Bitcoin Maxis Are the New Gold Bugs
This Isn't High School
In high school, I was into hardcore music. You know, the stuff that sounds like heavy metal, but that has a positive message. For a lot of people in that scene, it was only okay if you were only into hardcore music. It was as if all other genres of music were completely worthless, that no other musicians had any value or relevance. Really mature stuff. It was a bit frustrating to have conversations these types of people, because I was always worried about saying the wrong thing or simply expressing my liking for anything other than hardcore. In short, the hardcore-only crowd wasn’t much fun to engage with.
As I scroll through Twitter these days, I’m getting this same vibe from Bitcoin maximalists, those who believe that Bitcoin is the only cryptocurrency or blockchain product that has any value. Don’t get me wrong, Bitcoin is surely the king of the blockchain world; hell, without it, there would be no blockchain world. But this world now also has other inhabitants, and these other inhabitants have their own value.
Let’s start with the second biggest cryptocurrency on the market: Ethereum ($ETH) (Technically, “Ether” is the name of the cryptocurrency and Ethereum is the name of the blockchain). For a breakdown of exactly what Ethereum is in layperson’s terms, I recommend reading the following Tweet thread:
Some highlights from the Tweet thread above include the fact that Ethereum has a complete programming language inside of it, so programmers can write code and make apps on it. This makes Ethereum, essentially, the world’s giant distributed/decentralized computer. Instead of using Amazon Web Services to run apps, people can use Ethereum.
A major feature of Ethereum is the “smart contract”. In Jorgensen’s words, “‘Smart Contracts’ are like having a robot lawyer live in a computer. This robot lawyer can observe validate and execute agreements between perfect strangers perfectly, cheaply, millions of times per day.” Smart contracts are an excellent way to prevent fraud and achieve trust between two parties. You can buy art, domain names, tickets, and music rights on Ethereum without getting scammed. I won’t pretend to fully grasp how Ethereum operates, but I will say that I continue to learn a bit more about it each passing day. It has the potential to radically reshape our world on a number of levels.
What’s most wild about Ethereum to me is that Vitalik Buterin, its founder, launched Ethereum when he was 21 years old. Hmmm, let me think about what I was up to when I was 21 years old. Oh that’s right, I hadn’t just finished building the world’s first decentralized computer. I was probably drunk at a bar somewhere in the East Village of New York City talking about my feelings. And let me guess what some of these Bitcoin maxis were doing when they were 21 years old. Oh right, they weren’t launching the world’s first decentralized computer either! Weird! The biggest critique of Ethereum amongst Bitcoin maxis is that Buterin is currently overhauling the way the Ethereum blockchain functions, because, in retrospect, he saw some potential flaws and wanted to smooth them out, whereas the base operating layer of Bitcoin can never be changed. I see the validity of the argument, but it doesn’t negate Ethereum’s use case nor its value. I own $ETH for the same reasons that many traditional investors own something like Microsoft (which is now building products on Ethereum).
Then, we have Cardano ($ADA), currently the fifth largest cryptocurrency by market capitalization. It’s founder, Charles Hoskinson, also one of the early developers of Ethereum, is well-known for having traveled to dozens of developing countries - predominantly in Africa - in efforts to work with their governments to bring DeFi (Decentralized Finance) to these regions. (I neglected to mention above that Ethereum is the king of the “DeFi” tokens.) Hoskinson believes that too many on Wall Street simply see Africa as a poor continent with little potential, similar to the way it viewed China decades ago, whereas he sees nothing but potential for DeFi in Africa. I highly recommend listening to this interview with Hoskinson on Real Vision: Crypto. Also, I own $ADA because, in owning a certain amount of it, you can vote on the initiatives of the Cardano Foundation, and I want to be a part of this positive community that Hoskinson has created. (I also think the price of $ADA is going to go up a lot.)
There are other DeFi coins like Uniswap ($UNI), Aave ($AAVE), and SushiSwap ($SUSHI) that will also likely become quite valuable by the peak of this current bull run.
And then we have crypto’s role in the metaverse (very wild read). The metaverse is comprised of video game and other virtual worlds in which people can now both earn money and buy virtual real estate. In all honestly, the metaverse scares the living hell out of me because 1.) I am not a gamer and I think spending too much time in virtual worlds has detrimental effects on our brains and 2.) I don’t want to live in a Ready Player One simulation. But whether I like it or not, this is the direction in which we are moving. The world of physical real estate has priced out so many millennials that the world of virtual real estate is starting to become more appealing to them. If you want to buy some virtual real estate, you can buy the NFT token Decentraland ($MANA), and if you want, perhaps, an in-game item that can be transferred between different online games, you might build such an item on the Enjin ($ENJ) platform. I don’t even pretend to really understand how all of this works, but, again, I am trying to because I believe it will be a big part of our future. This will all have a massive impact on the human psyche and on human relations. For more on the parallel financial system that is developing in the metaverse, check out an interview with the author of the piece linked at the beginning of this paragraph, Piers Kicks, and Real Vision founder, Raoul Pal. (It’s free to sign up for Real Vision: Crypto. I highly suggest doing so.)
I’ve truly only begun to scratch the surface in regard to the ecosystem of blockchains and cryptocurrencies that are currently being developed. This massive virtual world is developing outside of most of our purviews, and it is going to have a notable impact on the physical world in which we all inhabit. In regard to investing, Bitcoin is still likely your safest bet in the crypto space. Its price still likely has a lot of room to run in this cycle. However, my guess is that “altcoins” (sometimes referred to as “shitcoins” by Bitcoin maxis) have even more room to run. “Altcoin season” is upon us and, if you are a more sophisticated investor, it might be worth doing your due diligence on a few coins other than Bitcoin.
Whatever your investment strategy is, I would advise being open-minded and accepting that there are cryptocurrencies other than Bitcoin that have value. Even if you are a Bitcoin maximalist, try not to be like the “hardcore kids” from my high school or the Peter Schiffs of the world, those who cling to their tunnel visioned way of seeing the world. There are people like Vitalik Buterin and Charles Hoskinson who have such big brains that are so much better than ours, and we luckily get a chance to directly invest in their vision in this new, more transparent financial system.
Best,
Frank
Currently Listen To: “Tonight, Tonight”, by Smashing Pumpkins
Currently Watching: Seaspiracy (Netflix)
Podcast That I’m Currently Absorbing: The Tim Ferris Show #506 - Interview with Balaji Srinivasan (Hands down one of the most important conversations I’ve heard on a podcast in quite some time; I wish I were a tenth as sharp as Balaji.)
Great article. A week doesn't go by without me finding out something new in the Blocksphere. I'm cool to sit in the Blocksphere day after day. It's like reading a cool SciFi book that I'm actually walking around in (in my head). If I really want to walk around in a part of it, I guess I could go to Decentraland.