Cryptocurrency is full of people who believe in old economic theories that have never been tried in the real world. There’s an almost zealous adherence to esoteric principles that seem to have no place in modern psychology, behavioral economics, and politics.
Fitting, perhaps, for a niche technology whose earliest followers—and most ardent advocates—came to it as an escape from convention. You would expect them to hold unconventional beliefs.
For me, bitcoin is not about economic liberation or freedom from corrupt authorities. It’s about the potential for a new world order based on open, permissionless financial networks and trustless, censorship-resistant communities. Monetary innovation and choice. Inclusive markets.
If we can get to that point, we’ll have economic liberation and freedom from corrupt authorities. We won’t need theories to get us there.
People are losing faith in their leaders and questioning the traditional financial system. Investors have no good places to put their money anymore. Rich people want to protect their wealth against currency devaluation and reckless governments. Businesses need better digital goods and services to prosper in the post-COVID-19 world. Everybody worries about how long our economic crisis will last, and what will happen to them before it ends.
These are real problems, today.
Now is not the time to obsess about the supposed Cantillon effect of central banks or the cruel misery of fiat.
We’re at the start of a massive shift in global monetary thought—except this time, it will not come from economists or political theorists, but from entrepreneurs, developers, mathematicians, and common men and women like you and me.
For the first time, we can test economic concepts in the real world. In doing so, we can create better markets, fairer economies, and stronger commercial networks.
Just as telescopes forced us to rethink our assumptions about the world and electricity forced us to rethink our assumptions about physics, cryptocurrency will force us to rethink our assumptions about money.
What discoveries will we find? What innovations will we create?
We will find out.
After all, people need to make money first.
“Price go up”
As you know, I expect a massive, long, powerful cryptocurrency bull market.
This bull market will be driven by two things:
Decentralized financial platforms that make it easy for smart money and insiders to get unlimited access to cheap, easy cash.
Centralized financial platforms that make it easy for anybody to buy cryptocurrency.
To understand why I believe this, check out my special issue on bitcoin’s price.
But bitcoin will not succeed on greed alone. Altcoins will not thrive from pure speculation.
Ten trillion dollars will not flow into crypto on wings and prayers, no matter how bad the world’s economy gets, how scared its rich people get, or how mad its poor people get.
At some point, you need conviction and a reality check. Do people really care about their investment or do they just want to make money? Does this technology really have legs to stand on or is it a shot in the dark?
At this moment, it’s clear: conviction has entered the markets and the technology is real.
Thanks to incredible innovations among cryptocurrency developers and blockchain engineers, we now have actual products and services running on cryptocurrency. DeFi may dominate the headlines today, but FOMO can’t hide advances in tokenomics, scaling, decentralized governance, and blockchain technology’s integration with real-world processes.
Not to mention the infrastructure around buying, selling, and using cryptocurrency is easier, safer, and better-regulated than ever before.
Walmart, Visa, IBM, Citigroup, and UPS are adopting blockchain technology to track their supply chains and facilitate cross-border transactions.
Fidelity, JPMorgan, and CashApp offer crypto products and services to their clients. PayPal and Facebook will soon join them.
Some cryptocurrency projects are working with governments on forensics, blockchain-based public services, and commercial innovation.
Bitmain, Coinbase, Ripple, and Ant Group have all said they plan to go public. U.S. regulators said banks can store cryptocurrency for their clients.
Over a hundred billion dollars came into the cryptocurrency market this summer alone. Looking at on-chain metrics—insights into the sentiment and behavior of people holding and using bitcoin—you see the same patterns and trends that we saw at the beginning of every previous bull run.
Altcoin projects have persisted through two or more years of funding carnage. Investors have held steady through 85% drops (99% drops for some projects).
Nobody is going to give up now.
COVID-19 Comes First
Medical science has tackled the disease with incredible fervor and speed. Finally, we’re seeing the results.
The world has ramped up production of medical supplies, tests, and personal protective equipment while accelerating vaccine development and disease tracking.
We have several promising vaccine candidates and, at least in the U.S., enough capacity to quickly get hundreds of millions of doses into the hands of medical professionals within weeks of confirming whether any of these vaccines work.
We’ve discovered a drug, Remdesivir, that reduces COVID-19 symptoms and shortens the length of hospital stays for people who are severely infirmed. In other words, with this drug, people get less sick, need less care, and die less often.
Once we confirm the proper dosage and administration, we can make it a standard of care and possibly (eventually) allow doctors to treat COVID-19 on an outpatient basis. You would call your doctor, tell him/her your symptoms, and if it sounds like COVID-19, get a script for some drugs and quarantine for two weeks. That would be amazing (but let's not get ahead of ourselves).
We’re pretty sure monoclonal antibodies work, too. With this technology, you can take a pill that gives your body COVID-19 antibodies. These antibodies wear off quickly but they provide the same protection you’d get with a vaccine, albeit temporarily. If effective, this treatment could serve as a key line of defense while scientists and drug companies ramp up vaccine production and distribution.
We also have preliminary data showing humidifiers cut down on the spread of COVID-19. This will matter more during the winter, but you can't ignore the significance: simply humidifying buildings and households will keep COVID-19 from spreading.
Of course, if everybody wore masks all the time, we would pretty much be able to go back to normal. Yes, people would still get sick, but it wouldn't be a public health emergency. Unfortunately, that's not realistic. Too many people refuse to do that.
Why do I bring this up? What does this have to do with bitcoin?
I want to give you hope that within the next year or less, we will put COVID-19 behind us.
At that point, we can get back to normal economic activity. People will get their jobs back or find new ones. Businesses will recover. Confidence will return to households.
This is essential for cryptocurrency’s success.
Nobody buys bitcoin when they’re scared. They use their money for rent, food, and "things."
When you’re about to get evicted or worried about losing your job or business, you don't usually speculate on innovative financial technology, no matter what the upside is.
You might hoard, worry, starve, protest, fight, revolt, or submit to tyrants, but you’re not going to buy bitcoin.
What comes next?
Once we tame COVID-19 and life starts to get back to normal—whatever “normal” means in the post-COVID-19 world—humanity will have massive problems to deal with.
People will realize just how much minorities and poor people suffered under COVID-19 while white people and white-collar workers largely did ok. Governments will have massive budget deficits. Central banks will have bloated balance sheets. Some countries will default on their debt or replace their currencies. The global economy may take a very long time to recover.
And yet, no matter how gloomy the future seems, humanity always wins.
We have an amazing capacity to learn, change, and persist. We embrace new concepts when they solve our problems or make our lives better. We reject old concepts when experience shows us a better way.
To succeed, all cryptocurrency needs to do is one thing: give humans a better way.
That is the next challenge for cryptocurrency.
The money will come. You can take that for granted.
The question is what will we do with that money? Will we just recycle it from one stablecoin to another to generate yield? Will we use it to pump up the price of Bitcoin so we can sell it to somebody dumber or more greedy than us?
But we will also pave the roads for the financial engines of the future.
As decentralized financial platforms mature and more people grew weary of incompetent governments and closed financial systems, they will create their own, nongovernmental organizations. They will organize themselves according to their principles and their interests, with rules embedded in their currencies and a blockchain to guarantee everybody will get the result they expect.
When people build businesses on these networks or start their own, they’re not going to hire a crew of blockchain developers to design their token and all the infrastructure necessary to support it.
They’ll use Aragon or DAOstack to program a token that provides the right incentives to support their project, with smart contracts that fit their needs. Then, they’ll go about their business.
Like we use a word processor for today’s publications, people will use a DAO for tomorrow’s business structures. In one step, they will have a tool for raising funds, organizing workers, rewarding participants, borrowing money, and managing workflows.
This will be as revolutionary as corporations when first developed in Renaissance Italy.
When you stand up a business that spans all seven continents and need to work with people you’ve never known, never met, and over whom you have no control or authority, you will look into a launching DAO much the same as today you look at incorporating.
“There’s an app for that” will morph into “there’s a token for that.”
This is the world we are moving towards. New forms of governance and finance that seem bizarre and complicated. Ideas that stretch the boundaries of conventional thought. Products that test the limits of regulations and technology.
For example, yEarn Finance, a platform for finding the best lending rates on stablecoins. This project places governance entirely in the hands of token holders. It has no foundation, investors, or management. It’s just a computer program. Nothing else.
Its token, YFI, is now worth $6,000.
Vive la révolution
As more projects like YFI gain momentum and prices go up, you will hear people revert to the old, trite arguments over what is money and what is not money.
They will focus on cryptocurrency as a transactional medium or investment, rather than a way for humans to operate in trustless environments.
They’ll miss the true revolution—humans organizing themselves without a central authority to coerce them into doing things against their own best judgment. Breaking down the intermediaries and gatekeepers that cause bottlenecks, complexities, costs, and conflict. Promoting choice and community without undermining consensus and governance. Creating fairer, more inclusive financial and social networks.
The great benefit of having programmable money is not that it’s better than what we have now, but that it gives you the ability to choose between the systems you want to use—and the opportunity to create your own, at global scale.
All from your laptop.
But not yet
Over the next few years, people will mostly not think about that. Everybody will focus on price.
I will, too.
In fact, a good deal of my premium content focuses on price, markets, and the opportunity to make money—or at least, better decisions about what we do with our money.
If people were naturally kind and generous, we would not need money, nor need to worry about how to get more of it.
But people are not naturally kind and generous. Therefore, when a once-in-a-generation opportunity presents itself, we need to take advantage of the opportunity.
In five years, you will not have a chance to get 20-30x returns from cryptocurrency, let alone the so-called moonshots you’re dreaming about.
If history serves as our guide, you can expect the crypto market will get too big, governments will regulate the gains into the hands of rich people and insiders, and many projects will fail and die.
Cryptocurrency will still serve a valuable role and do all the things I said above, but you and I will no longer have a chance to make money off of that. As always, those opportunities will go to the wealthy and well-connected. We’ll just use the platforms they create.
Today, we have a short window of opportunity to stake our claims to the financial networks of the future. We can’t let this opportunity pass us by.
Bitcoin is about to start a huge, multi-year bull run. During that run, it will crash. Not a 10% drop now and then, but six or seven gut-wrenching, 30-40% crashes that will shake your faith in its future.
My plan makes sure we spot those crashes, buy the dips, ride the market to the top, and exit before greedy people, insiders, and fake maximalists run off with our money.
Altcoins should follow bitcoin’s path upward. Some will do even better, possibly much better. Read my altcoin reports to learn about some projects that might lead the way. If you bought them when I recommended them, you’d have 500% gains today—and these projects have plenty of room to grow.
Also, please share this newsletter.
Just keep in mind: if you only care about making money, you’re missing the whole point.
If you get wrapped up in Cantillon effects and Austrian economics, take a step back. Look beyond theory and ideology. See beyond the investment opportunity. Think out of both sides of your head.
Cryptocurrency does not just fill an economic or financial need.
It fills a human need.
A token for every person and every purpose.
That’s the revolution.
Relax and enjoy the ride.