Crypto: Live, Die, Repeat

By Geoff Schaefer

Geoff is a Wealth Advisor with Intergy Private Wealth. He writes for The Steadfast Fiduciary to help people live with an abundant heart, open mind, and boundless generosity.

November 22, 2022

A favorite sci-fi movie of mine is Edge of Tomorrow.  This underrated Tom Cruise flick follows a soldier as he relives the same day over and over again in a war against a hostile alien race. A major part of the film involves a battle on a beachhead in which he fights over and over gain in an attempt to learn the alien tactics and weaknesses. Every failure is a lesson and every death is a chance to restart and capitalize on that lesson. I’ll stop there as not to spoil (although no excuses since the film was released in 2014), and come back a bit later.

With the collapse of FTX, a Ponzi scheme and fraud that would make Enron and Bernie Madoff blush, Web3 (crypto) has received yet another blow to a once darling of a technology. Trust in the system has deteriorated to nothing amongst the average consumer, setting back this technology for likely years to come.  Many parallels have been drawn between the rise of crypto and decentralized finance to that of the internet. Now with the recent drawdown of all crypto tokens of 75% plus (-100% in some cases), there is parallels attempting to be drawn between this and the dotcom bubble.  While the rampant speculation and toxic euphoria are similar, the widespread consumer use cases are far from it.

In the Harvard Business Review’s article: “Blockchain: The insights You Need from HBR”, it is keenly noted that the rise of the internet took a much different technology.  Before the late 90’s surge, there was a decade where there was no commercial case for the internet. Most of the mainstream press scoffed at the idea of an online publication taking the place of written media.  Defense funding allowed networks to be created that were primarily used my research institutions to share data. The networks were developed collectively for a decade it was not until the idea of email was introduced and delivered to the consumers that the internet really took off. This single consumer application added immense value and initiated a move to an online world. The networks and protocol required to facilitate this move had been developed for decades in obscurity and were prepared for waves of people and information.

Now look at crypto.  Bitcoin, an idea developed in 2008, still has yet to provide a practical use case.  Thousands of other “tokens” have emerged all claiming to provide access or technology that changes the world.  So far, all of the promises have been empty.  Using any part of this decentralized world is clunky and difficult.  So far applications of crypto have been like forcing a square peg into a round hole.  The idea sounds right, but when compared to traditional finance or Web2 applications, it just doesn’t make sense. If Web3 and crypto is to be the next wave of the online revolution, compared to the internet, we would be at a stage of relative obscurity not prepared for consumer use. However, the fan club continues to sound the alarm that we are there and the future is now in defi. Venture capital has funded crypto based projects to an extent that has never been seen in technology.  All of this for, clunky wallets with expensive transaction fees, online pictures of apes, and a new avenue for financial fraud?

I have read the Bitcoin whitepaper.  I own cryptocurrencies.  The idea of the technology is exciting to me.  As a group of people, I believe the finance community embraced it too willingly.  Right now, I feel that crypto is in a loop.  Forced to fight a battle over and over again.  A battle traditional finance systems have been working on and learning from for centuries.  A battle the internet and technology companies have been waging and developing off of for nearly 40 years. Right now, crypto is Tom Cruise on that beach. The only difference is Tom Cruise in the movie learned from his mistakes and prior experience.

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