may make a profit, but you will miss the fundamentals of the blockchain economy being built. Don’t miss the forest for the trees.
Unless it is your full time profession, don't trade cryptocurrencies. It's still a fools errand. And it's clear that you're playing in a market dominated by whales and moved by forces outside of any individual investor's control.
12) The blockchain / crypto world seems intimidating upon first glance, but the community is very welcoming and very willing to teach and mentor.
Well, um, cough, actually, there isn't a single "community" after all. The cryptocurrency ecosystem seems intimidating because it *is* intimidating. People are generally welcoming initially while you are poking around with an open mind, determining which cryptocurrencies and projects you believe have merit and a chance to succeed. But as you learn more and interact with folks more deeply, it is hard not to gravitate towards a particular camp, whether that be the large and thriving Bitcoin or Ethereum communities, the XRP Army or the emerging EOS supporters. Each has its own personality, its own norms and its own deeply held beliefs on the economic, political and technological systems that best support the growth of a blockchain protocol. Many people are passionately supportive of more than one blockchain, but it's rare to find someone without a favorite. And the disagreements between factions are often public and often heated. Come with your battle gear on, but try to keep an open mind.
13) There is a severe shortage of engineers capable of building blockchain technology and associated products. This is the opportunity of a lifetime for ambitious engineers.
According to Linkedin, "blockchain developer" was the fastest growing job in the US in 2018. It is clear that ambitious engineers realized the opportunity of a lifetime and began to move into the ecosystem. Towards the end of 2018, as the price of many cryptocurrencies spiraled downwards, a number of large companies such as ConsenSys and Bitmain laid off a . number of employees. However, there are a host of emerging companies that are hiring and numerous projects and companies with significant resources and engineering needs.
14) Silicon Valley is no longer the center of the world when it comes to the most exciting and far-reaching technology revolution of this century: blockchain protocols, services and applications.
The cryptocurrency ecosystem is global, with the largest mining operations and exchanges in the world as well as much of the retail and institutional investment occurring in Asia. There is also considerable investment in NYC, Chicago, London, Paris and many other parts of Europe and the US. Silicon Valley is still critically important, as it has the highest concentration of world class engineers anywhere in the world and the know-how to scale frontier technology companies. However, the high costs of living and hiring in Silicon Valley increasingly put it at a disadvantage relative to a decade ago.
15) The price of any given token on any given day has no bearing on the value being created day in and day out by the hardest working developers in the community, who are working to create scalable, secure, faster and more powerful foundational services. They are the heroes of this community.
In the 2nd half of 2018, there was much less focus on price day-in and day-out. Once most cryptocurrencies had crashed 75% or more from their all time highs, the focus moved from checking one's trading balance hourly to more productive pursuits. There is far less price hype and noise right now -- and far more discussion around building usable products.
16) Bitcoin is the flag-bearer for mass consumer adoption and awareness. The focus today is on price. The focus tomorrow will be on value and application to real world problems and opportunities.
Bitcoin is still the flag-bearer for mass consumer adoption and awareness. TIME closed out 2018 with a piece titled "Why Bitcoin Matters for Freedom" that highlighted Bitcoin's ability to act as an alternative stable currency in many parts of the world with rampant inflation or autocratic and oppressive governments.
17) It will be interesting to see if utility tokens preserve token value or whether store of value will be the primary creator of token value — or both!
The common wisdom throughout 2018 seemed to move towards an emerging consensus that a cryptocurrency will need to have store of value properties in order to accrue value to the underlying token. The best treatment on this topic was by John Pfeffer early in the year. In fact, the notion of a general purpose "utility token" of value has yet to see many successful use cases in the wild where governance rights, value exchange, tolls, fees or other earnings have justified the value of a utility token.
18) I am moving from an amazingly successful company (Button) that I co-founded into the completely blue sky field of blockchain and crypto. The reception has been unlike anything I’ve ever experienced. From my parents to my wife to my siblings to my friends to my industry colleagues — everyone understands: we are on the cusp of one of the greatest value creating moments in the history of technology.
Well, that sounds a lot like the mood at the peak of the mania in January 2018! Now, everyone is supportive because they realize that I am genuinely, passionately, unstoppably excited about and interested in cryptocurrencies and blockchain technology. The cheering has quieted down as the hype has subsided -- and the real work is being done now with a fantastic group of builders.
19) Day One is the most fun. Join me. Let’s invest, build and grow the protocols and applications of the future together. I can be reached at [email protected], and I’m overjoyed to work with “the crazy ones. The misfits, the rebels, the troublemakers, the round pegs in the square holes, the ones who see things differently. … Because the people who are crazy enough to think they can change the world, are the ones who do.”
Day One, 2019 has exceeded my wildest expectations. Over the past year, I found my calling and began to build The Block with an amazing group of journalists, researchers, analysts, editors, technologists, marketers and designers. We are supported by an incredible group of investors and an engaged, loyal community of hundreds of thousands of readers. We are now a dozen people in 6 time zones! Our aim is to provide objective, thoughtful and high impact information to the crypto ecosystem -- to speed decision-making, bring clarity in confusing times and help folks build faster. We live at the intersection of Wall Street, Silicon Valley, a global crypto ecosystem, Fortune 500 companies and experts from a multitude of industries.
If our mission excites you, please take a look at our job openings -- we would love for you to join us in 2019!
Happy New Year!
The views and opinions expressed in this article are solely those of the author and do not necessarily reflect the editorial viewpoint of The Block
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