Crypto At The Dinner Table
Dear Bankless Nation,
Over the last week and months, BTC and ETH have been the best performing assets in the world, re-entering price levels which haven’t been seen in years.
Congratulations for having made it this far. There is still a long road ahead of us, and the rapids are still yet to come.
My belief is that we are entering the top of the 3rd inning of the bull market. There are increasing signs of retail and institutional interest in crypto-assets.
Bitcoin is re-entering the public conversation, this time with three more years of maturity, development, and resiliency. Ethereum is delivering the software update of the century, and developing a platform capable of supporting a bull-market crypto economy.
COVID19 has pulled the future into the present, and along with it comes a willingness to redraw portfolios given new information. Crypto market cycles have been roughly four years long, and express a seasonality in their disposition throughout the cycle. Right now we are moving from Spring to Summer and right now is the time when crypto-asset prices become expressive.
Bull markets are when the outside world turns its attention to crypto, and reprices the entire industry based on the fundamentals and narratives that have been built since the last cycle.
During the summer phase of the digital asset market cycle, the future world gets expressed in these assets now.
This summer of the crypto market cycle will express demand in:
- Exposure to digitally scarce money (ETH & BTC)
- Exposure to a digitally scarce economy (Ethereum & DeFi)
Scare Digital Assets are IN
The industries around Bitcoin and Ethereum are perpetually in an attempt to ‘become understood’ by the world around them. There is nothing more bullish for the value-propositions of BTC and ETH than to be understood by the outside world.
The world is slowly coming to understand what these assets are.
First they’ll understand Bitcoin.
Bitcoin, as the asset diametrically opposed to loose monetary policy, has an easier time being understood in a world where 22% of all outstanding USD issued by the federal reserve was printed in 2020.
There’s a fork in the road ahead for humanity. We explored this questions with Raoul Pal—do we print money, or do we let a lot of people suffer a massively deflationary environment over the next 2-5 years? The small businesses of the world are completely exposed to the brewing economic storm, as are the older generations of America who are looking to retire on an S&P denominated savings.
The way the world navigates around massive economic turmoil is by distributing proportionally large economic stimulus to those who threaten to be a squeaky wheel to established political parties. It is politically favorable to distribute cash as a mechanism for appeasing troubled populations.
I believe this pro-money printing environment is bullish for the entire sector of scarce digital assets. If money printing produces an environment of monetary abundance, then intrinsic provable scarcity will rein supreme.
Then they’ll understand Ethereum.
As a result of this new pro-scarcity environment, the value proposition of Ethereum finds itself easily validated. Ethereum, as the internet’s natives settlement platform for digital scarcity appears as a capital haven as the world flees from inflation to scarcity.
If Bitcoin is digital gold then Ethereum is a digital economy. It’s a decentralized nation complete with a settlement, banking, and capital layer available to anyone with internet access. And now this digital nation has produced the world’s first non-sovereign internet bond with yeilds denominated in an asset more scarce and more useful than gold.
Simply put, if Bitcoin becomes one of the world’s most valuable assets, Ethereum will likely be the economic host of the scarce digital asset tsunami that Bitcoin charges into this world. The average person doesn’t think that Bitcoin is a one-and-done invention like many BTC maxis will have you think. They understand that there to be an investable world in the digital asset economy.
So, as you gather around the dinner table this Thanksgiving, remember that the world is hungry for digital assets (even if they don’t know it yet), and it’s likely that YOU are going to be their bridge to understanding the world of digital assets.
Here are a few pieces from the Bankless archive that may be useful anchors for expressing the value-proposition of digital assets in a world of COVID money-printer go brrrr:
Bitcoin lives by pitching every single economic actor into the choice of ‘buying’ or ‘not buying’. The FOMO from the challenge of this choice has the power to break anyones convictions.
The Fundamental Value Proposition for ETH
There are three fundamental pillars of ETH value capture, but explaining these intricacies can often lead to misunderstanding. In my experience, you can summarize Ethereum as exposure to a scarce digital asset ecosystem. If people accept BTC as a scarce digital asset, then convincing them that there is going to be an ecosystem based on this same underlying premise is no longer a big ask.
Digitally scarce assets are a new paradigm, and Ethereum is the place in which the economic activity comes to life.
If there is going to be a digitally scarce ecosystem, ETH is the asset with outsized exposure to this economy. The digitally scarce economy has a digitally scarce representative, which is ETH.
One of my favorite Bankless podcasts was our episode with Jesse Walden who put forward a thesis that the new frontier of strong financial investments is into digital organizations.
Digitally scarce assets can create digital revenue-generating collectives, much like a company or LLC, but instead built as investable internet co-ops.
Sometimes, exposing on the financial nature of this industry only appeals to the financially minded. Others can be more compelled by appeals to the desires of new alternative institutions for trust. In a world in which our elections are questioned, governments are viewed as incompetent, and banks regularly bring the world to its knees, the global desire for organizations that provide alternatives to receiving the trust of the people.
Using ‘trust’ as a term in this way is not really accessible to the typical person. You will have to figure out the best way to illustrate how Bitcoin, Ethereum, and DeFi offer new platforms that allow people to reduce their dependence trusted 3rd parties.
I’ve personally found the ‘our current institutions suck, and we’ve found a way to build new ones on the internet' to be oddly compelling to a population that has gotten their world rocked by 2020.
If the conversation does turn to crypto, I hope Bankless has been able to equip you with the knowledge needed to express its value prop on the journey thus far.
If the conversation doesn’t turn to crypto, have a relaxing dinner with your friends or loved-ones during a stressful and chaotic time.
Happy holidays everyone.
And remember that December is historically $ETH’s best month, 5 out of 5 times.
- David
P.S. The Eth2 deposit contract threshold is approaching 100%! Eth2 looks like it’ll launch on December 1st if it keeps up. Watch it live.