Sep 16, 2020 • 18M

Crypto is Easy - Issue #7

Open in playerListen on);
Episode details

From 1957 to 1958, the United States suffered a recession on the heels of a pandemic flu outbreak. Unemployment hit its highest level in decades. Prices rose as the economy shrank, whacking workers with the double whammy—less money, higher prices.

In response, the government cut interest rates, lengthened unemployment benefits, and accelerated government construction projects. Within a year, the U.S. economy recovered.

In hindsight, few economists blame the flu for the recession, though at least 100,000 people died in the U.S. (1 million people worldwide). Data suggest the natural end of a business cycle caused the recession, exacerbated by a series of rate hikes by the Federal Reserve.

Scientists produced a flu vaccine, people adjusted, and the economy recovered.

While COVID-19 is far more deadly, contagious, and difficult to treat than the 1957 flu (it’s not even a type of flu), it likewise received an aggressive public response, as did the recession it left in its wake. Also, like the 1957-58 recession, historians will realize disease did not cause this most recent financial downturn, it simply led the way.

As I said in last month’s issue, I expect we will put COVID-19 behind us by next summer. Medical science is too swift. Its discoveries are too compelling.

By the end of the year, we will probably know everything we need to know to crush “the global bastard” and get back to normal—whatever “normal” means in the post-COVID-19 world. It may take many months longer to get vaccines and treatments to everybody who needs them, but it will happen.

Perhaps we will fall into another Great Depression before we get there.

Hopefully not.

Humans are incredibly resilient. Economies adjust. Leaders and entrepreneurs find a better way.

The financial crisis of 2020 saw massive, coordinated government financial interventions on a level and sophistication never attempted before. While it’s too soon to think our economies will recover soon, it’s not too soon to think about what will happen once they do.

At that point, we will have to confront all the problems we had before pandemic disease and economic crisis consumed the world’s attention.

The list of problems is long, far longer than I have room to include in this issue. It includes racism, inequality, poverty, reckless government monetary policies, and an almost unbreakable commitment to debt, deficits, and spending among the world’s leading economies.

Meanwhile, we continue to endure the slow whittling down of public discourse, the gradual destruction of free markets, and the silent erosion of the value of labor, as measured in money.

Cryptocurrency can fix all of that.

And what does the cryptosphere care about?  

Sushi, hot dogs, pickles, and pasta. “Price go up.” Moon.

Awesome tech, LOVE the mission, freedom and all that . . . should I buy that latest DeFi token?

A revolution, if you can keep it

Cryptocurrency will fundamentally change our modern notion of money, wealth, privacy, property, and commerce.

For the first time, we can create financial networks that everybody can participate in.

You don’t need to know somebody who knows somebody who can get you in, nor do you need to meet somebody else’s standard for what “qualifies” you for admission. You just need to download the app or visit the website.

Everybody can participate in finance, join a group, start a business, and trade property no matter where they live, how much money they have, what political or religious organization they belong to, their family’s status, their race or religion, their level of education, or their nationality.

Computer programs can’t discriminate. Algorithms can’t shut you out.

No lobbyist can change bitcoin’s rules. No autocrat can punish it to silence.

The three Ds of the next bull run—DeFi, DAOs, and DEXs—will test the limits of monetary thought and yield paradigm-shifting discoveries for the benefit of all humanity, not just the rich and powerful.

These discoveries will be every bit as profound as penicillin, steam power, and electricity.

For the first time, we can test monetary concepts in the real world. We can go beyond the efficient market theory and Pareto charts. We can observe monetary policy in its purest form, without political influence and interference.

What discoveries will we find? What innovations will we create?

Everything is possible.

But money comes first

Possibilities abound—and we’ll get around to that.

First, the money. After all, it’s not called cryptomaketheworldbetter. It’s called cryptocurrency. Literally, the technology of money.

No matter how much good it does for humanity, somebody will get rich from it.

In some ways, that’s the whole point. Create value and ye shall receive value. What good is a new money system if nobody uses it?

Consider Ampleforth, a financial network that rebalances users’ funds whenever the value of its token, AMPL, moves too much. Theoretically, users can preserve the purchasing power of their money as the network grows or shrinks. The number of AMPL tokens will go up or down based on an algorithm designed to keep the token price stable.

Will it work in the real world?

We shall see. Meanwhile, you can play the rebalance for SICK gains, bro, as long as you don’t get rekt.

Some cryptocurrency teams like GoodDollar and ZoloUS have started exploring universal basic income. They’re trying to figure out how to give everybody access to money without moral hazards and market inefficiencies.

Will it work in the real world?

We shall see. Did you get my link for the airdrop? Easy money!

Rightfully So

These experiments and dozens of others will lead to profound insights about humans, markets, and finance.

They will lay the building blocks for the financial networks of the future. Just as telescopes forced us to rethink our assumptions about the earth and electricity forced us to rethink our assumptions about physics, cryptocurrency will force us to rethink our assumptions about money.

This will take time to sink in. Technology moves fast. People do not.

Perhaps we can be forgiven for obsessing about staking rewards and yield farming. After all, in a few years, rewards will slow down and yields will fall—by design.

Now, it’s never been so easy to buy into the same types of wealth creation machines that wealthy people have used for so long to make money off of their money. We owe it to ourselves to participate.

In doing so, we play a small role in weaving the financial tapestry of the 21st Century. We risk our fortunes in support of this new asset class and the technology behind it.

It’s only fair we benefit from that.

Wealth is not the goal—it’s the outcome

As cryptocurrency markets grow 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 way to transact or invest, rather than a way to create trustless networks for the benefit of all. Even bitcoin maximalists will fall into this trap.

They’ll miss the true revolution—humans organizing themselves without a central authority to coerce them into doing things against their own best judgment. People breaking down the intermediaries and gatekeepers that cause bottlenecks, complexities, costs, and conflicts.

They won’t realize cryptocurrency gives humanity a chance to promote choice and create communities without undermining consensus and governance. Nor will they care how cryptocurrency can create fairer, more inclusive financial and social networks.

That’s ok. We will.

While the rest of the world will obsess over central bank actions, the intrinsic value of money, and archaic financial concepts, we will pave the financial roads of the future. We don’t need to wait for economists and political theorists to present solutions. Once we have an idea, we can put it into action. Nobody can stop us from doing so.

As a result, the financial discoveries of the future will not come from academics and politicians. They’ll come from entrepreneurs, computer scientists, developers, mathematicians, and common people like you and me.

And we will reap the benefits.

Will we use our good fortune to build open, permissionless financial networks and trustless, censorship-resistant communities? Promote monetary innovation, privacy, and inclusive markets? Make money systems that allow the poor and marginalized to contribute to the world’s markets and, as a result, build their own wealth and financial security?

Or will we recycle made-up tokens from one lending platform to another? Pump up DeFi schemes? Use cheap cash to drive up prices so we can sell our stakes to somebody dumber or more greedy than we are?

The urgency of now

In the midst of worldwide economic decline, political discord, pandemic disease, and social crisis, we are fortunate. We have the time, money, and opportunity to invest in the financial networks of the future.

While we will benefit from doing this, we have an obligation to go further. We can take the gains for granted—follow my plan for bitcoin’s bull market and we will catch all the growth of this asset class while avoiding the inevitable crash that always comes after the market peaks.

This means we don’t have to stress about the ups and downs, mess with latest meme token, or FOMO into the next DeFi pump coin. Opportunities abound. Altcoin projects are doing amazing things. Bitcoin’s Lightning Network has grown strong enough to support new payment rails and settlement platforms for all sorts of financial transactions.

As a result, we can focus on things that carry far more urgency.

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. Workers suffer from the financial vampire of inflation.

Everybody worries about how long our economic crisis will last, and what will happen to them before it ends.

These are real problems, today.

Cryptocurrency can solve these problems—if we choose to let it.

Perhaps DeFi will get rid of pyramid schemes, interest-rate shenanigans, and greater fools. Some tokens actually do solve market inefficiencies or present new financial paradigms, they’re just mixed in with a bunch of scams, quick-money rug-pulls, and bad ideas.

In time, we will see what works and what doesn’t. Trial and error will end the old debates over soft vs. hard money, central banks vs. private money, fiat vs. whatever.

Anybody can create a financial system and release it on a global scale. Let’s use that power for the benefit of humanity and discovery. Even better—let’s support everybody trying to do so, whether or not they do it with bitcoin.

The money will come

We can do this because we know bitcoin’s price will go up. The rest of the market will follow.

That’s not a hope or speculation. It’s already happening.

The broad crypto market is up 300% over the past 18 months. Every metric, data point, and historical correlation predicts bitcoin’s price will go up for several more years, as it’s done since the beginning of 2019.

As I’ve shared with premium subscribers, the data is clear. Sometimes, it’s overwhelmingly compelling.

Yes, nobody can predict the exact price or the exact moment we’ll get a crash or pump, but often, the data will give off powerful signals about shifts in the momentum of the markets.

To make it easy for us to use those signals to our advantage, I incorporated them into my plan for bitcoin’s bull market.

So far, we’ve used these signals to catch all of bitcoin’s rise from $5,400 to $7,800 and the most recent crash below $10,100. At the same time, we’ve avoided the FOMO, allowing us to make the most of our time and money.

Read My Plan for Bitcoin's Bull Market

I also shared some data suggesting bitcoin’s bull market will go much higher and longer than most people think—perhaps up to $350,000 around October 2022, with the entire altcoin market growing 35,000% over that same time.

(Those are not typos.)

Far fetched? Not really. Take a look at my analysis:

See How High Bitcoin's Price Will Go

Does that mean we should expect to reach those lofty numbers?

No, but I don’t make predictions. I just try to follow the data and try to understand what’s a realistic expectation at any given time. An educated guess, based on facts and evidence.

When you look at the data, it’s pretty clear a $350,000 bitcoin is far more realistic than a $3,500 bitcoin.

$350k continues the path we’ve traveled for 11 years. $3.5k nullifies every bit of data, correlation, and pattern we’ve ever seen relating how people use bitcoin and how its price has moved over its entire history.

Altcoins will follow wherever bitcoin goes. Some will do far better.

For that reason, I offer recommendations of small, legit alts with huge upsides even if we don’t get altseason. I spend hours digging into the projects, communicating with the project leaders or their representatives, and putting together short, concise reports with the opportunity and risks.

If you had put $100 into each of eight recommendations when I made them, you would have $2,000 today—not including any staking rewards (some of which are quite generous), even with the recent crash wiping 50% or more off the value of some of those recommendations (along with many other altcoins).

If you’d invested in the broad market at the same time, you would have about half of that.

Better still, all of these altcoins have a lot of room to run.

See My Altcoin Reports

True, a lot of our gains came from hype, not substance. I factor that into my analysis with the “Why Now?” section I include with each altcoin report.

We want to buy our stake in these networks before everybody’s talking about them. Once they’re all over Twitter or Reddit, a 1,000x opportunity drops to 50x or 100x or less. We want home runs, not singles—projects that have huge upsides and potential to succeed even if they don’t get hyped or shilled, but that haven’t gotten their proper respect yet.

Perhaps this makes my list a little boring. It certainly doesn’t mean every recommendation will succeed (many won’t), but they’re all worth your attention.

I have almost 30 altcoins on my research list and a handful I might recommend in the coming months. Stay tuned for those.

Looking ahead

While we owe it to ourselves and our families to think about the wealth-making opportunities in crypto, it’s too easy to lose sight of the bigger picture. 

In the post-COVID-19 world, where humanity struggles to find its path forward, cryptocurrency will not thrive if its biggest advocates talk only about prices and its biggest selling feature is “it goes up.”

Think about the true revolution—open, permissionless financial networks that nobody can manipulate, defraud, or deceive.

As bitcoin’s price goes up, attention will follow.

Will this renewed attention lead to better, freer, more equitable money systems? Can we use this moment to make finance and commerce accessible to everybody, not just a lucky few? Do we harness this momentum to recruit great thinkers and bold leaders who can move this technology into the mainstream?

We can, but only if we choose to.

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 make our lives better and reject old concepts when experience shows us a better way.

To succeed, cryptocurrency needs to do only one thing: give humans a better way.

This is the next challenge.

I can’t wait to see who else accepts it. Relax and enjoy the ride!

See All Crypto is Easy Content

If you’re enjoying Crypto is Easy, please vote for me for Hacker Noon Independent Tech Journalist of the Year!

Vote for Me

Use your Hacker Noon login (if you have one) because your vote will carry more weight.