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Can't you do a little bit of all three? I for one cannot fully understand my wife's logic - we regularly do not agree with each other, there are many times in the same scenario where we will both have opposite views of how to solve the problem; we often do not think alike, yet I'm totally smitten with her and my world would be a worse place without her in it....

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I could do all three but I am already married and she wouldn’t take it lightly if I cheated on her 😂

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May 27, 2021Liked by Joachim Klement

I reached pretty much the same conclusions. However, my recent reading about Tether has moved me strongly towards your last bullet point. If you haven't read it, I'd suggest reading the relevant article on singlelunch.com (google 'tether ponzi'). It seems to me there's a huge problem sitting in plain sight in the cryptosphere with that situation. It's all verifiable and it's all very very murky indeed (think of a 'bad FED' freely printing crypto for it's own gain).

Notwithstanding that, I think we could all see how amazing the internet was in the 90's. We didn't know how it'd pan out exactly, but it was cool right from the off. Crypto is over 10 years old now, what are we really doing with it apart from trading it like pogs? It's a sham.

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Great article in the WSJ on this today

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May 27, 2021Liked by Joachim Klement

I agree. My kids own Ether and I likened it to beanie babies which they also owned. I can't see the intrinsic value (maybe the application is in creating other coins?). This mania has been fueled by M2 growth, Covid boredom, lax tax regulation with all led by the requisite barkers. I listened to an interview with Henry Blodget yesterday on this subject (Seeking Alpha), who approaches crypto gingerly at best, having seen mania up very close in 2000. I remember those times very well as my years as a trader pre-date him. Markets don't repeat but they do rhyme. Time will tell but this will end badly for most.

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I would say the most people who invest in crypto do not understand the technology underpinning it, and the FOMO plays a big part in their decision to invest. What is the author's view about quantum computers? What are the main challenges before they become reality and how long it might take? Thanks.

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As a trained physicist I understand quantum computing much better (I think) than crypto currencies. I am very hopeful that quantum computers once made practicable will revolutionize IT (and by the way enable people to crack the blockchain in a very short time and thus undermine the very reason of existence of black chain applications). But I also understand that quantum computers are years and possibly much more than a decade away. So would I invest in it now? No. I can agree with the notion of a new technology changing the world, but as I said in point 2, accepting a technology is revolutionary is something very different from being able to make money with it.

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You have expressed my thoughts and conclusions-to-date exactly!!

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May 27, 2021Liked by Joachim Klement

Well...someone might say "am I too young to understand the world's love affair with fiat currency and the oligarchy pulling the strings?". Of your three bullet points, I am in the 2nd camp. This is true for AI (artificial intelligence), EV (electric vehicles), climate change, gene sequencing/editing, and yes, even crypto and blockchain technology. If we look back at Internet 1.0 (1995 - 2000), I think we can see a lot of similarities. This seems true for any inflection point in history with enough innovations, wherein there is a general lag in the S-curve adoption. We can include "failures" that even when technically viable, we may have a poor execution (A+ idea, C- management team) or just poor timing or bad funding. I do not think we see many televisions by Farnsworth or riding Wright brothers airlines.

But, I empathize re: annoyance with jargon use. A common affliction of many presenters (some do it subconsciously because their mind is racing, or some are autistic, yet some deliberately doing it to make the audience feel helpless or not part of the clique/generate fear of missing out ). This is true for many topics - not just crypto, but techno schmucks, financial gurus...present company excluded :-). I hate it even in my own field they use acronyms and will not have the courtesy to define and contextualize.

Cheers!

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Yes, you/we are getting old, but that is a feature (up to a point).

The mass adoption of the Internet, which by the mid-1990s was 20+ years in the making, was a clear and foreseeable game changer. At the time, it wasn't really clear who exactly would make the big money (outside of pick-and-shovels providers, like INTC and CSCO), but you could confidently predict that it would be a huge transformation for decades to come. Buffett was right that most of the early "winners" faded, but -- for the sake of his reputation -- should have seen the bigger picture. ¯\_(ツ)_/¯

My take (FWIW):

Bitcoin: faith-based collectible with serious green headwinds; could be taxed/banned out of existence. Very cool experiment, Nakamoto-san.

Ether: most plausible big player, if it can sort out its performance problems. Trying to be useful and other coins trying to be useful are designed for compatibility.

DeFi: mostly young and impressionable crypto fans (funded by spec money) think it will save the world. They are overestimating both the mass appeal of decentralization and it's resilience to central authority. There will be a centralized digital dollar and it won't welcome competition.

NFT: as currently implemented, requires the acceptance of a new definition of ownership. I'm too old for it, but it is potentially fixable.

This: https://medium.com/@FEhrsam/vr-is-a-killer-blockchain-app-3a4122d7f505

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But that is exactly my point. I think there is a reasonable chance that blockchain technology can change some applications (though probably fewer than people expect). I was working in the internet industry in the late 1990s and remember those days very well. Yes, it was clear that it was a technology that would change the world, but it was also clear that it was overhyped and I was right insofar as many investments blew up. And that’s the problem I have today. Being able to appreciate a new technology is something very different from being able to make money investing in it, because as an investor you necessarily have to be able to differentiate between useful and lasting applications and overhyped crap.

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May 28, 2021Liked by Joachim Klement

I take heart in looking at old charts -- it took 10 years for AMZN to clear it's first euphoric top (~$105), 6y for GOOG (~$350), etc. I expect next gen digital infrastructure to be built faster, but adoption is human-constrained, so opportunities should be out there for more than a blink of an eye for those looking.

Crypto (blockchains really) is great at tracking ownership of everything, eventually, but of digital artifacts in particular as there are no alternatives. Proof of ownership has always been decentralized, so it should be easier to accept/embrace. That's where I am (patiently) looking for lasting value creation. It often takes some time for the true opportunity to emerge (thinking of Google /AdWords).

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