I was wrong about crypto
Almost exactly one year ago, I gave a keynote at a blockchain summit here in Los Angeles. Since then, if seems as if the entire world economy has pulled the eject lever, and I realized that some of the ideas I had a year ago ended up being way off.
How did I end up getting asked to give a keynote on blockchain? I’m just a real estate guy, right?
Well, if you take a look around, you can find many people trying to apply some of the core principles of blockchain to their own spheres of work and life. These are broad and general ideas like:
financial freedom and transparency
disintermediation of markets
new monetary/fiscal policy
For the last few years, I’ve been one of those people. I drank the kool-aid, big time.
Real estate has been a black hole for innovators for decades, so naturally when I finally “got” blockchain, I also started believing that I “got” how to apply it properly to the problems I saw in the real estate world.
Like many others in the space, I spent quite a bit of time on putting together solutions related to equity and debt financing, affordable housing and data solutions. Time will tell if any of those ideas actually stick.
A year ago the "Crypto" total market cap was 2.4 trillion. Now it’s 970 billion. That’s a 60% decrease.
“Market Cap” here is just the total dollar value of all the cryptocurrencies and blockchain projects combined together.
Why the dumpster fire?
Were some (seemingly reputable) crypto-financial institutions set up to only be profitable in an up market? YES.
Terra made about $18 billion disappear like magic, and Celcius took a modest $1.2 billion dollar bath and hit the chapter 11 button, real quick.
Was there also some serious fraud among smaller projects trying to raise money from unsuspecting people? Oh yeah.
But I wasn’t wrong about any of that stuff happening. It’s been happening off-and-on for almost a decade, and most people were not surprised to see things accelerate in these high-inflation times.
What I was wrong about is much scarier. 😅
When the traditional financial, banking and marketplace institutions began to really be strained and show signs of structural weakness last year, I thought for sure that blockchain-based alternatives would gain both utility and value as their traditional counterparts got weaker and weaker; basically I guessed that human beings would rationally choose the newer, safer, cheaper, etc., option.
Blockchain and crypto, as a concept, seemed like it would be the “risk-reduction” option that everyone would dump their bleeding 401k’s into; a modern day alternative to making a run on the bank.
Naturally, If I had been right, then as traditional Stocks, ETF’s, REITs and other funds began to dip down, my darling crypto should have been moving in the opposite direction, gaining steam in opposition to those market losses, right?
Instead, reality showed that the same “money is a made up game for the patagonia-vest-wearing Chads on wall street” crowd was also heavy into crypto. Instead of crypto being a bulwark of solid financial principles, leading us into a stronger monetary future, it was all just speculative, after all.
Humble pie for one, please!..
Why did I say that being wrong about that was scary?
I’m going to answer that in an upcoming letter. For now, let me know what you're bullish on in these trying times!