The One Thing in Crypto That Isn't a Facade

Someone recently asked me a question wanting to know whether I still believe crypto is revolutionary, or whether after all these years I've started to see it as a facade.

It's a fantastic question, and I told him so, because I've spent the better part of two years trying to answer it honestly for myself.

Here's the thing that makes crypto so difficult to evaluate.

The barriers to entry are almost nonexistent. I could create a shitcoin this afternoon. I could create a DeFi app. I don't need to file to be a public company. I don't need real employees. I need an idea, an internet connection, and a few hours, and then a token exists in the world.

What that produced over the last several years was an explosion of everything under the sun. DeFi. NFTs. Security tokens. Wave after wave of ICOs. The convergence of AI and gaming and cryptocurrency, whatever that was supposed to mean. Every idea anyone could think of got funded and launched and promoted, because launching cost nothing.

And of course ninety percent of it was never going to work. It was all experimentation, and most experiments fail.

But here's what I've come around to. It doesn't need to work. It only takes one or two ideas to really stick and land, and the wreckage of everything else is just the price of finding them.

Tokenization is the one that landed.

I keep coming back to this because it's the first thing I've found in this entire space that actually has product-market fit. Not a promise of product-market fit. Not a whitepaper describing a future in which it might have product-market fit. Real inefficiencies in the existing financial system, and a real solution to some of them.

Take the reconciliation problem.

Financial institutions run on siloed ledgers and databases that don't talk to each other, and an enormous amount of expense goes into the constant work of reconciling them, of figuring out who owes what to whom after the fact. Or take collateral mobility. It takes a day, sometimes two, to move funds between bank accounts across different institutions and jurisdictions, and during that window the collateral is stuck.

You might read those two examples and think they sound like edge cases that are pretty left field and have nothing to do with your life.

Most people never see these inefficiencies directly. But the reason you don't see them is the entire point. You don't see them because banks and other financial institutions pledge a tremendous amount of capital to make sure you don't. They hold enormous buffers so the machine feels smooth from where you're standing.

That's trapped capital. It sits in the system hedging against disaster, and it cannot be allocated productively anywhere in the economy. It's just there, absorbing risk, waiting.

And notice what's happened to the conversation at this point. This isn't a crypto thing anymore. I'm not talking about crypto. I'm talking about the existing economy and the totality of capital markets, and about a technology that can address a structural problem inside them.

That's why the institutions are hiring heads of digital asset strategy.

That's why they're spending millions developing platforms to settle transactions a different way.

They aren't doing it because they've suddenly discovered a love of blockchains. They're doing it because there's real money sitting idle in the plumbing and someone has finally built a plausible way to free it.

So to answer the question I was asked.

No, I don't think it's all a facade. I think most of it is, and I'd say that to anyone.

But underneath the noise there's one area that found genuine product-market fit.

That's the area I write about every week, and it's why I keep hunting for the biggest opportunities inside it.

Before I leave you today, I want to make sure you're aware of what my good friend Grant Hawkridge is up to. He's one of the smartest investors and analysts I know personally, and he's going to be releasing a system that was only available behind closed doors next week.

I feel a bit of comradery because he's Australian, but I genuinely think he's worth a listen.

He's going live next week and I'd hate for you to miss it.

You can sign up to his event next week where he's going to publishing his system that helped him find some killer multi-bagger trades in his own personal account.

You can click here to sign up.

I'll be with you watching in the audience!

Cheers,