My Love/Hate Affair with Crypto - AKA - Have Fun Staying Poor
The concept of money has always been alluring to me — probably because I grew up with very little of it. Money played an outsized and overwhelmingly negative role for a good portion of my life.
In grade 8 or 9 I remember coming to an epiphany: if I needed money I should go straight to the source. I promptly began an attempt to counterfeit money using a home printer/scanner and paper I bought from an art supply store (you obviously can’t just use standard printer paper). Even back in the early 2000’s scanners could detect that you were trying to scan legal tender and wouldn’t let you scan both sides of a bill, giving you a nice warning from the Secret Service — but you could just photocopy the bill and reorient the paper to line up both sides. Was it a garbage counterfeit? Yes. Was it better than I thought it would be? Yes.
I took my newly minted fake $5 bill to a coffee shop to buy a bagel. In my head I thought it would be like Catch Me If You Can, instead picture McLovin at the liquor store in Superbad. It scared the shit out of me and I never did it again — but the experience of creating money, and what money actually is stayed with me.
This story is for entertainment purposes only and definitely not a true story, and in no way do I claim to have counterfeited currency...
In the aftermath of the financial crisis in 2007/2008/2009 we entered the era of bailouts, QE, and money printing. This was my introduction to the monetary system, and it sent me down a rabbit hole into central banks, the gold standard, fiat, inflation, debt, government bonds, etc. — a story I’m sure isn’t super uncommon among the crypto community. It felt like the monetary system was as much mysticism as it was economic theory. Occupy Wall Street sprung up as a Newtonian reaction to the anger and frustration that was growing in the wake of the financial crash. While that movement was a failure, the seeds for crypto were planted in this monetary primordial ooze.
I came across the bitcoin in 2010 and was immediately intrigued; the entire concept of cryptographically generated currency, rewarded or “mined” for processing transactions via a decentralized network, anonymous and untraceable but at the same time burned into the blockchain visible to all and totally transparent, creating a permanently limited supply with block rewards decreasing over time… chefs kiss, it was genius.
In 2010 between college classes I would mine bitcoin on my late 2009 iMac as part of a mining pool. At that time bitcoin was worth around $1 and each block mined would reward 50 BTC. Given that I was a tiny fraction of the pools' mining power, I would receive a small fraction of each block. At that time buying or trading bitcoin via an exchange was practically non-existent, you essentially either exchanged directly with another bitcoin weirdo and prayed that you weren’t being robbed, or you just stored them in your wallet (and again prayed that you weren’t being robbed) and thought about how cool it was that you were creating money. (Eventually exchanges were created so you could also pray you weren’t being robbed on those as well - thanks Mt. Gox and BTC-e.)
It was around this time that I started looking into mining more seriously. Aside from the theoretical and technical arguments for cryptocurrency, the constant point of discussion you heard on the main forums was that the energy cost of mining was simply too high to generate a profit, unless you spent serious coin for a decent mining rig, but even if you did the new GPU (and later ASIC) rigs were going to make yours obsolete and you would need to spend at least 20K to effectively mine crypto (plus the power costs would still eat you alive!).
Even all the way back in 2010 Chinese miners were dominating and there were groups spending millions to create mining operations orders of magnitude larger than anything on the consumer scale. As a broke student my options were either pay tuition with my student loans or yolo into a mining rig so I could mine imaginary money with my friends on the internet. Who would have thought the last part of that sentence would have made me a millionaire…
There was constant noise that made me feel like I had missed the boat and simply got in too late. I stopped mining and only passively followed the crypto space for the next couple years, writing off my tiny BTC holdings and eventually reinstalling my OS and losing my wallet/private keys forever. I’ve followed the space since, buying a small amount of BTC before the initial 2017 bubble. It’s funny (heartbreaking?) to look back now at how early I was. I basically refused to get involved in crypto after my initial interest because it mentally felt like “averaging up”. “I’m not going to buy BTC at $100 I was mining it at $1!” — dumb. Is inverse sunk cost fallacy a thing?
One of the things I got wrong was that I was certain the financial industry and government would fight tooth and nail to kill crypto in the womb. Instead, Wall Street embraced crypto as another way to get rich and governments were asleep at the wheel, letting it grow to a point where it’s now possibly too big to fail. Most importantly, in my early 20’s I just didn’t comprehend how much money was in the financial system, a billion dollar market cap seemed crazy to me back then.
Over the years it's been surreal to see crypto specials on the evening news, but the weirdest thing has been watching how far off the rails the space goes during peak mania phases. For every Balajis, Naval, and Vitalik there seems to be 1000 absolute morons with laser eyes playing shitcoin hot potato who will fight you to the death if you aren’t 100% committed to the cause. The OG crypto enthusiasts were weirdos who hated how the monetary system screwed the average person and envisioned a currency and financial system “of the people, by the people, for the people”. When I look at the crypto space now sometimes it feels like 90% douchebags dunking on the fiat proletariat.
Another weird thing that’s mostly ignored is the fact that crypto and bitcoin in particular isn’t all that decentralized, it’s heavily concentrated in Chinese miners and early adopting whales who manipulate the price and popular discourse — granted the financial market has always been concentrated in the hands of a small elite, but wasn’t crypto originally a way to change that?
It’s clear that bitcoin’s initial use case as a currency hasn’t panned out. For years it’s made more sense as a digital gold rather than a medium of exchange. It has a chance to pass the market cap of gold — but I’m not sure where it goes from there. Ethereum has evolved to become way more interesting. The current marketplace built on top of Ethereum is comparable to the dotcom bubble, there’s a lot of garbage but the technology and community is slowly maturing underneath. Ethereum has the potential to become something special.
A DeFi use case that I get stoked about is intellectual property — After 10 years in the music business it’s been wild to witness first hand just how fractured and inefficient the industry is. Ethereum and smart contracts could provide the infrastructure to collect revenue and royalties in near real-time — paying artists and rightsholders with full transparency. You could build a marketplace to crowdfund catalog acquisitions, with proceeds distributed to the individual members of the fund with virtually zero friction — essentially a modern and fully realized version of the “Bowie Bond”.
The use cases are endless. Ethereum could turn the entire financial and monetary system inside out, empowering individuals and realizing the original vision of crypto that was kicked off over a decade ago.
At this point I’m rambling, I guess the point of this post is to highlight that there needs to be a moral course correction in crypto land to get back to it’s roots — as dope as it is to get rich off CUMMIES its way cooler to actually create a better monetary and financial system that truly empowers people. Even though I blew my chance at life changing wealth in crypto I’m still a believer in the long run — don’t screw it up.
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