A New Philosophy of Markets: Assets That Embody Technology
Back in the days when prices last bounced along cyclical lows, cryptocurrency was a global computer for the public, a new type of money, an incentive to engage, and a value to manage.
Back in the days when prices last bounced along cyclical lows, cryptocurrency was a global computer for the public, a new type of money, an incentive to engage, and a value to manage.
But now crypto is a market.
Many of us have spent the end of the year explaining to others that this is not the end for cryptocurrency. It's no secret that the crypto market is now financialized, and the collapse of the main architects and beneficiaries has done great damage. Even more so, many casual observers view crypto as an ordinary market that, while in dire straits, no longer makes sense.
This article is taken from the Crypto Is Macro Now newsletter, where Noelle Acheson - former head of research at CoinDesk and Genesis Trading - writes about the overlap between the changing crypto and macro landscapes.
As the industry gained coverage, rising levels of institutional interest, pricing, fraud and regulatory concerns fueled attention for high-profile media headlines, so the public reinforced the association of "crypto" with "risky."
And while many publications have had the opposite effect on our industry, perception tends to cling to what it can grasp, and price movements are easier to visualize than consensus algorithms. And the power of institutional signaling is more relevant than weighted decentralized liquidity pools. Drama attracts more attention than narratives of technology and innovation.
I and many others have vowed to start paying more attention to the technological aspects of crypto, advocating it in various places.
Cryptoassets are radical new technologies that are both speculative and investment opportunities. It can be difficult to realize that an asset is also a technology.
For the first time ever, we have tradable assets that embody innovation. Sure, investors can access progress through stocks and exchange-traded funds, but they are only a shell around potential revenue streams that become available to the public only long after the innovation is first tested.
Amazon, for example, spent three years building a startup before offering it to the public. Facebook, from 2004 until 2012, did not offer a tradable asset to bet on its potential. They were unstable at launch, and investors considered them risky.
But even these examples are not entirely appropriate, because Amazon and Facebook are not new technologies, but new uses of them. Bitcoin, ether and others are new technology, assets that move on new rails. But neither assets nor rails work or have value without the other. In addition, there is no profit risk associated with strategic decisions made behind closed doors or difficult economic conditions. It's the same if we could buy stock on the Internet in 1985 without having the full ability to implement it without any corporate risk.
Unlike any other tradable medium, cryptoassets open up support for innovation and do not require proving a certain amount of wealth for early access. To be sure, they are risky, like any new concept, but training as well as platform disclosure rules could provide some protection without creating barriers that reinforce inequality.
Crypto is much more than just a market or a new technology. It is a new way of thinking about value, risk, funding and engagement. Crypto adds philosophy to the financial soup, embellishes it with a few touches of witty code and a dash of hype, and gives it a whole new taste of evolution.
This year, maybe we'll be able to get our message out to the general public, get a deeper critical appraisal and a thoughtful approach to regulation. Perhaps even those of us who are also in the industry can meet the next cycle with the sustained conviction that what we are working on matters even more than most of us think.
