It’s been a while since I’ve had time to blog. I’ve been busy with the usual… You know, working to pay off a mortgage and my kids’ education. I’m sure you can relate.
Anyway, it seems like since my last blog the world has gone crypto-ga-ga. So it’s probably fitting to begin with this: The crypto craze is going to end badly for a lot of people.
I swear it will. And I think you know it too.
Setting aside the obviousness of how the momentum in all things with a “blockchain” or “bitcoin” in their name is feeling like an extremely crowded trade, my fundamental problem with what’s happening in crypto is that I don’t get it.
I generally think of myself as fairly educated, especially when it comes to innovations in finance. I use the word “fairly” here because as I said, I’m spending most of my time earning a living, not trying to position myself as an authority on something I don’t understand. I simply can’t devote the time to become a self-proclaimed guru like all the unknown people from all the unknown companies I’ve been reading about.
I was first exposed to the concept of bitcoin at one of my conferences in 2012. Barry Silbert, who was a close friend when he was running SecondMarket, was making a presentation about bitcoin and specifically about his plan to launch the Bitcoin Investment Trust, which has obviously skyrocketed.
Barry always had good ideas and I remember thinking during his presentation that I didn’t have a use for bitcoin and, as someone who subscribes to the Peter Lynch-style of investing, I couldn’t get myself to align with something that I don’t understand or use.
Fast forward to 2017 and not much has changed.
I still don’t transact in bitcoin (or other crypto-currencies) and I still don’t completely understand it. I should note that I do understand the fundamentals of the blockchain and I’m a proponent of applications being built using similar technologies.
Recently though, I’ve noticed a convergence of the crypto movement with crowdfunding, specifically in the area of initial coin offerings, which fascinate me. And since I do consider myself more than just “fairly” educated in crowdfunding, I’m trying to learn all I can about how ICOs may impact other forms of capital-raising activity.
Setting aside my bullishness for blockchain and my growing interest in ICOs, I can’t help but harp on the impending capitulation in crypto. Why am I so sure of this? It comes back to a basic understanding – or lack thereof – in what crypto is all about.
I always said that if I show up to Thanksgiving dinner and my Aunt Sheila tells me to buy into the stock market, then I’m selling every stock I own. Not because Aunt Sheila isn’t a smart woman, but because she knows very little about the stock market.
For me, the same holds true in crypto. Here’s the backdrop…
I’ve been doing a lot of work on a house I recently moved into. Both my electrician and my plumber have been bending my ear about buying crypto. I’m not talking about a passing comment like, “Hey Steve, this is interesting stuff, are you following it?” I’m talking about rampant promotion, constant reminders of price movements, updates on new platforms and exchanges, and a bunch of other crypto-cacophony. Basically, the ratio of talk about crypto vs. home repair has been eclipsed by 2 to 1.
If you don’t believe me, just look at the screen shot from my iPhone above. It’s not often that you’ll be exchanging text messages with your electrician. But when you do, you’d think it’d be more likely to talk about actual house stuff, not movements in currency markets.
Like I said, I’m fairly educated when it comes to financial innovation. Am I supposed to believe that people with even less education than me in this area are making sound investment decisions?
I’m more or less hopeful about the long-long-long term prognosis of crypto – I think. [Note: I’ve tripled hedged that statement.]
And I’m especially eager to learn more about the underpinnings of how crypto works, blockchain technologies, and of course initial coin offerings. So if you’ve got something that might be useful in this regard, by all means send it along. And if you’re the guy who just wants to tell me that I don’t “get it,” feel free, because you’re right – and that’s my point.