Last month, Dr. Roubini testified to the United States Senate Committee on Banking, Housing and Urban Affairs on “Exploring the Cryptocurrency and Blockchain Ecosystem”. You can read it here.
Dr. Roubini was one of the few people to call the Financial Crisis of 2008, so people listen when he speaks, we do. In his testimony, he gives a quick summary of the bitcoin and crypto bubble that peaked earlier this year, then promptly burst, taking bitcoin (“BTC”), from a peak of almost USD20k down to its current level of USD3,339 as we write this. That is sh.tcoin territory without doubt.
Then he promptly gets stuck into all crypto sh.tcoins, and the blockchain too, rating it as “the most over-hyped – and least useful – technology in human history: in practice it is nothing better than a glorified spreadsheet or database”. We respond well to this kind of passion at Jack’s!
There are other opinions that we value too, like Fred Wilson’s (from USV). His recent blog post comparing the current crypto market to the dot com boom of the late 90’s was excellent (see it here), and worth considering alongside Dr. Roubini’s discussion.
Everyone has their angle with bitcoin, crypto and the blockchain. At Jack’s, these are our current thoughts;
Bitcoin and Crypto
We don’t think all coins are sh.tcoins. BTC is first to market and has established irrefutable network effects as a result, but will it find its true purpose (store of value/investment, currency, medium) and what value is that true purpose against a fiat currency. BTC has been the go-to crypto coin and remains so. As we have seen with all technology, network effects are powerful and sometimes almost impossible to overcome in the short term.
Institutions are stepping up and into the BTC market. This is an important piece of the ‘legitimisation’ and stabilisation process. Are there classic financial service names stepping up to provide wallets, clearing, market making and custody. The more of these boxes that are ticked, the better for BTC and any other crypto that pulls the same support. This is what we would look for.
Beyond BTC, good luck. Try your luck with our favourite sovereign coin, the ‘Petro’.
ICO’s and tokens
We think ICOs were bollocks and still are. Possibly the worst kind of ‘derivative value’ connection to a company that you can get. You’re reliant on company promoters to achieve something with some kind of ‘fake’ token micro economy, whilst you hold said token, that you then have to trade against another mainstream cypto i.e. liquid to then get out into fiat. It’s layers of illiquidity and derived connectivity all so that the company promoters can get, essentially, free capital.
The blockchain is a distributed general ledger, that’s it. The blockchain is not crypto. The blockchain has some powerful uses and we are seeing examples of this play out in every industry, from banking to agri’ to trade. But, along Dr. Roubini’s thought lines, not every problem needs a blockchain solution, some just need a classic database or ledge.
In summary, at jack’s we sit somewhere between Dr. Roubini and Fred Wilson. ICO’s, blockchain and crypto are related but separate. ICO’s are a no-go zone for Jack’s, but happy to be proven wrong. We think it’s too early to write off BTC, but sure, there was a massive bubble. We want to see we major instos come out with product development in the next six months. For the blockchain, we see niche value and tools emerging and happy to build them into our software solutions, mobile, enterprise mobile or custom.