They Built It. Who’s Coming?
2018: The year of opportunity if you are reading this right now.
You know either on a basic or high level that cryptocurrency has value, and hopefully you have begun poking around at what is investable. I do enjoy having private investors from around the world joining together to invest in things that we will never be able to fully understand. That is textbook early adoption! We aren’t supposed to know every single speck and detail. The reason I have so much faith is because regardless of what people tell you, there are facts in cryptocurrency that no pessimist can deny. The facts that I care most about are: Who is here, who is coming, and how much are they coming with.
Who is here
Well, I don’t think we could be joined by any better group of people. When co-workers and family members tell you that it’s all going to $0 (as all day job final adopters will say), you must first think of who is going to go to $0 with you in their world. The founders of what would be Facebook, the founder of PayPal, Hedge Fund Managers, Creme de la Creme Back/Front end developers (some of which left HUGE Silicon Valley jobs), and of course, all of us fine normal people who don’t want to miss out on the Google IPO of our generation. There are more big money people here than we can count. A lot of them have significant amounts of their net worth tied to cryptocurrency.
I am sure you could go throughout history and find me smart people who have made bad second business decisions. However, if we just think about the history of innovation, cryptocurrency has all the signs of a wave that is not yet a wave. The first sign is anger. When the talking heads on TV discuss blockchain, there is always someone declaring it’s demise in hyperbolic fashion. Smart people get upset when they can’t grasp the concept of something. It happened with the automobile, internet, computer, and the list goes on. I could pull up blips all day from news anchors in the 60-70’s running their mouths about something new and useful. Society has to repel it before they can embrace it. I don’t know where in the exact part of the process we are at, but I am hoping 2018 will give us our road map that we so desperately need.
Who is Coming
I will summarize and explain: Coinbase People, Big Business, Intermediaries
Coinbase people are people who are not yet able to really grasp the concept of cryptocurrency. Think about what is needed to be done if you would like to invest in currencies that aren’t the big 4-5 that everyone can buy with cash. You need to make two accounts, use your cash to buy one virtual currency to pay for another virtual currency. Yes, I know that makes sense to you and I (sometimes it doesn’t), but for most people it simply doesn’t. This extra layer of annoyance and deterrence is what is going to make us money. If it was easy for these people to buy all of the currencies we hold so dear, Raiden would already be on a beach somewhere. If you just think about all the steps you went through to buy coins and store them, that is enough to put more than half the population into a technology coma. This, once again, is my bet. My bet is that once it becomes easy for these people to buy different coins (and the government makes it easy for them), then we will begin to see some rapid adoption. You are just simply not going to get most people to go to Hong Kong virtual Exchanges to buy cryptocurrencies. It must be at their doorstep, especially for Americans. Look at the drive-thru food culture! They wait. We want them to wait, that is what creates discounts for early adopters.
There are plenty of businesses who are actively looking into implementing blockchain. Think of the SWIFT system for money transfer. It takes days, its expensive, and backlogged. How about securing client information? Well, I couldn’t possibly think of any data breaches in the past 5-10 years. How about the rapid exchange of information/data? Companies already do this on “secure” email servers en masse. That’s an 86′ Toyota Corolla with 300,000 miles on it compared to the cars that people can encrypt their information on in the blockchain. Encrypting money and information from a basic level makes complete sense. If the best cars/roads are crowd sourced on an alternative platform, so be it. If they want to stick their nose up to it, that’s fine. Darwin’s finches had some losers obviously. Blockchain will be the place where all things are done eventually. Brick and Mortar stores are slowly dying, while our internet identity grows at an unstable pace. All of this volume must go somewhere. Clearly the way we use the internet now is outdated and dangerous. So, we must migrate. Here in lies the bet.
I saved the best for last. Remember those lazy Coinbase people? Intermediaries are the folks who will make the drive-thru window for them. Let’s think about how an asset manager could use cryptocurrencies. They can actively manage a pool of currencies for investors, they can make an index that costs people essentially nothing to buy on an e-trade account, or they can simply buy large amounts to go with the other holdings that they have of traditional investments. The amount of ways they can use these products to derive fees from their clients its infinite. Each and every single way will benefit us. I have never known a financial services firm to turn down a financial market because of it’s volatility. These are the people to listen for. Currently, there are a couple funds investors can buy that have a holding of bitcoin. If you and Raiden aren’t satisfied with just one coin, why do you think others would be?
I am sure you recently saw the SEC is quietly telling all asset managers to pull their bids for cryptocurrency funds. Governments are still trying to get taxes from the last big wave, you think they can handle another one right now? This was expected. This wasn’t going to be a smooth ride. If you have read my earlier posts, we like when the government talks. They scare people! We can make money from scared people.
All of what I have told you means something. Think ahead. What would your parents buy? Grandparents? Co-workers? Or better yet what are they willing to be exposed to in a financial product. A fund listed on an American Exchange can’t have “road map” currencies as constituents. That wouldn’t make sense. My homework to you is to write down your own hypothetical American Index fund. find the names you think are stable enough to be tracked in a basket of other currencies.
This is going to be an exciting year if you are prepared, and you are creative. I do hope this has stimulated some thought. I am not recommending you buy or sell any currencies, as my intention is to give you as much armor as I can in the trenches of the exchange. I wish you the best of luck. But, this all can go to $0. Take profits. Read.
Images courtesy of Pennex and Shutterstock.