Because here's the harsh truth:
Crypto needs to change.
It needs to evolve.
Because what happened before
clearly wasn't sustainable.
And in order to reach a new future in crypto,
a future I still fully believe in, we
need to look critically at what happened over the
past few years and how it created this crash.
Only then you'll begin to realize
that we've seen this all before.
Part of the reason that everyone and their brother has
been so eager to pile on and mock crypto in
the past few weeks is because prior to this crash,
crypto was having a bit of a moment,
a hot crypto summer.
And just a few years ago, words like
'Crypto' and 'NFTs' were barely even breaking into
the public consciousness and things totally changed.
Places accepted it as payment, large investors placing huge bets,
sporting arenas being renamed, Matt Damon, LeBron James, Larry David
all in crypto ads.
There's a good chance that your neighbor or
your weird cousin or your girlfriend's boyfriend's coworker,
people who knew nothing about crypto just a
few short years ago were now forming a
pincer movement, cornering you at parties asking you
about Bored Apes and blockchains.
So don't be too hard on yourself if
you invested and you're down right now,
but be willing to understand why. This market turned
into a kind of gold rush that led to exponential,
and frankly, unsustainable growth in the space.
At this moment, there are more
than 19,000 cryptocurrencies in existence, operating
on dozens and dozens of blockchains.
Compare that to the approximately 180 fiat
currencies that exist in the entire world.
There's a huge gap here, and as we all know,
There are some currencies like Bitcoin, Ethereum, Cardano,
Avalanche that pose a genuine public utility.
Coins that have detailed white papers, a clear
vision, and a credible roadmap for delivery,
coins that were designed for a purpose.
And then we have all the shitcoins,
or copy & paste coins.
We've all crossed paths with these coins.
Coins that just come out of nowhere,
possess no public utility.
Coins that were created with the express purpose of
buying at one price and selling in another.
And it gets confusing fast.
By the way, if you want to have an investment
community around you, other investors to chat to, so you
don't have to feel like you're alone in this space.
Check out Finova linked down in the description.
Now, useless financial instruments
are hardly anything new.
Just think back to the collateralized debt obligations,
also known as CDOs, the mass
packaging of bad mortgage debts.
All the top investment banks in the world
were selling these investment stink bombs and we
all know how that turned out.
Now let's be real.
The purpose of crypto is utility.
Solve a problem, provide a digital currency
or service that's free from government manipulation.
It isn't about buying some cheap animal themed coin
at one price and selling it at another.
You can go to the casino for that.
Now, I want to say that I don't
necessarily have any problems with meme coins.
I just think they're a product of the times.
Decentralized tech is still kind of figuring itself
out and that will take a while.
So meme coins have kind of stepped in
to offer some excitement in the short run.
But a crash is going to purge
these kinds of currencies from the system.
Maybe not the biggest memes are the first coins
to copy Bitcoin's code, but thousands of others.
But the good news is
Even now, as so many people are
sounding the death knell for crypto,
I am totally confident that this will happen.
But how can I be so confident?
Because we've been here before.
We've heard this story.
In fact, we've heard it many times, but
most recently, we've heard it in the 1990s.
It's the early '90s.
Picture it, you're rocking your bomber jacket,
plaid shirt, chain, wallet.
You're listening to Nirvana.
Michael Jordan is the greatest athlete in the world.
Seinfeld is the biggest show.
Things were so simple, weren't they?
And then you start hearing about
this new thing called the Internet.
Now, maybe you've got some disposable income, you're
a baby boomer living in the 90s.
You probably do.
And sure, there are naysayers, people who think
the Internet is just some fad, something we'll
look back on years from now as we
rock our 28th generation beepers.
- What is the internet anyway?
- But you don't feel that way.
Sure, the Internet might not look like
much right now, all of it's text
based, ugly, not especially user-friendly.
But you see the future.
You see the underlying potential, the
possibility of a connected world.
You see what this is going to mean for everything.
Literally everything.
So, of course, this is where
you should be putting your money.
What could possibly go wrong?
Well, as the '90s went on, with interest rates
at their lowest point since the '70s, the Internet quickly entered
the mainstream, there were suddenly a lot of people
creating these dot com startups, and there are even more people
who are looking to invest in them.
This led to a massive increase in
equity markets, the greatest expansion of capital
growth the country has ever seen.
The Nasdaq index rose from under 1000
to more than 5000 in five years. Crazy.
people investing in companies not because of the profits
they were making at the time, but because of the
profits they could make in the future.
Many investors and venture capitalists abandoned their cautious approach
for this fear of not being able to cash in
on the growing use of the Internet.
No one wants to be the loser who misses out on the Internet.
- the mark, with the a and the ring around it.
- @ ?
- See that's what I said.
Many investors didn't even really understand what these companies did
or how they plan to make money or
how the Internet was even going to evolve.
So they found themselves highly susceptible
to a company's marketing and PR.
Startups understood how important this was, and they
often abandoned any semblance of fiscal responsibility, focusing
solely on doing whatever they could to gain
investors and increase their valuation.
Some startups spent as much as
90% of their budget on advertising.
Sound familiar?
A big part of the PR and marketing from these
early startups was pushing this weird idea that it wasn't
a problem if you didn't turn a profit.
In fact, for a time, it became
almost like a badge of honor.
If your startup wasn't making any money, it didn't
turn people off or keep them from investing.
It did the opposite.
It meant that you were forward looking.
It meant that you were fearless.
It meant that you weren't in this for temporary short
term gains, but that you were playing the long game.
It meant that you were in this for the future.
Just one example is Priceline, an online travel agency
that, for a time, was one of the most
sought after and highly valued companies on the planet.
In March 1999, Priceline went public at $16 a share.
On its first day of trading it went up to
$88 before settling down at $69.
This gave Priceline a market cap of
$9.8 billion, the largest first day valuation
of an Internet company to that date.
However, at this point, Priceline, as a company,
had racked up approximately $142 million in losses.
But the investors didn't care.
Priceline had a nonstop marketing blitz, telling
everyone it was one of the hottest dot coms. And it worked.
Expedia, one of Priceline's biggest competitors, was even
quoted saying that they couldn't compete with Priceline
because their business model required them to actually
make money, which hurt their valuation.
Just like there's been a rush in the past few
years to create new coins and blockchain, there was a
rush in the '90s to keep the pipeline of new IPOs coming,
which led to a lot of companies that were founded
on shoddy principles but great at advertising to get the
necessary heat to gain investors and grow in valuation.
That's all that mattered.
This happened over and over again.
Want to know just how insane the speculation got?
On March 10, 2000, the Nasdaq hit
a record high of 5048 points.
Evaluation that was 200 times as
much as the companies' underlying earnings.
I don't use the word "Bonkers" lightly.
This was pretty bonkers.
And looking back at all this now, it's
pretty easy to predict what happened next.
By April 2000, just one month after it hit its peak,
the Nasdaq had lost more than a third of its value.
Over the next year, hundreds upon hundreds
of these new, brilliant, cutting edge, forward
looking, profit agnostic Internet startups saw their
value drop by more than 80%.
Priceline, the Internet darling, absolutely cratered
with a valuation dropping by 94%, it's difficult
even now to track just how much
money was lost during this period.
Some sources put the number around $1.7 trillion.
But that's only when it comes to public companies.
The real number is much larger.
In any case, a lot of people lost a lot of money.
The public view of the internet
transformed, and most companies disappeared.
These were companies that were founded at the
dawn of the internet as we know it.
Companies that were ahead of the
curve and sold themselves as being
absolutely fundamental to our shared future.
Companies that today you've never heard of.
That being said, there were a few that did survive.
But why?
Because they were strong and organized.
Because they possessed a genuine utility.
They weren't just vapid marketing.
If we look to the crypto industry today,
we can see the earliest examples of the
businesses that make the most sense - exchanges.
It's simple.
don't just happen in tech.
It happens pretty much any time there's
a new advancement in human civilization.
Real quick, let's jump further back in time to
the dawn of the 20th century and the automobile.
The horseless carriage was sold, accurately, as something
that would transform all of our lives.
Now, at first, building cars was
insanely difficult and labor intensive.
You needed skilled mechanics and artisans to do it.
But then a guy named Henry came along
to help popularize the automotive assembly line.
Almost immediately, manufacturing a car
got a whole lot easier.
And I bet you can guess what happened next.
The exact same thing.
In 1908, there were 253
active automobile manufacturers in America.
By 1929, that number dropped to just 44.
And even then, nearly 80% of the output was done
by just three companies: Ford, General Motors, and Chrysler.
It's the same story.
The same rapid, over enthusiastic, gold rush mentality,
the same expansive bubble, the same crash.
It could be cars, dot com startups, crypto, or Tamagotchis.
It's all the same song and dance.
But when it comes to crypto, we're
painfully in the crash right now.
But what came next with all these other stories?
It's what's going to come next for ours.
The recovery.
It's so easy to feel down about crypto right now.
It's been a difficult time for all of us.
And it's so easy to fall victim to the negative
talk from people who say this sector has cratered forever.
Who are even gleeful about it because
they never invested in the first place.
Or maybe they just don't
like the name crypto.com arena.
And yes,
but the tech still makes sense.
After or cheap money leaves the sector, we'll be
left with a more solid, balanced, healthy market with
coins gaining in popularity, not just because they're well
publicized, but because they're credible, well designed and made
to solve a problem. Same as everything else,
value always wins in the end.