The State of Crypto in Closing out 2022

Disclaimer: None of the following should be taken as investment or other financial advice. I'm just a marketing guy who hails from Fintech before people started calling it that and who occasionally has observations and opinions to share... and this blog hasn't been updated in too long, but it ain't dead yet.

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(~5m read)

“Even if he is crazy... Go now!”
- Hannibal Lecter

In the early 2000s, the dot-com bubble burst. Yet, here we now are with ~40% of the global human population on the Web, which was brought to us in 1989, running on the Internet (spawn of the Arpanet) as had been created 20 years earlier. A few myopic naysayers called it a fad. The only ones who ended up as roadkill off the side of the Information Superhighway were the diehards thereof. The Analog Amish, so to speak.

The adoption of file sharing via cloud computing didn’t start really kicking in until the late 2000s. Before that, what was everyone using? FTP is a protocol that has been around since 1971. Email? Jeez, man: Most people today are still using plain old SMTP. Sure, HTTPS for securing data in transit and hopefully 2FA for access controls as well, but still: Most aren’t securing such data at rest via PGP or whatever else for E2E, and SMTP’s been around since 1982.

So yeah, ICOs in 2017, NFTs in 2021-22, lending vs. staking vs. HODLing, CEXs vs. DEXs, PoW vs. PoS vs. PoH, BTC vs. CDBCs vs. crypto at large, etc., all this is part of the legwork and growing pains; trial and error. Many of the experiments will hash out to be flops, dog (RIP Pets.com) n’ pony shows, or flat-out scams. A few will hash out to be game-changers. Such is the nature of progress on any given new platform or paradigm. From the high-level and long-term view, all will work out.

To be sure, this year dealt us all some severe blows (Terraform Labs, Celsius, Voyager, FTX, BlockFi, Nexo), and next year we'll probably see at least a bit more bloodshed. Still, it's not like the industry's cypherpunks will stop building. Its cryptonauts won't stop exploring, and its influencers won't stop advocating. The media will keep following. Policymakers and regulators will keep debating and wrapping their heads around the space.

Verify, Do Not Trust

Investors who don't know how to ask "What's their motivation?" in doing research and following the trends, and when to take what some of its leaders say with more than a grain of salt, I won't say they deserve to lose their money. I will say, however, that in volatile times it can be worth considering extra carefully how much allocation to give to crypto within one's broader portfolio if any at all. Personally, I'm a big believer in a few basic tenets: Never FOMO-buy into things you don't understand, investing without a decided strategy is just gambling, "not your keys, not your coins," and never invest what you can't afford to lose.

Today, we’ve whole generations who were born into not just a post-Internet, but post-Web, world. People who literally never got a chance to experience the transitions from the analog-to-digital worlds or the Information-to-Noise ages (much less the analog-only world), what are they doing today? Maybe for the first or second time, some are getting married or becoming parents. For them, the Internet has always been ubiquitous. An unquestionable given, as they were born too late to experience life without it.

“It’s not our fault that we were born too late.”
- So What, Ministry

And their kids? They’ll come of age in a world of increased automation. Learning to drive a car? Don’t be shocked if many will never need to, just like how right now, you probably haven’t memorized the phone numbers of your significant other(s), close friends, and family members. In this post-1990s world, you mostly haven’t had to; such is one of the basic rules of evolution: Use it or lose it. Your brainpower has been freed up for other things.

On the one hand, we can and do get by on all kinds of things indefinitely until we can experience, are shown, or at least envision something better. Until then, most of us don’t know better, so may want but don’t actively seek or try to build something better. We can’t be faulted for this, as we’re too busy putting up with or just surviving the status quo.

On the other, once we do experience something better, suddenly, we can barely fathom how we ever lived without it. Our capacities for non-linear acclimation, scaling, and using things, even if we don’t know how they really work, are part of what separates us from artificial intelligence. They’re also part of what doesn’t distinguish us from many other species on this planet.

“Don’t Feed the Animals.”
- Your Nearest Zoo or National Park

“We are all animals, my lady.”
- Darkness, Legend

Onward and Upward

As to the case of blockchain technology as to that of the Internet: The underlying potential applications are horizontal, not vertical, and they go beyond the contexts of just one or a handful of industries, likewise beyond that of just for-profit points of view.

Cable TV pundits can keep dropping buzzbombs all they want. Infotainment is only their job and all. Here in the USA, if we see Congress finally pass some cohesive regulation that makes institutional investors feel comfortable enough to go in and stop sitting on the sidelines? At that point, the asset class hits a whole new level of legitimacy. Even if that comes down to the SEC classifying BTC and all PoW as commodities and otherwise putting issuers of coins and tokens based on all other consensus mechanisms on notice for rolling unregistered securities, and then we see a huge shakeout across all the alts, boom.

In the meantime, one can enjoy the day-to-day social media memes and occasional SNL sketches all the same. After all, along the sometimes ugly paths of progress, if one can’t at least have a few laughs... then that’s just no fun at all.

Happy Holidays!

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