Liquid Insights
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Liquid Insights

Throwing Out The Blockchain With The Bathwater

The well-known phrase, “Don’t throw the baby out with the bathwater” dates back to 1512 and is based on the German proverb, das Kind mit dem Bade ausschütten. Generally, the phrase refers to throwing out the good with the bad, while trying to remove the bad. In financial markets, this phrase is often used in difficult markets when investors indiscriminately sell assets across the board. Unfortunately for blockchain technology, it is consistently the baby in the bathtub full of crypto.

Having experienced this phenomenon many times in financial markets, particularly during the financial crisis and years after, these moments create significant opportunities for those willing to see through the clouds and rely on facts, analysis, and experience. Fortunately (or unfortunately) for blockchain, crypto is the gift that keeps on giving.

I started Liquid Mortgage in early 2018, precisely when the previous “crypto winter” began. This was after 12 months of research, tinkering, and building with multiple blockchains without a use case in mind. As an institutional investor and part-time technologist, blockchain was simply interesting to me, not a technology necessarily looking for a home. Then I began to think of major pain points of trading mortgages, and how this technology might be useful in fixing certain aspects of that specific market, which would eventually become Liquid Mortgage.

At that time, Bitcoin was in the process of dropping some 85% from its (then) all-time highs. Headlines were everywhere about how crypto is dead, blockchain is pointless, and most were writing the technology off completely. Explaining the product to potential investors and clients, I could see the skepticism and most conversations ended with, “why can’t you just do this in a database?” Time to keep building.

Fast forward to 2020, the crypto market rallies and suddenly blockchain is back! Over the past two years, we have never seen more institutional interest in the technology and our solutions. The only real changes were crypto market sentiment and a more educated client base. We have been building and innovating the entire time waiting for the market to come to us.

Today, with Bitcoin down some 70% from all-time highs, some think we are regressing back to the 2018 mentality. Those who still think blockchain technology is useless, have likely not interacted or built with the technology. We see the market trying to throw the blockchain out with the bathwater once again, but most people we speak with are more educated on the technology, understand its limitations, but see significant real-world benefits. Given our experience and ability to see through the clouds, we continue to build.

For those of you building for the first time in this environment, keep your head down, make smart decisions, and ignore the bathwater.

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A publication distributed by Liquid Mortgage, a digital asset and payments platform for traditional loan products. The goal of this publication is to share thoughts and opinions on technology, markets, and industry trends.

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Ian Ferreira

Ian Ferreira

A former Portfolio Manager and Trader building technology to revolutionize traditional fixed income markets.

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