Investing in New Frontiers

Facebook was founded in 2004. Bitcoin in 2009. Old frontiers are often still very new. Knowing what they’ll do next is nearly impossible.

“Abiding in the midst of ignorance, thinking themselves wise and learned, fools go aimlessly hither and thither, like blind led by the blind.” — Katha Upanishad

That’s the first time anyone ever said anything like, ‘blind leading the blind.’ It’s from 800 BCE. That’s a long time ago. Rome had not even been founded yet, that’s how long ago it is. Homer had not even published the Iliad.

I wonder, if Homer was alive today, what he would write about financial markets now:

A millennial sits in a coffee shop
He sings with tweets
“HODL my crypto to all the moons!”
His goal is to own a lambo.

That’s my attempt at writing a modern Homeric stanza. As an investor, or someone interested in markets, history is the only road map we have — even if that means studying Rome, Homer, and Upanishad. It’s also why I think its important to be careful of things that have a short history. And a short history is anything under 100 years old.

I think of Cryptocurrencies, which in the grand scheme of financial markets, are still very new. So is social media. So is VR and AR. Our news, conversations with friends, and the things we read may make them appear old, over time, after a year of talking about them, but in the grand scheme of things that is very little time.

Today, there are cryptocurrency experts everywhere. They are both bearish (think it’s going down) and bullish (think it’s going up). They’re raising money for their ICO or they’re writing about the revolution taking place. However, what’s fascinating to me, is how someone can become so sure of one thing when that thing has less than 10 years of history behind it.

The entire world is connected now through Twitter or Facebook. Maybe that’s why “following” an expert is so easy. So, should we blame social media? But, even that is still in its infant stages. We’re debating privacy, fake news, and data harvesting that all come with the new social media world. I always remind myself that Facebook was founded in 2004.

That’s less than 15 years of history.

Is that really enough time to be an expert on something? And something that connects a few billion people? We still don’t fully understand the ramifications of it.

When I was growing up in the Bay Area, I remember when they were getting ready to introduce FasTrak. Those were the little readers that sat on your car’s dashboard and made it easy for you to drive through tolls on the Golden Gate Bridge. A machine would scan it every time you crossed the bridge and that was your payment style. One of the main arguments against FasTrak at the time was centered around the Government. People would say things like, “now they will know where I am and when I cross a bridge!” and “the Government should not be able to track us crossing the bridge!”

Let that sink in.

In just a few years, people went from freaking out about their privacy crossing bridges to carrying phones with GPS, video, and apps like Facebook that suck in everything about them, their lives, and day-to-day activities. I wonder if Mark Zuckerberg sits back in his chart at times and just says, “holy sh*t what have I created, how did this happen so fast?”

I wonder what Satoshi would say about Bitcoin. Maybe he’s sold a few coins, is sitting somewhere on a beach with millions, thinking, “I can’t believe that just happened.” I think that’s more probable than some revolutionary V for Vendetta figure striving to change the world. These products happened so fast, still have so little history, that their creation and permanence in society is still in explainable, I believe, even by those who started them. Why Facebook and not Myspace? Why Bitcoin and not Hashcash (a 1990s cryptocurrency)?

Young and exciting industries, like crypto and social media, are total game changers for society. But as much as we want to understand them, they are still so know. They are just happening and there’s no formula or anecdote that can explain it. At least not yet.

I’m not saying Bitcoin or social media is a bubble, nor am I saying it’s the future of our world. What I’m saying is that these topics are still too young to be an expert on. There isn’t enough history for anyone to truly get it. I think someday, after many years have passed and the smoke has cleared, we may look back and realize that ultimately it was a case of, “the blind led by the blind.”

Make sure you’re also following me on Twitter.