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It’s been over a year since I last posted. I apologize, dear readers. I plan to start writing regularly again. My goal is at least once a week.
If you’ve wondered where I’ve been, I offer you what I hope is a satisfactory explanation. I got lost. I fell deep into a intellectual treasure hunt than has no bottom. The world I fell into was full of quirky people, ridiculous adventures, Chinese and Russian gangsters, emotional ups and downs, and a taste of what our future economy might look like.
That future is one in which cryptocurrencies become an integral part of the internet. The ideas and people at the core of this movement captured my interest because the philosophies guiding them were similar to the ones that led me to start this blog.
My journey into the world of cryptocurrency began shortly before starting this blog in the fall/winter of 2016. About a year and a half had gone by since I left my job as an analyst at a large asset management firm in San Francisco. I was living in Lisbon, Portugal, learning how to dance Kizomba. (What? Not what you expected?) I wasn’t really doing anything that you could consider “work,” and eventually got bored (or lonely enough in my non-Kizomba time) to seek out the local start-up community.
I began attending tech meet-ups, and at one event, met a character who resembled some mix between the Cheshire Cat, the Mad Hatter, and that one kid growing up who all the parents really like because he knows how to charm them even though he causes chaos and destruction. Naturally, we became quick friends and eventual business partners. I will call this person Z.
When Z first told me what he was up to, it went along the lines of, “I connect technology projects that need money with people who have money and they use cryptocurrency to make these investments.” This statement may sound less crazy in 2018, but I didn’t understand WTF he was talking about back then. So several discussions unfolded into a few ah-ha moments.
That “Oh Shit” Moment
It was during those discussions with Z that I had the first ah-ha. A parallel financial system was emerging from the depths of the internet, and 99% of the people who had heard of cryptocurrency didn’t understand what was going on. Z had helped raised millions of dollars for multiple projects from people he was meeting in internet forums, Slack channels, and sub-Reddits. And he wasn’t the only one doing this!
Maybe it was because I came from a world of regulated financial reporting, road shows run by investment banks, fake symbols of professionalism and credentialism that I was so taken aback by Z’s claim that people would invest in projects by sending cryptocurrency across the planet over the internet. I had so many questions: What the hell were these projects? How the did he get involved? Who are these investors? Why does anyone trust each other? Why does anyone trust YOU (Z)?
As Z answered all my burning questions, I realized two things:
- The technology underpinning cryptocurrencies is a mechanism for scaling trust on the internet.
- If it’s true that any project can throw up a payment address as easily as it is to post an email address, then this technology solves global crowdfunding.
While crowdfunding was already an established service, it was tied to the incumbent financial system and regulations, so it never took off as rapidly (at least in the United States) as I thought it would for funding nascent technology businesses. Regulators and banks were slow to change, this money was difficult to move. Cryptocurrencies enabled the behavior I thought was possible, but had been held back by the above factors.
The moving money around problem was solved by a publicly viewable list of transactions—a special database called a blockchain. This list has mathematical properties that allow computers all around the world to check transactions, update the list with all the legitimate ones, and then agree to use a single copy of that list. The catch? No single entity controls the list. No bank. No government. Think uploading and downloading music files on software like Kazaa, Limewire, or BitTorrent, but with money. The only way one person could control it is if they controlled over half of the computing power running the network. Because people trust the mathematical properties of this software, they’re okay with sending and receiving money over it.
Although the regulatory problem still wasn’t solved, this parallel financial system was small enough at the time for lawmakers to ignore it. The result being that there were people in places like Svalbard raising money from investors in China.
While there were plenty of scams and shady people using this system (Wasso wasso wasso, anybody?), I discovered real entrepreneurs and technologists trying to solve real problems. Some of these people truly believe we can create fairer, more democratic, and trustworthy financial and governance systems. My curiosity raging, I dug deeper and found that the rabbit hole already had visitors.
The Rabbit Hole: A Global Network
The second ah-ha moment occurred while I was traveling. After meeting Z, I decided to implement one of my favorite learning tools: going to conferences. (A quick tip: if you want to learn about some emerging technology or anything really, there is probably a conference, festival, or trade show for it. You can usually find the people who live and breath whatever topic it is at these things. Go talk to them!)
I ended up going to a conference in Bucharest, Romania where I met several early Bitcoin and Ethereum enthusiasts. It was here where I got my first taste of the visionary – albeit idealistic – personalities who were creating the internet’s financial infrastructure. It was on this trip that I had my first visceral sense of the community and openness that is endemic in the crypto/blockchain world. People were there to build a more open, secure, and fair internet and financial system.
I was hit with another visceral understanding when I realized my money could now move across borders without any gatekeeper. With assets like Bitcoin and Ether, you can choose to control the keys that access your funds. Since there is magical math that makes it impossible for anyone else to touch your assets without those keys, you have access to your funds wherever you are on the planet (as long as you have an internet connection). This felt like the future. No more worrying if I could take out cash at an ATM or if my credit card would be accepted in a certain country. And it made sense too! I mean we don’t think of sending an email to our dear cousin Franz in Austria as a cross-border email, do we? But for some reason, in this age of free, planet-wide communication, we still have a term called “cross-border payment.”
As long as I could find willing buyers of Bitcoin or Ether, I could convert to a local country’s currency and get on with my day. In addition, I could send as much money as I wanted. With no limits! It was money without borders, native to the internet.
And if this wasn’t exciting enough, the best part was the most important: the community. Thoghtful, creative, and wacky people were innovating and getting involved all over the world. Things were happening in San Francisco, New York, London, Berlin, Zug, Hong Kong, Seoul, Tokyo, Shanghai, Singapore, and Buenos Aires. Even Lisbon has a community. So just like the internet itself, this crypto world is permissionless, and anyone can get involved by going to conferences, meet-ups, reddit, telegram, GitHub, Medium, and Twitter. Because it is a new industry, there are no gatekeepers. No bankers, no politicians, nor Facebooks to infringe on anyone’s opportunity to participate. It is truly the tech and financial world’s Wild West.
It’s Tough To Make Predictions, Especially About The Future
Through the dusty clouds of 1s and 0s, I could see the beginnings of a potential future where this technology dramatically altered society both on and off the internet. Some of the most interesting ideas in this cryptocurrency world, like Decentralized Autonomous Organization or Oracles, sound like they came out of a substance induced conversation in a college dorm after watching the Matrix. But many of the people working on bringing them to life believe in a future that is less dominated by powerful corporate interests and empowers groups of individuals to innovate collectively on the internet. Stop! Before you say this sounds like some form of woo-woo, hippy communism, wait… The way I’m currently thinking about it: market-based incentives for open collectives. If this is all confusing, don’t fret, even Marx’s head would be spinning. But if you’re eager to learn more, stay tuned for the next post where I’ll dive into some of the details of this future vision.