Introduction to Crypto

As a technology-oriented finance professional, it didn’t take long for me to jump headfirst into crypto. It started as a curiosity, but quickly became a hobby and then my focus. I’m always learning more, and I think that’s what I love the most about crypto — there’s seemingly no limit to to the breadth and depth of this technological and social revolution.

My friends and family frequently ask me about Bitcoin, Ethereum, or other coins they’ve heard about, and I enjoy answering these questions. But now I’d like to share my knowledge and experience more widely, so I’ve decided to start this series. After all, the ethos of the crypto movement is openness and transparency, and I’ve certainly benefited from this, so I want to pay it forward — especially to anyone who is just starting their journey down the rabbit hole. Let’s dive in.

What is crypto?

As a transformative technology, crypto is many things to many people, but at the most basic level it is the technology underlying the new decentralized internet that is being built. While the internet itself started as an open and decentralized network, the dominant trend for a while now has been the development of closed and centralized networks — monolithic walled-gardens like Facebook that own and control the data and identity of their users. Crypto bends the arc of the internet back towards open and decentralized networks.

Why does this matter? Open and decentralized networks enable personal freedom through 1) ownership of data and identity, 2) censorship resistance, and 3) permissionless innovation. The hope is that this empowerment of individuals will weaken top-down power hierarchies and unleash the next wave of human ingenuity and technological innovation. For more discussion of this topic, check out Ryan Shea’s interview with Naval Ravikant at the 2017 Blockstack Summit (below).

The Bitcoin Beginning

As the first successful digital currency, Bitcoin is proof of concept of this new way of networking and empowering individuals across the internet. By adding an incentive system to a distributed consensus protocol, Bitcoin gave rise to a decentralized currency and payment system not controlled by any central authority. Instead, participants in this network individually control their own money and identity while transacting billions of dollars of censorship resistant and permissionless payments each day. As a bonus, because Bitcoin is digital money, it is also programmable — a first for money and very important feature in an increasingly connected digital world.

But Bitcoin is just the beginning. There is a whole stack of decentralized protocols and applications being built, which I will discuss in a following post. The decentralized internet is coming, and like with the internet we have now, everything will change again.

The Opportunity

Despite all the buzz, crypto is very much a niche technology, and now is a great time to start learning. As crypto transforms the internet, you can be sure it will impact both your daily life and also the industry you work in. There will be a growing need for people that understand crypto, and not just software developers, but all skill sets, such as designers, marketers, accountants, and lawyers. Finally, just as the technology itself is open and accessible, so is the possibility of financial inclusion — you don’t have to be wealthy to participate.

The Challenge

This space is new, and it’s moving lightning fast. Hype abounds, and the possibility of financial gain has attracted speculators and scammers alike. Regulators worldwide are now taking steps to curb speculation and protect investors, while also trying to keep their doors open to innovation and its benefits. But in the end, most projects will simply fail on their own, despite good intentions. Sounds a lot like the dot-com bubble, doesn’t it?

Is crypto in a bubble?

Here’s a question to consider: during the dot-com boom which provided better long term value, a focus on profit or knowledge? Entrepreneurs and investors who blindly chased the dot-com boom lost their shirts overnight, while those who persevered to better understand the internet’s potential were prepared to pick up the pieces after the bubble burst. Ebay, Amazon, and Google recovered, a whole new crop of technology companies were born, and the actual impact of the internet soon surpassed the hype of the 90’s. The knowledgeable entrepreneur or investor with a long-term perspective stood to gain tremendously over the last decade, despite the boom & bust cycle.

We are seeing this process play out all over again with crypto. Open and decentralized internet protocols will change everything, like the internet already did once before. But history has shown us that no truly transformative technology gets built without irrational exuberance and the capital, skill, and entrepreneurship that this exuberance attracts. As Carlota Perez wrote, it is the infrastructure that gets overbuilt during the boom that provides fertile ground for the recovery.

Next in this series we’ll explore what’s being built.

About this publication

This series explores crypto and its underlying technologies, with a focus on simplifying complex concepts.

If you enjoyed this summary then let me know by hitting the ‘clap’ button below. You can also leave a question or comment in the response section at the bottom of the page.

Note: This material is provided for educational purposes and is not investment advice. As an investor I’ve learned the importance of doing my own research before making investment decisions, and so my advice is that you do the same before you make yours.