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What Type of Investors Does Crypto Need?

Let’s beg the question – how relevant are traditional Wall Street fund managers as investors in the crypto sector? 

My viewpoint is that we need fund managers that are long term believers and are committed because they have done their own original research. They should be able to understand crypto to the point where they are able to comprehend what the technology does, where it is going, and are able to form their own defendable (and original) thesis across the many emerging blockchain sectors. But do they? 

For example, of the traditional investors that get it, Ray Dalio is one of them. In a CNBC interview this morning, he said that he sees Bitcoin, cryptocurrencies or digital gold, as part of the “new money” that is a medium of exchange and a store-hold of wealth that you could move between countries. He admitted that Bitcoin had made tremendous achievements over the past 11 years towards those goals.

Sadly, many other so-called crypto investors have a superficial knowledge pertaining to what they got into, and often haven’t even used the technology themselves.  

Fickle investors will flee their investments the minute there is a weakness or bad news, because they need to protect their capital, and will wait for the next momentum cycle. 

Maybe, the crypto industry was too early for the proverbial “Here comes everybody”.

Most current crypto investors have no real relationships with the projects they are investing in, except the relationship they have with the price chart. I doubt some of them even spoke to entrepreneurs directly. 

Investing in crypto is not yet like investing in the stock market where companies are at a known stage of predictability in their business, and where valuation metrics are more easily quantifiable or visible. There is no such thing as a missed quarter that later corrects itself. Instead, the field is full of information asymmetry. 

Traditional Money Managers Don’t Get It, Won’t Get It, Can’t Get it

Reality is that not all traditional fund managers will be able to fully comprehend, let alone believe in the crypto revolution. The grand-daddies of conservatism, Buffett and Munger have already spoken, and their views are the epitome of denial that there is something new here.

In part, the analogy of asking traditional fund managers to get into crypto is like asking a professional basketball player who has never heard of soccer to suddenly play that game. Imagine they would start saying things like: 

  • The net is too wide, that doesn’t make sense!

  • You can’t touch the ball with your hands? That will never work.

  • Why is the field so long and wide? It will be too tiring to go up and down both ends!

  • Why are there 11 players? You can’t easily talk to each other. 

  • Why don’t you stop the clock if there is a whistle? That’s not fair. 

Well, the rules of soccer are very different from those of basketball. And the type of players it attracts is different. Both games have tackling, intercepting, shooting, and blocking in common, but it doesn’t mean that an athletic basketball player that is willing to learn and adapt couldn’t play soccer if they wanted to. However, not all of them will be able to.

Taking the analogy one step further, imagine a sports regulator stepping in and saying: we’ve had the rules of basketball for years, all other sports must adapt to them.

What Matters is Who is Staying, Not Who is Leaving

During the UST/Terra debacle and overall crypto prices correction of mid-May, talking-head after talking-head went on CNBC exposing their ignorance of crypto and predicting the darkest scenarios about an industry they clearly never understood well enough. Most of them would be hard pressed to talk for more than 15 secs about what crypto really does in terms of the variety of use cases and state of practice.

In retrospect, it wouldn’t be such a bad thing if some types of investors flee the crypto markets, as they get replaced by smarter ones who get the longer term view. What matters is who is staying. Developers, entrepreneurs, smart investors and dedicated users are all staying. 

If the narrative shifts too hard towards prices, speculation and superficial involvements, instead of latching on the fundamentals of blockchain technology via a discriminating eye, we have lost the plot about what crypto is about.

It is mind boggling to see most coins (especially the L1 variety) move up and down almost at the same rate. Do these “investors” clearly have any clue about how different the top 10 L1 blockchains really are? For example, for the amount of weight it carries and share of transactions it commands, it is surprising that Ethereum’s market dominance keeps hovering below the 20% level. 

As long as most cryptocurrencies fall and rise in unison, and investors follow each other like sheep, this points to the fact that the market is full of investors that are not very sophisticated nor discriminating. The crypto industry will not be able to break free of its own if it continues to be linked to the vagaries of the traditional markets. 

In the next post, I will debunk the theory of crypto-to-market coupling…or decoupling. 

We Need to Let Crypto Come Out of The Closet

The crypto market just had a rough week in mid-May, like a hurricane or tornado hit it. 

As the overall market cap of cryptocurrencies shed billions of dollars in value, the doomsayers came out and repeated the same absurdities: this asset class has no backing, Bitcoin is useless, cryptocurrencies are going to zero. 

Amidst this backdrop, there is cause to wonder if the cryptocurrency revolution is progressing well or facing existential challenges? 

There is no denying that challenges exist. But a significant macro challenge has been lurking since the beginning:

the crypto industry and its participants are not getting enough acceptance or respect from the mainstream.

The sad reality is that many aspiring crypto businesses and participants are living in a closet, and it is time for crypto to come out of that closet. It’s time for the industry to be recognized and widely accepted as being credible, long-lasting, strong and fundamentally sound.

We are already in a vicious circle. Bad actors or spectacular failures continue to appear and give reason for the mainstream to disallow crypto to normally co-exist with the rest of the world. For these reasons, the establishment keeps pushing crypto to the edges of business and society, and forcing it to find refuge in jurisdictions with inherent lax regulation. 

A wild west of crypto is not the modus operandi we want, nor is it the desired final state for this industry. But the mainstream needs to start by being more welcoming. The best blockchain entrepreneurs prefer to operate inside more clement jurisdictions where certainty is not questionable.

Today, many businesses operating in the crypto industry are being discriminated against in more ways than one, a situation that is not stemming from their own making. 

Here are some data points:

  • Blockchain startups can’t easily open a bank account at established financial institutions

  • Startups have to choose legal constructs rooted in offshore jurisdictions, a situation that makes it even more difficult to be accepted by many Western financial institutions

  • Fiat transfers from exchanges to banks are scrutinized, often resulting in sudden account closures

  • The SEC has yet to approve a spot Bitcoin ETF, as they keep rejecting or placing on hold one application after another

  • Many exchanges are not US-based and rely on external jurisdictions that are more relaxed or offer little oversight on safety or risk controls 

  • US/Canadian consumers are often shut down from participating in token offerings

The opposite of this situation is exactly what needs to happen. 

Embracing or Repelling Crypto? 

I don’t understand why the US government keeps beating down crypto when the industry is at its doorstep begging for acceptance.

Bitcoin and the underlying blockchain technology are not a purely American invention, but it might as well have been. Most of the original core developers that worked with Satoshi Nakamoto were in the US. Nick Szabo, credited to be the original proposer of smart contracts is American. Ethereum took roots in Canada. Some of the most successful blockchain businesses are US-based. The largest and most successful VC funds supporting the blockchain are also in the US.

So why doesn’t the US government embrace an industry that can easily produce the next FAANG (Facebook, Amazon, Apple, Netflix, Google) set of companies, a fate that would hugely benefit the US economy at a scope of billions of dollars?

Instead, by pushing exchanges and blockchain projects to operate in less stringent regulatory environments, bad habits are being formed and excesses committed without adverse repercussions. 

Blockchain businesses should feel safe about being in the US. I regularly talk to smart US founders that wish they wouldn’t have to select offshore locations to concoct their legal structures, token offerings, or governance jurisdictions. 

Let’s Talk About Regulators

When it comes to regulators, there is a difference between protecting investors and preventing them from benefiting from available opportunities. When regulators get fixated on the bad side of crypto, they start to mold their frame of mind around protection at all costs, and that results in an unbalanced outcome and a self-fulfilling prophecy of negativity. 

Regulatory knee jerk reactions are not going to solve anything. This is a time when regulators need to be super smart and display a deep understanding, so they don’t throw the baby with the bath water. 

Actually, regulators need to let everybody in, to get closer to them, so they can regulate them better. Strictly practicing enforcement without clarifying the rules will only continue to frustrate industry participants and push many to jurisdictions that allow them to perpetuate bad behavior. The situation is not as simple as pounding the table while insisting the “tokens” debate is strictly about security vs. commodity vs. utility.

What if crypto were accepted and not discriminated against and became part of the normal business environment? Good things would happen. 

If you want to protect consumers, don’t scare off companies, people and projects. Embrace them and learn from them so you can regulate the bad parts but let innovation thrive in the good parts. 

Now that the last hurricane has passed by, the good parts that remain are what counts. 

The proverbial – what doesn’t kill you makes you stronger – applies here. 

There is no doubt the crypto industry will continue building with a stronger base than before. 

Introducing $WAM, my Social Money Experiment

It’s no secret I’m a fan of creative usages of crypto-tokens, and the resulting mini-economies they create. As a refresher, please refer to 2 seminal blog posts I wrote 4 years ago:

The Theory of a Blockchain Circular Economy and the Future of Work and

The Relationship Between Cryptocurrency Tokens, Value and Work.

Since then, I’ve had direct experience and involvement in the first social currency that showed a decent adoption, Steemit, as well as with Kin, another large-scale cryptocurrency for socially-minded mobile apps. 

[disclaimer, I was an early advisor to/holder of STEEM, and am currently on the Kin Foundation board, and hold KIN]

While both Steemit and Kin reward the end-user for their activity, the user is required to use their common currency, STEEM or KIN. There is nothing wrong with that model, as it fits a wide range of use cases. Kin, for example has been adopted by 57 mobile apps, and garnered more than 4 million monthly active users in that ecosystem who participate in a variety of earn/spend social actions.

This brings us to wondering: How about a personal token for a brand or individual that is tied to their unique online presence, and one they directly own, control and use to coordinate how value is created across their community’s touch points? 

That’s where Roll comes in. Roll is social (crypto) money that a personal brand can use to incentivize a variety of earn/spend activity for their community. Think of it like a personal loyalty points program, with the difference being:

  1. you receive and manage your points as crypto-tokens in a special wallet, which means that you have custody of these tokens, and no one can take them away from you or arbitrarily force an expiry date.
  2. you can spend them inside the community where you earned them, or across other services in the crypto universe- that’s the equivalent of using your United MilagePlus at a hotel or restaurant seamlessly.
  3. you can exchange them for another cryptocurrency like ETH or BTC without asking anyone for authorization, so the equivalent would be to redeem your mileage points for their actual face value in dollars/euro/etc, with the additional twist that these points might appreciate in value based on a various demand/supply factors related to the economic strength of that specific currency. 

To get this started, Roll has minted 10 million $WAM tokens, and that supply is fixed. It will never be increased nor change. Roll holds 12% of that supply, and I was given 2 million initial $WAM that I plan on distributing across the community I touch via this blog, social media or events I produce, such as the Token Summit. Every month, for the next 3 years, I will be issued a new number of $WAM that I can continue deploying. 

How do you start? 

You can earn $WAM via an action you take, or via a redeem code I share with you. 

Specifically, here are some options to consider:

  1. Redeem code: Just click on this link, and if you complete the steps which include signing-up for Roll (or downloading the App), you will find 100 $WAM auto-magically appear in your wallet. Note this is available only to the first 30 that respond within 3 days. So, it’s a one-time offer (and I will receive your email from Roll).

  2. Subscribe to any one of the 5 blockchain-related news content portals that I’m personally curating. Each new email subscription between June 10-15 that doesn’t un-subscribe for at least 1 week will receive 50 $WAM into their wallets. 

OnCoins – General blockchain market news

OnEthereum – Ethereum ecosystem news

OnDeFi – Decentralized Finance news

OnStablecoins – Stablecoins and Digital Currency news

OnDGov – Decentralized Governance and Decentralization news

3. Leave a comment on my blog with an idea on how to “spend” $WAM, and I will send you 200 $WAM. One idea could be to redeem them as a discount for a future Token Summit ticket, or potentially for early access to my next book, or something exclusively available to token holders, but I’m looking for creative/interesting/valuable ideas. 

As a sidepoint, last week, during a virtual presentation on Decentralized Autonomous Associations, I pre-announced $WAM and offered 100 $WAM to the first 50 users that subscribe to the Decentralized Governance news portal, and they will be receiving their $WAM shortly.

$WAM is an ERC-20 token. This means that the Roll wallet allows you to send your $WAM to another ERC-20 compatible wallet you may already own, and in the future, you will be able to trade it on the Roll Exchange (similar to Uniswap).

How do you spend $WAM? 

Currently, the “Spend” options for $WAM are limited, which is why I’m asking for feedback in point #3 above. Another spend idea  is that $WAM could be used as a currency to purchase a digital asset on the OpenSea marketplace.


Sign-up to one of the curated news portals. Start here: OnCoins.org

Redeem the special code to earn $WAM if you sign-up and download a Roll wallet

Learn more about Roll. Here’s a great podcast the 2 founders, Bradley Miles and Sid Kalla. (Some of you may remember Sid as a speaker at the first Token Summit in 2017 when he was an analyst at Smith+Crown)

Or, download Roll for iOS on the Apple App store and Roll for Android on the Google Play store, and get familiar with it. 

Finally, here’s a handy FAQ on Roll.

Let the good times Roll with $WAM. I had to say it 😀.


Cryptocurrency Needs to Go Mainstream

I wrote a blog post on CoinDesk a couple of days ago, Defining Cryptocurrency Is the Best Way to Kill it.

It’s a plea and a case for allowing cryptocurrency to become as pervasive as today’s money in all of its applications variety, plus much more. It’s also about the realization that the industry has tied itself in knots with various classifications and definitions trying to please regulators. Let’s stop playing that game, so we can let cryptocurrency become accepted as an alternative digital currency that is here to stay for the long term.

Cryptocurrency inherits all of money’s properties (as a unit and a store of value that is transferable, fungible, verifiable, divisible and scarce), in addition to adding unique functions that money doesn’t have:

  • its immutability is digital (the physical is gone)
  • it can be fungible or non-fungible (non-fungible is an innovation)
  • its policy governance doesn’t need to be centralized
  • it has very powerful programmable capabilities with imbedded logic (if-this-then-that)
  • its transferability is peer-to-peer (without central intermediaries)

If cryptocurrency is so much better than money, why are we erecting so many barriers for its adoption?

Please go and read this article, Defining Cryptocurrency Is the Best Way to Kill it.


Friday March 13 2020, AKA The Morning-After

Friday the 13th of March 2020 will be remembered as the morning-after. 

The morning-after North America came to grips with the fact that the Coronavirus is among us.

The morning-after US and Canadian stock markets tanked like they haven’t before, in decades. 

The morning-after global crypto-markets reached lows that set it back to December 2018.

The COVID-19/coronavirus situation has already done its damage, not just to human lives, but to the financial markets, and consequently it has affected people’s wallets, investments, and many businesses that will suffer, at least in the short term.

As if it wanted to punctuate the point, we now know that the Coronavirus has also hit a known Hollywood actor, a top NBA player, the wife of the Canadian prime minister, and the president of Brazil. That’s a good dose of celebrities at once for the mainstream headlines, pushing awareness, fear or knowledge to another level.

I don’t watch the crypto markets on a minute by minute basis, but I did so intermittently yesterday to better understand what was going on. Around 10pm EST, when I saw Ethereum dip into the 90’s and Bitcoin cross below the $4,000 mark, I said to myself – this is now overdone. 

Sure enough, shortly after 10pm, the crypto markets started to bounce back, in part due to short interest covering, and in part due to the traders’ realization that this was overdone.

That said, I expected the crypto markets to do better than the (traditional) markets, and I can’t understand why that didn’t happen. Cryptocurrency should have offered a flight to safety for those who were liquidating their stock equity positions and getting into bonds. Perhaps that was wishful thinking on my part. Others, such as Brian Armstrong, CEO of Coinbase were also surprised.

Either investors didn’t have enough confidence in cryptocurrency as a safe haven, or they didn’t have easy linkages to efficiently enact capital transfers from brokerage accounts into crypto-trading ones. Or maybe it was a bit of both.

Regardless of the real reasons (and there may be several of them), it is noteworthy that during this mayhem, stablecoin USDT’ trading volumes were higher than Bitcoin’s at $52B+ over the past 24 hours. That’s close to 35% of the total market crypto market cap (as of March 13th 2020). That doesn’t necessarily mean that $52B in stablecoin holdings are sitting in people’s accounts, but it could be a factor when demand starts to flow back into cryptocurrencies.

The US economy is getting a $1.5 Trillion stimulus package. What is the crypto-economy getting? Nothing. So, it will need to pick itself up on its own, and grow again. 

This is a challenge that the industry can tackle, and I believe it can do so if we continue executing on the following ideas:

  • Continue working on the best projects that highlight variety and innovation in the application of the blockchain, not just work on the technology itself.
  • Communicate in clear, precise and non-obscure language the benefits of specific implementations.
  • Don’t stop knocking down the barriers with regulators who are erecting them and being tough gatekeepers.
  • Continue funding the best projects, companies and ideas that promise to make the crypto market (as in usage) larger and relevant to the average consumer.

The good news is that the fundamentals of blockchain technology have not changed, and they have not been altered. The recent downturn in market prices is just another stress test on the sector. It can only emerge stronger and better than before, because it has been there before. Extreme volatility is part of the history of cryptocurrencies.

This is not a time to lose confidence, nor lose hope over the blockchain promise. The sector will emerge stronger and more resilient, I am sure about it.


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