Crypto: Is this the real life? Is this just fantasy?

Bohemian Rhapsody, the legendary boomer song from Queen, asks a great question. Sometimes the world of crypto feels like a long, psilocybin-induced trip. What happens in crypto stays in crypto. Dog coins going to the moon, JPEGs being priced in the millions. The so-called adults in the room from the traditional or real world look on in amusement, patting us all on the head and watching us enjoy our little party while muttering to each other how it will all end in tears. 

Except that the party is not little anymore. Sam Bankman Fried of FTX fame is one of the richest people in the world and he is just the public face. There are countless paper billionaires (just like Elon) in the crypto world of whom no one will ever even hear. And yes, to be honest up until now, it’s been mostly fun and games.

There are 10,164 coins listed on Coingecko at last check. That’s a lot of coins and believe me, most are them are NGMI. When I say most, I mean like over 90%. But here’s the thing. Many years ago, when we started our crypto journey, we couldn’t find a single one that was going to make it. Of course, there was Bitcoin and Ether but back then these were considered HIGHLY speculative and completely manipulated. I would venture to suggest that both Bitcoin and Ether are now accepted by the mainstream as viable financial investments. There will always be those that don’t believe but there are many stocks that are thought of that way too.

Even still, today most crypto tokens live north of the wall and the applications are in this “play-play” world where all the experimentation is happening. As the crypto world grows, so in theory does the total addressable market but there is only so much one can do in a world where the majority simply are not present. Crypto and the services it enables all still qualify as “niche”! And it is. Right now, this applies to all of DeFi. Both old DeFi and new DeFi (as such a distinction now exists). It applies to most NFTs too. You would be forgiven for believing that NFT collectibles and digital art have gone mainstream, but they haven’t... yet. Most of the high value transactions are still crypto-native, catering to the monumental pool of wealth that has been built in crypto over the past few years.

As investors what we always dreamed of was finding those projects that would stand the test of time - the Amazons of the dotcom crash as we used to write, long before crypto became a thing in the investment world. As little as a year ago, Ethereum was still around $300 and Bitcoin around $8000. Most people thought you were a moron to suggest them as investments. If you started talking about any other projects (which we did) you were not only a moron but on the verge of being stuck into a lunatic asylum. In fact, we were laughed out of many a room and patted on the head.

Fast forward to today and suddenly crypto is everywhere and financial influencers with no real prior involvement in crypto at all have fallen down the rabbit hole and are writing beautiful, wordy notes about projects and concepts further down the risk curve. It’s fantastic!

There is one “but” though. As with stocks, not all of crypto is equal. There are lots of exciting ideas around but how do you find the ones that will win? How do you find the ones that will stand the test of time? There are many ways to skin a cat and flow sure helps when hopping onto the latest punt coin – alternative layer one Defi, dog coins et al. The earlier the better. But what we are here for is the big ones. The ones that will change industries. We are here to find projects that can gain REAL WORLD use. Why? Because the TAM is just so much bigger, and the commercial benefits naturally follow. Projects with real world impact will also be more likely to be bought by the establishment (who still happen to have lots of money). And finally, projects with real world impact can capture the imagination with the ability to tell a story. Valuations don’t really apply as a cap but rather as a floor!

It’s happening in telecommunications with Helium. It’s happening in gaming with Axie Infinity. It’s happening in financial services with FTX and Binance (despite their current regulatory woes). It’s happening in the art world with NFTs and the likes of Opensea and SuperRare. And this is just the beginning. Wait until it happens more obviously in governance and governments with new ways of organising resources and stakeholders (DAOs).

This is the holy grail. This is what every single person looking at cryptocurrencies should be after. Because these are the ones that won’t make you 10 or 20 times your money. They will make thousands of times. You get the chance to be like a VC. Even better, you get to buy in BEFORE the VCs come. It’s no wonder a16z is dedicating more personnel to crypto than any other space in its entire famed history.

Yes, QE has given rise to the biggest financial bubble we have ever seen, and nothing goes up in a straight line forever, but this is bigger than that. It’s a generational opportunity. Embrace the volatility. Embrace the madness. The fun is only beginning.

Because soon enough the fantasy becomes reality.

In fact, in many areas, its already happening.