Last week, I met a guy who sold his car several years ago to buy bitcoin. The gamble paid off, and he made a fortune.
I met a fund manager with over US$26 million invested in a single crypto.
I also met a guy who, just three years ago, was unemployed and living with his mom. Now, he leads two crypto start-ups worth several million dollars.
They were all at Consensus 2019 and the surrounding parties and mini-conferences that make up Blockchain Week in New York. It’s one of the biggest gatherings of crypto professionals and enthusiasts in the world. Attendees came from as far away as New Zealand, Singapore, Canada and Switzerland.
Today, I’m sharing four of my takeaways from the event…
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1. “Big money” is buying bitcoin
We’ve said before that there are billions – if not trillions – of dollars in institutional money (money held by banks, hedge funds and other big organizations) waiting to invest in crypto.
At Consensus, everyone kept talking about how the big money is finally arriving. You see, hedge funds, venture capital funds and pension funds are starting to invest in crypto.
A recent survey by global asset manager Fidelity Investments found 22 percent of institutional investors own digital assets.
Now, they still haven’t made huge bets in the sector, but allocating small portions of their assets to crypto is a start. I believe we could see 50 percent or more of institutions holding crypto within two years.
2. Crypto is re-defining money
At Consensus, Joseph Lubin, the co-founder of Ethereum, said, “We won’t need money to lubricate commerce as much as we did in the past.”
He gave an example of projects on Ethereum that are converting solar power into tokens. That means the owner of a home equipped with solar panels would get tokens (think of them as credits) for every kilowatt of power his panels produce. Once he has his solar tokens, he could trade them directly for other services… say, for streaming movies.
Under that model, individuals are trading value without touching a currency. This is what people mean when they talk about crypto “tokenizing value” – generating a tradeable token rather than money for a good or service.
Many experts believe just about everything will eventually be tokenized… and the definition of “money” will become much broader.
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3. The U.S. needs regulatory clarity
The crypto industry is changing so rapidly that no one knows exactly how cryptos will be used years from now. That makes regulators’ jobs almost impossible. It’s like building guardrails for a road without knowing the destination.
But inaction on their part can be as bad as acting too swiftly. Hester Peirce, a member of the Securities and Exchange Commission (SEC), which sets and enforces many regulations for the industry, spoke at Consensus and said she believes the U.S. is moving too slowly.
“There is a lot of excitement, enthusiasm and hard work here in the U.S.,” she said. “What is depressing to me: our country has always been the place where innovation can really thrive, and now a lot of the activities are happening offshore.”
I agree and even take it a step further, arguing that the U.S. government is declaring war on cryptos. By over-taxing investors and drowning projects in regulatory requirements, the government is stifling innovation. Many interesting crypto projects are so turned off by U.S. requirements, they don’t even allow U.S. investors to buy their tokens.
There is a bright spot, though. The SEC doesn’t consider bitcoin or Ethereum to be securities. That means investors who hold them and the companies that work on them aren’t subject to the same regulatory risk as many other cryptos.
I believe that’s why bitcoin and Ethereum have outperformed most other cryptos in recent months, and it’s a trend that will likely continue.
4. “Crypto spring” is here
Bitcoin soared from US$188 in January 2015 to nearly US$20,000 in December 2017. But that boom was followed by an epic bust we call “crypto winter”.
Bitcoin’s price collapsed more than 80 percent during 2018 to a low of US$3,200. The selloff led to layoffs, bankruptcies and the closure of hundreds of crypto projects.
But the crypto winter forced entrepreneurs to stop thinking about crypto prices and start working on products that the world wants and needs.
That’s exactly what the industry needed.
This year’s Consensus felt like “crypto spring.” Bitcoin prices are headed higher. Bitcoin is the top-performing asset in 2019, up nearly 100 percent. And developers and entrepreneurs are energized. You could feel that renewed sense of purpose throughout the conference.
Throughout the conference I heard one thing over and over again: Crypto needs to add its next 100 million users. It needs to move from the fringes to the mainstream.
I left Consensus confident that next 100 million users aren’t far off.
Cryptocurrency Analyst, Stansberry Pacific Research