Why I’m bullish on crypto
Remember when you had to connect your landline phone’s cable to your computer to connect to the internet? Remember that beeping sound while it was dialing?
For those of you born into the wifi era, let me remind you that less than 20 years ago, that is exactly how we used to connect to the internet. My parents only allowed me to use it 1 hour per week, only on Saturdays, and I had to take turns and rotate with my siblings.
Who would have imagined that today, there is wifi everywhere, we can connect through our very modern smartphones, and hardly anyone uses a landline anymore.. not even my parents, who were born into a world with no internet at all!
Think about it… Internet disrupted and revolutionized how we lived. It’s one of the major technological inventions of the last century, but, it’s not the first one, and it’s not going to be the last either. Every few decades, there is one major breakthrough that completely disrupts how things work.
And I believe we are witnessing one of the biggest disruptions of our generation, in the way that it will impact, and be part of our daily lives. Blockchain technology isn’t new, it’s just that it has been used for other less visible applications, that we had no idea about, and just because now it’s been expanding into something as impactful as our every day Financial System, is that we all of a sudden realize that it’s here.
Money has been around for Millennials. It’s one of the greatest inventions of humanity. If you are interested, do read Sapiens, it’s a phenomenal book by Yuval Noah Harari that explains a lot about who we are as a species, our origins biologically, and more importantly (at least to me), the origins of our beliefs. Religion is one of these strong beliefs that we created and gave immense meaning to; the other one, is money.
From the moment we as humans adopted the barter system, we assigned economical value to the goods based on certain criteria, one of them being available supply, or the other side of the same coin: scarcity. Another one of them being demand. We have evolved in creating more and more efficient ways to trade, and we finally are here, with money as we know it today, materialized in the form of banknotes.
The underlying concept of money or capital has not changed. What changed, is what we collectively believe and trust in to represent that value, as well as the financial institutions that we created to support and regulate this system.
We were born into the existing financial system, into the existing money and store value options, but we forget that it hasn’t always been like this, we forget it’s been adopted because it represented a better option than the previous system. And now, when facing an emerging alternative that challenges the status quo, we of course think it’s crazy, just like the foragers would think about our existing financial system.
What we are witnessing, is the technological advancement, enabled and empowered by the internet, transforming and disrupting an outdated and malfunctioning financial system that is struggling to keep up with our needs and behavioral changes. Therefore, the rise of cryptocurrencies, and their magnitude, is not simply speculation. Of course, there is speculation, and it will always be there, just like day traders speculate on the stock market. However, the real significance is the philosophy behind it, and what it represents.
We do not live in a static world. The norm is constant change and evolution, and technology is just a catalyst that speeds this process up. But we are creatures of habit, and our defense mechanism’s default mode is to avoid changes, avoid uncertainties, and reject the unknown. This is how we are wired (again, do read Sapiens if you haven’t yet), therefore it’s no surprise that we face challenges to keep up with the technological advances of our time.
Those who are more open minded and understand that this process not only won’t slow down, but it will only speed up exponentially, will be able to adapt faster, embrace changes, and leverage these inventions to be on top of their time. Those who resist and refuse to accept this truth will have a hard time in the coming years, at least in terms of keeping up. This is probably Darwin’s Theory of Evolution and survival of the fittest applied to the 21st century.
But let’s get back to cryptocurrencies. Let me further summarize in few points the reasons I’m bullish.
It’s the evolution of money, adapted to the current world.
This is already self-explanatory based on the paragraphs above. People are increasingly losing trust and confidence in the existing financial system, and are developing an alternative to the same.
Trust
There are really two main reasons how trust is fundamental in the cryptocurrency world. Number one, is described in the name “blockchain” itself: basically (it’s probably a good time to call out that I’m no way a tech expert, so do excuse how much I’m simplifying here), think of it as data stored in blocks, that is then uploaded to the cloud and remains linked to other blocks through chains, and nobody can really alter it directly without adding new data on a new block, and anyone that wants to check it out can access to it, so that level of transparency and lack of manipulation is one of the main reasons people trust blockchain backed initiatives.
Number two, is decentralization, and I’ll explain it in the next point.
Decentralization
I’m gonna excuse myself to use the Robinhood and GME example that so many people have spoken about in the last week, but I do think it illustrates very well the problem of the existing ruling system and its implications that we often forget.
The reason why Robinhood was able to change the rules out of nowhere and went from being the hero to being the traitor overnight, is because ultimately they are still the decision makers, which means that it is run as a centralized system.
What developers are trying to create with cryptocurrencies is, therefore, a decentralized system, leveraging blockchain technology. Now, this is a way more complex topic with various elements to it that I won’t deep dive into in this article.
Clear value adds
Without classifying the different types of cryptocurrencies, I’ll just conclude that, if you read till here, you probably got a sense of the fact that crypto offers clear value adds, and in various ways, not simply as an easier way to operate, or a more transparent and decentralized system, a new store value, or a disruption to the existing financial system, but all of the above and more.
The new generations
I think it’s also fair to say that the majority of people that hold the key to the existing financial system are not from the new generations that are born into the digital era, which finds cryptocurrency to be an obvious turn of events. Hence, the resistance. Obviously, it is much more complex and the generational gap is not the only roadblock, but what I’m trying to say is that while it is very hard to comprehend for a lot of people, for a lot of other people, it’s second nature.
To share the analogy made by Avichal Garg, if we want to compare this to Facebook, we can say that we are in the MySpace era right now. So even though we are at an initial stage of crypto, just think 10, 20 years from now, when the new generations are in the position of power, cryptocurrency will naturally, get there with them.
The biggest the disruption, the more polemic it is, and the more resistance there is. Besides the fact that biologically humans are wired to dislike changes, there is also another critical reason, and its economic incentives. There is always a group of people that are most benefited by maintaining the status quo, and will do everything they can to maintain those economic incentives and power positions to themselves.
But once they realize that there is no going back, they will try to get ahead and dominate the new system, which is what’s happening right now in this bull market.
There are of course a lot of challenges and problems that the crypto community needs to overcome and solve before it can become truly scalable and mainstream, but don’t ignore the writings on the wall. This is just my thoughts on crypto and why I’m bullish. Read, understand and judge for yourself.