“I have never cheated any honest men, only rascals. They wanted something for nothing. I gave them nothing for something.”
Joseph “The Kid” Weil, early 20th century con artist
The lure of easy riches is hard to resist. In 2021, I had the opportunity to invest in countless crypto projects.
They all claimed to be the next big thing. Sometimes, I wondered if I was missing out.
But I passed on every single one of them. Here’s why…
At My Desk in 2021
“How is a bunch of slides worth $100 million?”
Me, 2021
It wasn’t hard for me to tell these weren’t solid investments.
The “companies” almost never had any customers or even a product. And the coins traded at absurd prices with few, if any, real use cases.
A real business has to have a product. That product has to solve a problem for a real person, who will pay money for it.
A real technology business is something like Uber.
Uber gets me a car when I want to go somewhere. I’m happy to pay for that service.
A few slides filled with cryptobabble isn’t an investible business.
Where Are the Use Cases?
It’s been 14 years since Satoshi Nakamoto wrote the Bitcoin whitepaper, launching the crypto craze. By now, we should all be buying our groceries and paying our mortgages in Bitcoin, right?
Wrong.
Almost no one on earth buys anything using Bitcoin or any other cryptocurrency. Even in El Salvador, where Bitcoin is nominally the official currency, practically no one accepts it for payments.
The user experience is terrible. Sending crypto involves hard-to-use software and long cryptographic keys — one typo, and the money is gone.
One of the few common uses of crypto is stablecoins. However, an enormous amount of stablecoin use is tied to crime and money laundering, not legitimate commerce.
Uber was founded 14 years ago. In that time, it’s made its way to everyone’s phone and into the S&P 500.
In that same period, what has crypto accomplished, other than enabling speculation?
Wrap-Up
As best I can tell, here’s what crypto is for: speculation and money laundering. In a decade and a half, those are the only common uses we’ve seen.
If we want to invest in solid businesses with a long term future, a volatile asset used by speculators and criminals won’t do.
Perhaps someday, someone will invent a great use for crypto. But it hasn’t happened yet.
I keep a laser focus on customers and product. Forget the sizzle — look for the steak.
What do you think is next for crypto? Leave a comment and let us know!
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