A Letter To My Friends: Why I Own Crypto
My Reasons For Putting My Money Where My Mouth Is
I am often asked my opinion of crypto by those who have not yet delved its rabbit holes. This is my letter to them.
I like crypto and I hold a pretty risky amount of my money in it. I have for a long time. This is not a recommendation. I have also learned my lesson already to never recommend anything to anyone else when it comes to money. Instead, I write this to explain to you the way I think about things.
First, not all crypto is made equal. There are enormous money making opportunities that I don’t touch. Meme coins, NFTs, early project hunting. I don’t think these kind of activities are bad. I just don’t have the desire to spend hours every day chasing these opportunities. Emotionally, I also can’t yet handle the stress of it. To play around in the depths of these rabbit holes, you need very extensive knowledge of the technology and ecosystem and you need to spend extensive time on social media.
Instead, I’m referring to the core crypto assets: Bitcoin, Ethereum, maybe Solana. There are other tokens that are worth mentioning (CRV, OP, ARB, the EigenLayer token) but they also require a lot of additional knowledge. I want to focus on my general crypto thesis of why does it matter?
My Three Most-Bullish Crypto Narratives
1. Serious Innovation and Talent
First, I haven’t found an industry attracting such talent. It’s up there with AI, neuroscience, and space exploration. Yes, the scammers and the SBFs make the headlines, but there are so many brilliant, talented people quitting their jobs in tech, joining crypto companies, solving problems, sharing, learning, and collaborating. The speed at which crypto innovates reflects this massive pool of talent. This is the absolute frontier and I like putting my money where I see such motivated talent.
Speaking of the frontier — this is one of the most interesting and exciting industries I’ve ever come across. This is a digital frontier where the smartest and most talented people win. It is cutthroat. Make one mistake and you can get wrecked. Have one vulnerability in your code, and your entire community can get wrecked. But also, this is a fertile field which has very little sympathy for “trying” or “good enough.” Such an industry cultivates stress tests every idea to the max and ensures that only the best succeed. Explore some narratives (even past ones like the Stable Coin Wars) and get a taste of this digital Wild West.
2. Crypto Is A Financial Revolution
Next, I see crypto as a means of financial protest for a generation of people that feel disenfranchised from traditional assets, burdened by the financial irresponsibility of the generations that came before, and disillusioned by the current “game.” But this is not a violent, anarchist revolution. This is an extremely well-designed alternative that is already a growing revolution with radical implications. Adopting a financial system outside the reach of governments — protected from inflationary decisions and the corrupt tendency to use monetary policy as a financial weapon — is so potentially disruptive that I think the only reason governments haven’t taken a more aggressive stance is because they don’t yet understand its potential. But their kids do. You know, the ones who were told “go to college, work, and you’ll be able to buy a house and be happy.”
But this dream is dead. The wealth divide is growing rapidly. People have to work harder and harder to get ahead. They feel the system is rigged against them and they don’t want to participate. The worse things get, the more appealing this revolution will become. Crypto offers an alternative game. And the global macro economy is playing right along with it.
3. DeFi Works
The fact that DeFi works at all is insane to me. And it not only works, but it hosts billions of dollars and allows people to genuinely access numerous financial applications. You can have your entire financial life on DeFi. I do.
Gamma is a nice auto-balancing vault for providing liquidity across DeFi
You can lend, borrow, contribute to ecosystem security in exchange for rewards, vote in decentralized governance systems, all without middlemen. Real products are being launched by decentralized organizations. I understand that this is still siloed. But the important thing is that it’s built, it’s being actively improved, and it works. I really think, in the context of the points I made above, this is an “if you build it, they will come” type situation. And built it we have.
Final Thoughts
All in all, what I see is an extremely innovative industry attracting top talent, with demonstrated value, working applications, and more and more TradFi adoption. The global macro economic is playing perfectly into the original thesis of Bitcoin. The crypto infrastructure is being laid as we speak. I think it’s inevitable at this point.
Of course, there are no guarantees. I do think that holding BTC and ETH — and not getting too fancy with things — may still be one of the smartest investments you can make. The risks are there. Yes. But they’ve dramatically decreased — especially with the approval of both ETH and BTC ETFs. I also think that — when you take into account the risks with stocks, real estate, and bonds — crypto is not even all that risky. Those assets have been propped up by federal policies and collective narratives that — arguably — have them extremely overvalued and the most vulnerable to the (potential) coming fallout of western monetary policies. I don’t think crypto is actually as risky as people think.
It’s for these reasons I hold crypto. This is certainly not a ride for the faint of heart. A part of you will either crumble from the gut-wrenching up and downs of financial gain and loss or you will consciously carve the fear and attachment out of your heart and be a new Buddha. Either way, be careful out there. But I am very excited to see where we are in ten years. I think you should start paying attention.
Thanks for reading. I would love for you to share your comments and ideas. Please leave me a comment or hit me up on AirChat or Twitter to discuss this article (I like AirChat the most!)
As always, none of this is financial advice. I am not telling you to buy or sell anything, just sharing my underlying research and conclusions.
I do hold a portfolio of cryptocurrencies. I was not paid by anyone to write this article.
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