I want to give a huge shoutout to @Addison_Bennett for being a total badass and helping me understand the state of the blockchain ecosystem. And my Dad, Luis A. Pérez. He talks about financial foundations on Youtube, go take a look.
Thanks for opening this newsletter. You probably know me, or somebody who shared this with you does. I’ve probably been talking their ears off. And so, here you are.
Take a few minutes to read this if you’re interested in the buzz you’ve been hearing about cryptocurrency and the blockchain. If you like it, drop me a line. I’ll be sending out weekly newsletters going deeper into what’s important, how to invest and trade, what’s happening today, and what the future of cryptocurrency could look like.
Cryptocurrency is the frontier of democracy in finance.
I want to start by clarifying the above.
Finance is a world that makes sense to most at the checkbook level. For the generations coming up right now, even that is arcane. Who uses a real checkbook at all though, still? Not me, if anybody could look back in the last 10 years with a spy camera.
The present is digital payments, chipped cards that can pay at a distance, and sending money around with your phones.
But we’re still using the same institutions at the foundation. Banks. Investment brokerages. Paycheck lending businesses. Opaque institutions that provide cash value in the pennies for people like you and I. If you have excellent credit, you have access to loans and cash that 80% of the rest of America don’t. That means car loans, mortgages, deferred payment programs. Go lower in the classification and things get more difficult: high interest rates, large down-payments, rejections. I’ve had great credit and not so great, and the difference is stark.
What I’m trying to say is that institutions made of highly privileged operators aren’t here to open up the world to just anybody. And that means the majority of Americans like you and I. We can’t vote much with our dollars because we’re the product. Our debt is bought and sold as financial products on markets that average people can’t access. We can’t make loans to others with the ease of a bank, capture returns on corporate gains from the companies we work at directly, or live on the returns of overdraft fees and monthly maintenance charges on our checking accounts. We’re the product and we don’t get much of a say because it doesn’t make financial sense to those making the money. However, this is changing.
Blockchain technologies have opened up the possibilities for people like you and I to operate with our money like institutions do. We can vote with our money, loan with our money, and make direct returns from the organizations that we operate within.
Anyone can get in on this
My Dad is a great example. After spending years serving his nation and the church, building a financial foundation, and paying his dues to the financial and credit industries, the big break came from Crypto. During the Bitcoin dip of 2017, he bought a few coins to play with and hold. Back then Bitcoin was far below its current price in the $40k range, and was hovering around the $1000s. Holding through 2020 showed the value of playing. Once it shot up to $60k then bounced around the $30,000s, he could now get into realizing his vision of legacy through real-estate.
And this is only one story. This is happening to everyday people doing their research and learning their way around the ecosystem, at the basic level.
This is still the frontier
There are big risks involved. The two biggest that come to mind are volatility and security. Markets for cryptocurrency can be like those of the stock market: prices can go up, and they can come down - and fast. Instruments like stablecoins and staking can smooth the ride, and those are a tale for the future. To the second point, even popular exchanges have been victims of malicious actors breaking into the computer systems. That has meant lost funds for more than a handful.
But it’s not all a warzone. Sticking to the most trusted exchanges and working within the least volatile currencies will mostly prove stable and secure. Owning the risk involved will get you in the door to a huge potential upside for the years to come.
…And it’s still early
You can consider the place in history we are with a baseball analogy. If first base was the first 10 years of super early adopters, then second base is the next five or so years as the market begins to crystallize. Third base will be a handful of years as adoption becomes truly mainstream, and home is when crypto is as safe and ubiquitous as your grandmother tapping her phone on a little box at the gas station.
We’re still at second base. Things are still rough at the edges, and you can make losses out of wins if you’re not careful, but the opportunities are opening up for more people to understand and use crypto day to day.
How I got into this
Meme Stonks and DogeCoin
I came into this from Doge and Gamestop. Social Media was reeling from the shock of these financial instruments, once jokes, turning into serious money. Since I was seriously feeling the FOMO (Fear of Missing Out), I finally put some money into Robinhood, then anxiously watched it for a few days. I missed the early rumors about Gamestop, but I was early enough on Doge to cash out with a handsome return. I loved it. It was like a comic book reality, and I wanted in.
Maybe that makes me a weirdo, but it showed me my first taste of gains. My first payday from trading on hype.
How does it start to make sense? It definitely takes a couple of bull markets to understand what’s going on. In my case, I missed the 2020 dip and record stock run, then the early summer 2021 Altcoin rocket-ship. That just means I’m starting to pay attention. Like Andrew Carnegie said, “put all your eggs in one basket, and then watch that basket.”
My personal take on the crypto ecosystem, as it is today
If you’re an everyday computer user, who is okay with the basics, and uses your money for ordering from Amazon or paying for delivery through your phone, but isn’t into diving into esoteric niches and dealing with high volatility (enjoy trading stocks?) then it’s probably not going to be the kind of thing you’ll enjoy. Why?:
High transaction fees on the major blockchains: you could be spending tens of dollars to make simple transactions. If you’re just ordering pizza or groceries, it’s not worth the cost.
Things change quickly, and understanding how to get your money from one place to another is not simple. You can spend hours researching just to make a single transaction from place to another.
Starting out in Crypto
Do you want to try your hand at this? For the hungry, here’s a short, pithy guide on how, for today. Next issue will go more in-depth.
What to expect
This will be totally new. If you’ve traded stocks or forex before, this will seem familiar.
The steps here are:
Get a wallet,
Buy BTC and ETH to trade with and pay fees
People to follow
Follow people on Twitter and Youtube. Here are some people I view very highly:
NOTE: This is not investment advice. I am not a professional investment advisor. Please do your own research.