Not a “crypto” company.
There’s an important difference between the two, and my hope is that this short “manifesto” serves as a primer, on why Bitcoin is a key part of our company’s core differentiation in the market, and why Amber is Bitcoin first.
Why am I writing this?
Many have questioned our strategy to focus only on Bitcoin.
In fact, the final prompt was a series of questions toward the end of 2018, which inspired me to lay out our strategy for 2019.
It feels alot less contrarian releasing this now in May of 2019, after the recent Bitcoin pump, and the slow shift of the narrative back to Bitcoin > Blockchain/Crypto — but in any case — it must be said.
So I’ll answer the above and other peripheral questions in this article, with links to some further reading in each section to help further reinforce the key points.
If there’s one thing lacking (majorly) in the broader industry; it’s focus.
The noise to signal ratio is out of control.
Our position & strategy is first and foremost about focus.
Focusing on what matters, ie; Bitcoin; as sound money, as an asymmetric ‘option’ for the future, as the most robust, undervalued asset in the world today, and the zeitgeist of our time.
It’s about focusing on building an incredible product, delivering what’s best for our users, our team, our investors and the community.
It’s about making our message & position clear, in an ocean of diluted brands attempting to make a quick buck by listing every shitcoin under the sun.
There are some incredible people like Pierre Rochard and Elizabeth Stark working on game changing projects, who get it. It’s the organizations such as Lightning Labs, Amber Labs (yep, that’s us), Casa, Bitrefill, etc that are setting the standard — but we’re definitely outnumbered by the blockchainers, shitcoiners, scammers & fly by nighters.
As a result I firmly believe that the best strategy is to be the signal amongst the noise. To be narrow, focused & sharp instead of wide, dispersed & blunt.
So why Bitcoin?
It’s useful that being sharp, narrow & focused aligns very well with being contrarian (my natural state), and furthermore that I believe Bitcoin is not only the best most asymmetric bet, but is the contrarian bet of our time (the perfect combination).
I discussed this in Edition 1 of The Bitcoin Times: where I opened with Peter Thiel’s ultimate contrarian question:
“What important truth do very few people agree with you on”
My Answer being:
“Blockchain is Dead; the Future is on Bitcoin”
See more here:
And the talk I gave which ruffled a few feathers:
But let’s explore this further in relation to our strategy & position as a Bitcoin Business.
There are some core, fundamental reasons why a Bitcoin first & Bitcoin only strategy makes sense.
#1. Leverage. Not diversification
It starts with understanding what you’re doing as a business.
Companies who tell you that they’re helping you “diversify” your investments by offering you a way to invest into multiple crypto currencies are either inept, short term opportunistic or malevolent.
Diversification is defined by lowering your portfolio risk via the combination of multiple, uncorrelated assets.
So let’s get something clear at the outset:
Cryptocurrencies (or crypto-assets; whatever you want to call them), are ALL correlated. And not just mildly correlated, but almost perfectly correlated (to Bitcoin) !
Diversification in crypto is a myth. It’s a lie sold to you by people selling you “trading courses”, or companies that want to list multiple tokens, and charge you fees each time you trade them.
Here’s the reality:
By spreading your investments across multiple cryptocurrencies, you’re not diversifying. You are in fact leveraging.
Leverage increases risk! It is the direct opposite of the outcome you want by diversifying!!
If you’re a professional, experienced, seasoned trader; leverage might be ok. But for the large majority of human beings on planet earth, leverage on normal, highly liquid assets is risky, let alone leveraging up in an asset class that’s as nascent & volatile as crypto - it’s pure madness.
It’s no wonder just about everyone’s lost money in this space.
We care about our users, and we take security very seriously.
What’s the #1 rule for security?
Remove the risk all together.
Making something secure is not about creating complex, convoluted systems to try and obfuscate inherent chinks in the armour.
It’s about removing (or in reality, lowering) the complexity, and as a result, narrowing the available opportunities for attack (a.k.a; attack vectors).
The more complex a system, the more more fragile it becomes, the more moving parts, the greater the attack surface, the more issues to deal with.
By focusing on Bitcoin & Bitcoin alone, we’re able to run a business where 100% of user funds are held in cold storage (*CSaS), which lowers the burden on us operationally as a company, whilst maintaining the highest guarantee of funds security for our users (outside of self custody — which for 95% of users we’ve surveyed is an uncomfortable thing for them to do anyway).
*CSaS = Cold Storage as a Service.
Listing multiple shitcoins and having to maintiain multiple cryptocurrency wallets is a nightmare; made worse on trading platforms & exchanges where the funds need to remain hot for liquidity. It’s a recipe for disaster.
Managing security, keys, systems and processes is much easier & more robust when focusing on ONE [bearer] asset class, especially when that asset class is a digital form of money.
There is no second chance with being hacked here. It’s not like having personal information or a password stolen - it’s the actual funds that get irreversibly moved.
More information on “why exchanges get hacked” in the following article:
Why do cryptocurrency hacks keep happening?
Forget the clickbait bulls&$%. THIS is actually why…
#1 The Gold Standard
Bitcoin is the standard.
It’s the only asset of it’s kind with the liquidity, brand, infrastructure, security & overall stability that could warrant any level of financialisation**.
Furthermore, the investment thesis & analogy is clear:
Bitcoin is digital gold. It’s a scarce, self-sovereign digital asset, that more & more people will want to have exposure to, because it’s the only asset in the world (gold is the nearest cousin, but Bitcoin is far superior) that is:
Capital, from around the world, from all levels (institutional, commercial & retail) will flow onto this network over time.
And if you understand that its total unit quantity is finite & fixed, you’ll begin to realise just how much potential Bitcoin has as an investment opportunity.
It will also reinforce why we’re so bullish on Bitcoin & willing to pour all our focus into it.
As a business, our primary concern is building up a user base that:
- Trusts us
- Raves about us
- Has a great experience with our product
- Refers us to their friends & family
- Continues to be a customer as we broaden the product suite
By doing the due diligence and then focusing on the most important element of this entire new industry, we’re being competent partners (stewards) along our customer’s journey.
The following article is an important read where I really reinforce key elements of Bitcoin’s value proposition:
**Other Crypto’s Investment Theses
When you consider or analyse other crypto-currencies, you find a lack of narrative or actual investment thesis. I mean; why should Ethereum’s value go up?
Putting aside all its core problems, it’s a token that’s supposed to price the gas on a global computer. What value does something like that have? You don’t buy Ethereum to hedge against inflation, or to store value that’s unconfiscatable; you buy it to (potentially) build some sort of “unstoppable program” on an “unstoppable global computer”.
That’s NOT an intelligent basis upon which to make an investment.
The same goes for every other shitcoin, ICO and token out there. They have little to no argument as to why they’re investible. More here:
ICO Submission to the Australian Treasury
Why ICO should stand for “Illegal Coin Offering”
*Note: my comments above do not support Ethereum. I think it’s both a bad investment, and despite what some consider honest attempts at trying to build something, a poorly designed network.
Bitcoin’s long term potential is extraordinary. Whilst there will most likely be waves of altcoin “pumps” & “dumps” in the medium term, Bitcoin is the only digital asset that is truly Lindy compatible, ie;
It gets stronger / better with time.
There’s a number of reasons why, and explaining all is outside the scope of this article, although in short:
Bitcoin is a recursive phenomenon.
As people figure out that it is not only technically, but probabilistically secure, they demand some ‘y’ portion of the network at ‘x’ price. As more people start to realize this, and request a greater ‘y’ at a higher ‘x’, demand outstrips supply.
As this occurs, those who are incentivised to validate (miners) are further incentivised to build more infrastructure and therefore make the network even more secure. As it becomes more secure, more infrastructure is built around it (ie; wallets, exchanges, apps, etc), which draws more attention, and more capital.
During this time, more people see more people holding some capital there, and realizing that the 1BTC they had is still 1BTC, it’s not been inflated, it’s un-confiscatable, so they purchase some more, further increasing demand, and thus the price, which in turn further incentivizes the participation of more validators, more infrastructure, more participants, etc.
More capital begets more security begets more capital begets more security.
This is what’s known as recursive.
It gets stronger with time.
Its a form of power law.
It’s Lindy compatible.
Bitcoin has crossed the point of no return— a number of years ago — and is one of the rare forms of money (other than gold) that has truly proven to be so.
For more information see pages 10, 11, 12 and 19 in The Bitcoin Times:
The Bitcoin Times
The Bitcoin Times was created to cut through all the bulls#*% you may have read or heard about Bitcoin...(there's lots…
*Note: Money is an interesting concept. Broadly speaking money is the ultimate Lindy-compatible concept, because the longer a money exists, the more inherent trust people have of it. But the nuance to note is that SOUND Money is truly Lindy. Fiat or money that can be inflated / manipulated / confiscated can have the initial benefits, but winds up breaking; because not only is time required to be Lindy, but the less change / more rigidity; the better (ie; must be anti-fragile).
There are apps in the market to help you invest into funds, ETFs and blue chip stocks.
They’re all great products.
At Amber though, we believe it makes sense to follow a simpler portfolio structure. For example:
Put the large majority of your wealth into solid, low yield investments, such as real estate, treasuries, term deposits and some blue chip stocks / ETFs that are unlikely to go away, eg: Apple, S&P 500, etc.
Take a small amount (1%, 5%, 10% or whatever you’re comfortable with possibly losing) and allocate it to “options” for the future.
In traditional financial terms, an option is a contract you buy to “bet” or “hedge” on a future outcome. The more unlikely the outcome, the cheaper the option; but also the higher the payout, should it occur.
For example; one could’ve bought a what’s called a “put option”, betting that the banking system would collapse in 2005. At that stage, you would’ve been called a madman, and those options would’ve been cheap. The payoff in 2008 was extraordinary.
Bitcoin is similar in the probability / payout opportunity.
Bitcoin’s monetary experiment will have a binary outcome:
- The experiment works → Network Value = $5T — $20T in the next 10yrs.
- The experiment fails → Network Value = $0
Monetary transformations this significant don’t live somewhere “in between”.
If the former occurs, we’re talking a price per bitcoin of $1m — $5m.
If it’s the latter, then $0.
Would it not make sense for the average person to put aside $1000 (or some similar, small amount) today, and buy what’s effectively the most accessible & asymmetric “option” ever available?
With Amber, there are no excuses.
Small amounts, put aside consistently; add up.
Losing $1000 won’t mean much in 5yrs. But if that $1000 turns into $50,000, it will change your life.
This is our message.
Everybody wants a better life & a better future. Amber exists to help you along that journey.
Technical / Product
As a technology company, you want to be on the cutting edge of technological development.
You also want to be building something that:
- benefits from some sort of network effects
- you’re known or recognised for.
#1 Lightning (the future)
I can categorically say, the bleeding edge is Bitcoin, Lightning and the subsequent layers that will emerge.
Whether you look at the caliber of innovation that’s happening on Bitcoin, via schnorr, taproot, and the very discipline of cryptography being driven forward, or the incredible, open source software that’s being developed for ease of participation on Lightning; it’s evident that the large majority of meaningful technological advancement is happening here.
By focusing on Bitcoin, we have an opportunity to help build with and on the next major layer/s, and as a result be a leader in not only the asset, but the network that matters (bitcoin + Bitcoin).
I’ll be writing an article on our Lightning strategy at a future date.
#2 Shallow VS Deep.
This is tightly related to the opening statement about focus.
As a software company, you have a choice as to whether you build a deep, feature rich product that is more “narrow” (aka focused), or something that’s more broad & shallow.
There are pro’s and cons to each.
The broader product may appeal to more people initially, but the deeper, more functional product retains users far better & builds “raving fans” who stick with you along the journey.
The other major benefit to going deep over broad, is expertise.
You have a much better opportunity of being a leader in your field if you focus and own your domain.
Our mission at Amber is to be leaders in the Bitcoin & bitcoin.
The opportunities for companies who help build & then leverage the layers of protocol that are being built on Bitcoin will change the world.
When people ask me “what’s different about Amber”, the most straight forward answer is: “We only support Bitcoin”.
It’s a differentiator.
Amber will stand out as a trusted partner on your journey through Bitcoin.
It’s the application you’ll come back to after you’ve experienced the inevitable “shitcoin whiplash” that comes from attempting to either invest or “trade” multiple crypto’s (clepto’s), getting confused and getting rekt thanks to mindless pumps, dumps, shallow orders books & failing projects.
The brands that will stick around are those who remain true to their mission and have a coherent narrative from the beginning.
The noisy multi-currency platforms which support gambling (effectively) will not stand a chance against businesses that root themselves in a long term vision & have a consistent message they build their brand upon.
Clarity > Noise
Red VS Blue ocean.
In the crypto industry, it’s become increasingly obvious that every to,, dick & harry wants to build an “exchange”, and their strategy is to “list more coins”.
Wallets these days are not so different.
Similar to the shallow VS deep discussion above, a focused position in the market is akin to building deep.
It’s the clear signal amongst the sea of noise.
It’s the ultimate Blue ocean strategy, because in an industry full of multi-currency, multi-ICO, multi-wallet, multi-everything noise, those who stand out are those who have a clear position.
Those who have no position are diluted via the copy cat competition that does what they do.
Finally, and again, echoing (or repeating) everything I’ve said above — taking a long term view and focusing on the most likely outcome (after an educated analysis) is likely to yield the strongest brand.
This is all the more important with monetary networks such as Bitcoin, which converge to unity, much like the internet did.
Everyone who built their brands on the Internet’s competing “information superhighways” is now long gone. Amazon bet on the internet — as did a bunch of others — and they’re all today’s giants.
Could our stance change?
Unlikely. In fact; very unlikely.
We’ve been approached by a number of altcoin “projects”, offering us money; and we’ve turned every one of them down.
We care about our users, and want to be considered long term partners and stewards on their journey.
It’s in our best interest to help guide these users, with minimal stress, minimal noise and minimal confusion. We all have better things to worry about than the next pump & dump, get rich quick scam.
So at this point in time, and for the foreseeable future, Bitcoin is the #1 focus, and we’re here to make sure that getting exposure to this new asset class is as easy as humanly possible with Amber.
Should Bitcoin’s status as the most secure, robust & game-theoretically sound network change, or if for some reason, something critical happens to Bitcoin, and the entire ‘experiment’ falls apart, then we’ll have reason to also change & adapt.
Whilst extremely unlikely, nothing is impossible, and again, as a business — we would re-evaluate our options.
Alternatively, if the overwhelming majority of our user base request the addition of other crypto assets, then we’ll know we’ve done a poor job at articulating the above benefits, and will re-evaluate then.
But if the broad base, which we anticipate will be the case, wants to focus on the one that matters, ie; Bitcoin, we’ll know we’ve done our job.
Will we support other asset types?
Mid — Long term, definitely.
Our intent is to build deep, and when the time comes to make the business model broader & more robust, those assets will be selected from other asset classes entirely eg;
- precious metals,
- currencies such as USD,
- traditional equities
- and even new STO types of equity — when they’re worked out.
LONG before we introduce other cryptocurrencies.
(Note my comments earlier regarding diversification VS leverage.)
I hope you got some value out of this.
If you’re interested in getting exposure to Bitcoin, we promise Amber will be the easiest way for you, your friends & family to do it. So download it today.
Amber is also raising a Series A round in 2019. If interested, please reach out directly below.
Wishing you all an amazing, prosperous 2019 ahead.
If you enjoyed this post, please show it some love, give it a clap (or a few) and pass it around to anyone you think should have a read.
CEO & Co-Founder @ Amber Labs
Aleksandar ⚡️vetski [₿] (@AleksSvetski) | Twitter
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Some other interesting Anecdotes
Liquidity & Hashrate
I’m writing a separate article on the effects of liquidity now (due in June when I have more time), but the below is a glimpse into only Bitcoin counts.
BSV (shitcoin central) is in the top 10, and is completely insignificant in comparison. This number is even lower now.
Bitcoin is Dominating Crypto Taking Over 90% of All Mining Fees - Bitcoinist.com
When considering Bitcoin dominance in terms of market cap and trading volume, spare a thought for the poor miners. The…
John Carvalho popped a post up on Twitter asking a similar question (funny enough, while I was in the middle of writing this as an answer to a customer):
It’s an important question for a Bitcoin company to think deeply about.
I think the article above answers our position, and it’s my hope that we’re ahead of the curve on this (as I believe if that question was asked a year ago, the “yes” would’ve been closer to 2%).
My general thoughts
I posted the following on Twitter the other day which I think also sums up the viewpoint:
And last but not least, I just saw this thread from Vijay Boyapati last night which really reinforces everything I’ve written above. if you haven’t seen any of Vijay’s work; definitely check it out: