As always, this article is made for educational purposes. This does not constitute financial advice nor trading advice. Past performance does not indicate future results.
Do not invest more than you can afford to lose. This is not financial advice; always do you own research :)
Four years ago, I fell deep into the crypto rabbit hole.
It was April 2017, and I couldn’t get this guy on my bus to shut up about Bitcoin.
At the time I was living in Sydney, but I was riding on an overnight bus from Noosa Beach to Airlie Beach to sail the Whitsundays — a popular holiday destination for backpackers.
It was only 9 in the morning, but it was already 38 degrees (Celsius) outside and suffocatingly humid. It was technically already Fall in Australia, but you wouldn’t be able to tell from the tropical climate of Queensland.
I had barely slept the night before — the bus kept stopping every 2 hours at various destinations on our way to Airlie Beach.
Around 8am, a guy around my age boarded the bus, plopped right next to people, and immediately asked if I had heard of Bitcoin.
“Uh nah,” I lied.
Of course I knew about Bitcoin. It was the anonymous digital currency that criminals used on the dark web to buy drugs and weapons. I even had a dorm mate get arrested by the DEA my freshman year for being a seller on Silk Road.
And on and on he went for nearly 20 minutes — without so much as a grunt from me.
Finite supply. Disintermediating banks. Instant payments.
I was tired and grumpy, but I was immediately entranced.
We ended up speaking for the next few hours on user-custodied data, Web3 as the next revolution of the internet, open finance. I saw the light then — realizing that crypto was more than the go-to money for the dark web, but a bold idea to transform our relationship with the financial services industry and the internet companies that we’ve relied on for every basic function of our lives.
Four years later, I’ve only become more and more passionate about crypto — to the point where my friends meme me as the “crypto bro”, waiting for the right moment to launch into a diatribe on the bringing money to the internet.
Here are my four most fundamental takeaways from my four years in crypto:
We’re still early
I know it’s hard to feel that way sometimes, especially if you’ve seen Bitcoin and Ether skyrocket to all-time highs in the past few months. And you look back at the chart and see that the entire crypto industry went 10x in a year.
And you go on Bloomberg.com and every article seems to be talking about Bitcoin — another company adopting it for their treasuries, another government discussing a pilot with CBDCs, another financial instrument being launched to gain exposure to Bitcoin.
Trust me — I feel the same way.
But we need to zoom out and see that we’re still in the early days of crypto.
Currently the entire crypto market is around $2 trillion USD. Compared to other asset classes like gold or traditional equities, crypto is still small fish.
As of January 2021, gold has a market cap of $12.8 trillion, global equities has a market of $90 trillion, debt securities have a market of $130 trillion respectively, and global real estate is ~$280 trillion.
And don’t even get me started on the derivatives market.
The vision of crypto is big.
Imagine a world where individuals have ownership over all of their data — not just their online data, but their medical records, their voter history, their demographic information — and they’re able to selectively give permission for any party to access this information.
No longer do people have to ask their municipalities or their insurance providers for permission to use their own information.
Imagine a global economy where people across any nation can do business. A small business can open an online store and instantly transact with the entire world — using a currency that is instantly settles into self-custodied bank accounts.
It’s possible with crypto.
And while I’m not saying that this will definitively happen, the vision is much larger than what the market is currently at.
Nobody knows everything
This whole industry is barely a decade old — and only a handful of people can claim to have read the Bitcoin whitepaper when it came out in 2008.
Decentralized Finance, DeFi, is taking the crypto industry by storm. The “movement” arguably started in 2015 with the founding of MakerDAO — not taking off until 2018 with the launch of Uniswap v1.
And yet, it’s basically a full-time job to keep track of all the developments happening in the space.
Thanks to the power of composability of smart contracts / dapps and the scalable, human capital efficiency of open-source communities, new innovations are happening at an insanely rapid clip — similar to the early days of the Internet in the 90s and the early days of the Facebook/Twitter social graph in the late 2000s.
So don’t think that any one person has the time and mental bandwidth to keep track of all the new projects, coins, protocol enhancements, governance proposals, cross-chain collaborations, etc. that are happening in crypto.
Because of that, don’t think you have nothing to add to the space.
If you’re a developer who’s still wrapping his/her head around Solidity or other smart contract languages, or if you’re a non-developer who’s still learning about Bitcoin, there’s a home for you in this community to contribute to the new wave of the internet.
Community is king
Community isn’t a fluff word in crypto — nor is it a merely a way to build brand like it’s used in the consumer industry.
Thanks to DAOs, crypto communities are a high functioning team that can be mobilized to rapidly increase the utility of a project in three dimensions:
- Adoption
- Advocacy
- Technological innovation
Because community members are economically incentivized to contribute to the project, they become — in essence — super users, the biggest champions, and mini-Board members of a protocol.
On the adoption front, the more community members use a project, the more they’ll be financially rewarded — in the form of governance or other tokens through robust liquidity mining programs. Thus, members are more active than an average user of a traditional product.
On the advocacy front, community members become outspoken champions of a project — breeding virality for the exposure and organic discussion of a project.
Just search #dogearmy on Twitter and see how many people love to talk about Dogecoin.
On the technological innovation front, the more community members a project has, the more innovation (and thus utility) the project will ultimate have — thanks for composability.
Composability allows for dapps and other protocols to talk to one another, rapidly breeding new and new novel inventions and ways of interacting with a project.
Take Ethereum for example, the defacto leader in developer community. As a result of having a robust community, it has the most dapps and the most economic activity on top of its platform.
Have high conviction
As an investor, you need to have high conviction in the success of your invested projects.
In doing so, you’ll have the mental fortitude to weather the storms of the market — through price corrections, downtrends, and a full blown crypto winter like in 2019–2020.
Whether it be a strong team, sound technology, or taking advantage of industry tailwinds, you need to definitively know why you’re investing in a project before you do so.
Without that conviction, you’ll risk paper handing your investments at in opportune times— leading to a loss of potential gains.
In tandem with high conviction, that means that you can’t be a “mutual fund”, i.e., you can’t hold a bunch of assets — chasing the shiny object that has pumped recently.
Only hold quality coins that you believe in. It’ll help you in the long run.
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