When I was in grad school at Penn I was active in two clubs: the real estate club and some tech/entrepreneurship club (I can’t remember the exact name). These were two areas that I was interested in and so I wanted to hang out with people who were also interested in these things and I wanted to hear from experienced people who were active in these fields.
At that time, which was before the Great Recession, the real estate club was bigger and more active than the tech club. I think it was something like 3 to 1. But I remember one of my professors telling me that participation across the various clubs generally ebbs and flows. Before the dot-com bubble, the tech club was where you wanted to be. But that asset bubble had burst, and so people had moved onto real estate, which, at that time, was in the midst of creating its own asset bubble.
What we students were effectively doing — by way of deciding where to spend our time — was chasing the next hot thing. They were chasing where they thought they’d be able to make the most money coming out of school. There is, of course, nothing wrong with this. The pursuit of profit is fundamental to capitalism. But at the same time, I think it’s crucially important to have some conviction.
Right now we are going through another cycle. Real estate was hot last year and it is not right now. Tech was hot last year and it is not right now. NFTs were hot last year and they are not right now. The list goes on. But if you like these things and if you have some conviction, is it really the time to move onto the next club? You may find the opposite to be true. Now is actually the time to ramp up participation.
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The last of the items on your list – NFTs – doesn’t actually produce anything. It’s a Ponzi scheme, a smaller version of Cryptocurrency, currently imploding a well-deserved death (hopefully). Real Estate is, well, REAL. Even Tech produces some real things, when it’s not virtual METAverse fluff and hype. But NFTs are a scam.
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What does art produce?
In this case, you’re paying for the original, not the art. Actually, the art market is pretty much a bubble too, with too much questionable art going for high prices. People are running to it as an alternative to everything else that’s imploding, but a lot of it is over-priced.
The current state of NFT’s and crypto at large is an unfortunate but necessary step towards this industry actually maturing. The true value capture of this technology is found in its core properties – decentralization, immutability, high security, and a digital bulletin board that provides the potential for fully functional smart contracts (automated business logic). The whole point of this is to replace the need for trust in humans with mathematical, deterministic systems that adhere to the properties mentioned above. Are we there yet? Not even remotely. Can we get there? I believe we can. I view certain existing protocols as a trial run for real adoption (eth for example).
With speculation and greed come bad actors and profiteers. FTX, Luna, 3AC, Celsius, and Bancor are a few of these bad actors who delegitimize the industry by taking advantage of retail speculators – either through their lack of technological knowledge, or with shady business practices in an unregulated market. Their crimes against cryptographic truth did not go unpunished, like Mt Gox before them. The death of these entities will be better for the long run, as users and VC investors demand cryptographic guarantees (i.e for a CEX to prove solvency or certain liabilities on chain rather than having to ‘just trust’ them).
Anyway, this is a long way of saying that crypto isn’t going to die, the protocols and networks that matter will endure, and we are not far away from certain real world use cases like the digitization of various assets. My only hope is the next bull market isn’t filled with so many bloodsucking, piece of shit VC’s and CEXes. Maybe there will be more clearly defined regulation by then.
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