Crypto comes back

“I get knocked down, but I get up again
You are never gonna keep me down.”

Tubthumping, Chumbawumba

One of my friends said that being in the crypto world requires patience and belief.  I thought he was crazy for a long time.  When crypto was down, I was convinced that I should do something else (and sometimes did).  And, when it was up, I was too late and all of the opportunities were gone.

Clearly, I was wrong on both sides.  With a decade of watching it, I missed the bigger picture.  When the focus is on the immediate results, or prices, I missed the longer term view of what was happening and evaluated success too much on the immediate market view.  Which is madness.  The housing market is down, housing doesn’t become useless.  It’s often a factor of other things (interest rates, economy, population trends, etc).

Several new areas of crypto have emerged, beyond just the store of value of bitcoin, including:

  • Bitcoin
  • L1 tokens
  • Fungible tokens with utility
  • StableCoins
  • Non fungible tokens
  • NFTs
  • DeFi
  • D-apps

That’s a lot.  Each one of these is experiencing huge innovation — well, maybe not bitcoin, but all the others are.  In fact, some of my most interesting views have come from the emergence of new L1s, such as Solana, which are several orders of magnitude faster and cheaper than Ethereum.  Beyond just convenience (who doesn’t want faster/cheaper), it actually opens up entirely new use cases, which were just not possible with Ethereum speed and cost.

For example, if you wanted to ‘tip’ people on the blockchain small amounts of money, clearly the transaction fees of Eth (well over $100) are way too high.  Or, if you wanted to have messaging network like functionality, the speed (as well as the cost) make such applications prohibitive.  As such, Eth applications tended towards those involving large sums of money, where the transaction fees could be justified.

But, with new L1s, or potentially Eth2, we can remove that restriction.  Wow.  So, even in the crypto winter that started last November, which saw the crypto market cut in half (as a comparison, that’s about what happened in the great recession in 2008) there is still lots more coming in crypto, which simply wasn’t possible before.  And, that’s just with the L1s.  There are the other areas above, all of which have similarly interesting and potential use cases still emerging.  And, there will will certainly be more areas than just those above.

So, as I was saying in the crash, “Buy the dip.”