How Crypto Wins (Or, Why I Doubled-Down on Tezos)

How is everyone doing during this crypto winter? It's been a while since I did one of these posts - but I've been busy with the beta launch of teia.cafe, getting feedback and adding more features over time. (We expect things to pick up around late November when TEIA's DAO goes live - mostly testing and debugging until then. Feel free to test it out in its current form, though...feedback is also welcome!)

The bull run is largely over now - and having gone through a few startups, failed fundraising attempts and projects that have now gone under - you might think that I've had enough and I should consider wrapping things up here in metaverse-nft-crypto-dao-token-land. But nope - either I'm a sucker for punishment (quite possible) or I'm sticking to it because I truly believe that things are about to turn a corner.

For this article's sake, let's assume it's the latter. I'm always looking ahead so I don't like to dwell too much on things I've done in the past, but if it'll get some people to listen more closely I'll list them here:

• I was in Ethereum's ICO, back when it was around 32 cents per ETH or so.
• I own an original CryptoPunk - which I bought for $100 in 2017-2018 or so. (For the record, I think that people who paid millions for it are nuts.)
• I bought DOGE before its massive rally - my return on that one was about 100000% or so, I think. I used that to self-fund a few of my art and creative projects.
• I have been living off of crypto investments since 2018. Paying attention to the markets is literally my "job" now.

I do have the receipts to prove it if necessary - though one thing I've noticed is "Web3" people seldom actually check ledgers, which is pretty ironic. (That is part of the problem with the space as a whole, but I digress.) That's my track record when it comes to crypto - but I think that it's also important for me to list my activities outside of crypto as well, because they are starting to become more relevant as time goes on:

• As a music composer (my original background) I was working on improvisational skills within the classical music medium, before it became more commonplace.
• I was part of the earlier days of YIMBY (Yes-In-My-Back-Yard), advocating for equitable and common-sense housing policies, especially in California.
• I supported Andrew Yang for president in 2020. We of course didn't win but was able to put the concept of Universal Basic Income (UBI) on the radar.

So I do have a history of joining groups and movements right before they "go mainstream" - so to speak. What I've learned is that you don't actually need a lot of people to "change the world" - all you need are a few dedicated people who really believe in the cause to keep things afloat in preparation for the next run. This time around my entire existence has told me to double-down on alts - with Tezos, in particular. My involvement with the TEIA community is a very strong one because I see it as the intersection of all of my interests into one - culture/art, politics, and tech all together, all at once.

How the Collapse of Fiat Will Play Out

For a while now, I've had a feeling that fiat currency was in trouble - the Social Security / Boomer retirement cliff, rising national debt, inflation/interest rates, COVID and the costly responses involved, rising inequality, automation and remote work displacing labor, the increasing frequency of government shutdowns, people fleeing urban and metro areas in droves, US's credit rating downgrade...I mean, the list goes on and on. But they all point to one outcome: Fiat = Oh-Oh 😨

I'm obviously not the only one who thinks this way. The fact that the market has been pretty much rising consistently without a hitch for the last few decades alone is enough of a reason to be skeptical - nothing can keep on going up forever all the time, after all. But in recent weeks some of the happenings in the financial worlds have made it more real.

You may have heard that the US bonds market has crashed - in some cases, down 50%. This is a big deal, because bonds are traditionally seen as the "conservative" option for investors - at least compared to stocks. If the "safe" option is no longer safe, what will happen to stocks? Down 25%? 50%? 75%? Who knows - but we do know that it's not going to stay up like that for too much longer.

I've also recently learned that more than 50% of US assets are now "passively managed" - meaning that they are invested according to rule-sets, not by human beings. In order to cut costs, Wall Street became more and more reliant on rule-set investment strategies over active managers...which means that most trades are literally done automatically now, without any human intervention whatsoever.

It was the realization of this that allowed phenomenons like GameStop and (to a lesser extent) FTX to exist - people shuffling money around from one to the other, without really paying attention to what or where the money itself was going. Were all those people wearing nice suits lecturing people about financial responsibility and fiscal forecasts and such and such that careless? You bet - over half of them just take your money and literally insert them into a machine - most of those talks and conferences about economic matters were nothing more than a performance art piece to make the investors feel at ease, really.

So to get to the point - this is likely how things will play out over the next few years:

• Stocks will start to dip - lots of people have been trying to keep prices high artificially up until now but they are out of options at this point.
• If prices fall below the trigger point of the trading rule-set, it will do so automatically. A lot of these trades are tied to formal contracts so nobody will be able to stop it, even if they wanted to.
• This will lead to a massive sell-off, each rule-set triggering each other in a downward spiral. (Like GameStop, but in reverse - the "doomsday" scenario many worry about.)
• This massive liquidity event will mean that there's a lot of cash sitting around. (The smarter ones are already out of the market, waiting to buy back in.)
• There is a good chance that at least some of that cash will go to crypto. (Others will diversify their investments outside of the US, making the dollar even weaker.) Crypto needs only about 1% of that for it to double in price - growth from sheer scale.
• High quality alts (including Tezos) has the potential for larger growth - again, due to sheer size alone. If demand increases at the same rate as the other coins, that just means a higher ROI.

So in a nutshell, that's pretty much it. Remember that the only thing that matters in investment is when you got in and when you got out - getting in after a project has already "won" is not a good strategy, even though it's something people do very often because it makes them feel "safe". You get the highest returns by taking bets on small projects and see them grow larger over time.

I've written enough about the virtues of Tezos in the past so I won't be going into that here. But there is an interesting question to be asked about what will happen to Bitcoin and Ethereum - the two biggest projects in the crypto space right now. As a point of reference, currently ETH is about 300-400x bigger than XTZ, BTC about 600-800x. If they are so much bigger and have such a greater market share they must be doing very well, right?

Well, not necessarily. First, you have to realize that while the pie may be bigger, there are also more people eating it, lowering the amount of wealth per person. Both projects also have much higher fees as a whole - as we head further into the recession and people start paying closer attention to their wallets (crypto or real), fees will start to become a greater concern over time, not less. With the 0-interest rate money fountain turned off, every little bit of money you can save will start to count, after all, especially when you can put that money into savings/staking to earn interest over time.

Both the BTC and ETH ecosystems have spent a lot of money on marketing in the last few years - getting celebrities and big companies/organizations to at least take a look. (Most of them actually turn down these prospects after realizing that BTC/ETH is not actually decentralized, but that's another story altogether.) But that may actually come to harm them in the long run.

BTC/ETH have both capped out on mind-share - meaning most people have at least heard of the two projects at this point and already decided whether or not they wanted to get in, limiting potential future growth. Truthfully, outside of its own bubble, crypto as a whole has a terrible reputation right now - colored by consistent barrage of news about FTX, bad UI/UX, crypto scams and massive losses, and illegal activity. (This is not some conspiracy to "keep you down" - these things do actually happen, yikes.)

The other part is that because of their name recognition, there has been an influx of fiat money and traditional contracts tied to assets like BTC/ETH. When fiat goes into 😨 mode, will the sell-off include these assets as well, or are they designed to be hedged against it, as many claim it was designed for? We won't really know for sure until it actually happens - but the picture is a very messy one, at least compared to the alts that are primarily populated by early adopters and hardcore believers.

If the folks pulling the strings behind the rule-sets adapt and respond to the crisis quickly, there is a chance that fiat will weather the storm and it will be back to "business as usual". But you have to ask yourself honestly if that's going to happen - especially when it requires people to put their differences aside and work towards the greater good. Or if they're going to succumb to the pressures of macro-level crises and let things fall into chaos as usual.

So in that context, a small and obscure project like Tezos has the opportunity to position itself as something different than the rest, depending on how it's done. The fact that it is non-US-based is likely to be an asset rather than liability in the near future, with the additional benefit of having a real "product" - art - even if the infrastructure around it is not yet complete. Time will tell, but the growth from 0 to 1 is exponentially much, much better than 1 to 2, in terms of its ROI - so if you believe that Tezos, the product, is superior to the rest, then it makes the potential upsides of it in the future that much more appealing.

Though yes, it is also possible that we will see crypto prices rise as a whole across the entire industry, bringing back those feelings of we're-all-gonna-make-it (WAGMI) once again. 🚀

Either way, I think there are more reasons to be optimistic rather than pessimistic about crypto right now, and arguably even the economy as a whole. Even in a "dooms-day" scenario fiat crash - what's the worst that can happen? People with money will have a little less money (if you own stocks you are already in the top 20% btw), while the prices of goods and essentials will finally start going back to normal, which is actually a benefit for most people as a whole. When the market crashes there will be a few people screaming that the sky is falling, but it's not all bad, really - in fact you could probably argue that it is a good thing since it reestablishes the fundamentals of the economy that will allow for real growth to happen again. We need to just stay adaptable and pay attention to the opportunities lurking within.

Good luck folks - if you ever get anxious about your money, just look at Eva's super cute picture and let it warm your hearts. Everything will be fine. 👌